Customer Experience for the Bank of Tomorrow? Part – 2

By SunTec Research Team

In the previous part of this article, we discussed on “What will be the customer experience of tomorrow, what are the factors driving it and what can the bank of today do to address this and become the ‘bank of tomorrow?”

In this part of our article, we will discuss on the importance of putting the customer at the center and providing both tangible and intangible values to give the utmost personalised experience.

Customer centric, driven by purpose

Today, the unique selling proposition of any bank is the wide variety of products and services. It is as if variety is the key! Products are at the center of any bank’s business. To sell these wide varieties of products, banks highlight the benefits they offer, mostly centered around the rates. Or the bank of today is product centric and benefits driven.

But they seem to forget that these products are for a customer. Customers buy a product for a purpose.

We take a mortgage because we want our own home. You buy a debit card because you need the flexibility of spending money on the go. Here the products are the mortgage or the debit card, but the true purposes are owning a home or flexibility in spending. In fact, each financial transaction is driven by a purpose.

Banks have invested heavily in each product and the analytics associated with it. For example, plenty of banks of today can derive the lifetime value of a customer, measure each customer’s spending patterns and make targeted offers, but carpet bomb the same customer with multiple offers because either they are not able to derive insights from this data or do so in hope of believing that at least one offer will click. As PwC mentions in their report, ‘few can analyse a customer’s deposit account, see that his salary deposit has increased, and send a note congratulating the customer on his or her promotion together with an offer of a premium card and a higher credit limit.’[9]

Banks of today do not know their customer very well. To add to the conundrum, as per a survey by PwC, while 61% of the banks say that a customer centric model is very important, only 17% are prepared for it[10].

The banks of tomorrow will understand this need and put the customer at the centre of everything they do. They will be driven by the purpose of each transaction. The ‘bank of tomorrow’ and its customer experience will be customer centric and purpose driven.

The banks of tomorrow will put the customer over the product. We feel that the banks can take a cue from Amazon and Jeff Bezos on customer centricity.

As pointed out earlier, banks are already moving ahead in this regard. From highlighting the rate of interest for a home loan, banks of today are highlighting the importance of owning a home in the customer’s life. Education loan is not anymore about the ease of repayment, but more about the financial freedom it gives students. Even though banks are slowly moving towards being purpose driven, the gap is till huge.

In short, the banks of tomorrow, to give a great customer experience, will have to put the customer at the centre of all they do and understand the purpose for each transaction. Customer centricity and focus on the purpose of each transaction will certainly help banks build more trust with their customer.

Focused on tangible & intangible value

When you buy a bottle of water, there is an exchange of value. Value is defined as the ‘importance, worth or usefulness of something.’ The key word is usefulness. Value has two components – tangible and intangible. Both can differ in different scenarios.

When you buy a bottle of water, you give money. This is the tangible component of the value. If you buy the bottle of water from a 7-Eleven or a Walmart, the tangible value or the money you pay may be different compared to the tangible value or the money you may pay for the same bottle when you buy the same from a Ritz Carlton or a Marriott. The tangible value is decided mostly by the availability of the product as well as the location.

But the intangible value is decided by the situation that we find ourselves in. The intangible value for a bottle of water for a person stranded in a desert or a sea will be much more than the intangible value for the same bottle in a room full of water bottles.

Or, dealing with tangible value is easy, dealing with intangible value is tough.

The bank of today focuses on the tangible value while the bank of tomorrow will focus on tangible and intangible value. Intangible value will help the bank understand the customer in a better way and understand the purpose of each transaction better. Intangible value along with tangible value will give a detailed picture of each customer rather than the grainy picture the bank has as of now.

If my bank knows me better, then I am sure it will provide me with a product that is more relevant to me at any point of time, rather than a product that was relevant to me two years ago. If my bank offers me a more relevant product, then I will certainly trust my bank more.

The banks of tomorrow will use enterprise wide systems that will help the banks to measure, monitor and manage the intangible value along with the tangible value.
While many banks of today have systems and partnerships that will help them measure, monitor and manage tangible value, we are sure none of todays banks have thought about this. This will become not a choice, but a necessity for the bank of tomorrow.

Catered to the evolving customer base

With the customer moving towards the centre, the importance of the customer will increase more.

Today, for most of the banks, the customer profile is static. As per the bank, if I am young, I stay young. And hence, the product portfolio and the marketing messages associated with each product is based on a static customer profile.

But the population boom and the lower mortality rates have meant that the customer demographic is continuously evolving. More number of younger people, increased number of tech- and finance-savvy senior citizens, a higher number of working and independent women, who will be continuously evolving, will be the norm.

This means that the ‘bank of tomorrow’ will have to cater their customer experience to each of these segments and change it rapidly to be in sync with the evolution.

While the bank of today has already moved ahead in this regard, there are still gaps. While it may have special products for senior citizens, working women, young students, or first-time home owners, all of us know of working professionals who get messages for student loans.

This means that the ‘bank of tomorrow’ will have to do much more. To cater to an evolving population, it will have to create much more narrower segments and monitor each for continuous evolution. Being more integrated into the customers life and keeping a tab on notable events in the customers life will be key to doing this.

For example, if a student, who is a customer of the bank, has started searching for a home on rent, it may mean that he has got a job or is looking out for a job, and is about to complete his education soon. He or she may be looking to move in with his or her family. The hypothesis can be confirmed only if the banks obtain more data points by being continuously part of the customers life. If he or she opens a salary account, it may mean that the student has obtained a job. In this case, the customer profile changes.

To understand how a customer evolves, it is also important that the ‘bank of tomorrow’ provides a much broader set of products and services than it is offering now. For example, let us consider a customer who has an upcoming wedding. Rather than focus just on a loan to cater to the wedding expense, the ‘bank of tomorrow’ can provide services such as access to wedding and event management providers at reduced rates or facilitate the booking of a honeymoon package after wedding. Wouldn’t you not love if the bank, without asking you, sent you a wedding gift on the day of your wedding? Wouldn’t you love it more if the bank provided a free credit card to your spouse after your marriage?

Some banks have already realized that such significant events can be inflection points which can lead to the switching of bank accounts. Here, banks have decided to play a proactive role. For example, Santander Bank is providing its SME customers foraying to international markets for the first time with non-financial services including trade services, import financing, leasing, a network hub, an expert business call line and other resources aimed at companies in the early stages of international expansion[11].

Evolution is change. And because change is constant, evolution is also constant. As banks evolve to become the banks of tomorrow, they will also have to keep in mind the evolution of their customers to provide a better customer experience.

Personalized where each segment is one

Today, the bank caters to different segments in separate ways. It is true that each segment has its own need.

But do banks of today really understand what we want? In fact, one of the most repeated pain points of today’s customers with respect to their banks is the lack of products or services fulfilling their unique needs. A study by Capgemini reveals that only 37% of customers believe that banks understand their needs and preferences adequately[12].

Yes, everyone including you and me, are different and our needs are as different as chalk and cheese.

The ability to personalize customer interactions will be the differentiating factor in the future. According to Accenture, one out of every two customers expect personalized treatment, irrespective of the industry.

The ‘bank of tomorrow’ will embrace this idea and treat each one as a segment. Or in other words, each person will be a segment because each of us deserves to be. In line with this, the ‘bank of tomorrow’ will deliver a customer experience that will serve the unique needs and preferences of each customer. In other words, the customer experience of tomorrow will be personalized to the scale of one[13].

By leveraging algorithms and using concepts such as big data analytics, the bank of tomorrow will draw out a detailed portrait of each customer, based on which the bank will be able to cater to the needs of each. As I said, treating each customer as a segment will only add weight to the old adage that customer is the king. Because, kings do not fall into any segments, and are a segment by themselves!

In the next part of our article, we will discuss on the experience ‘bank of tomorrow’ should provide – Invisible, Intuitive, Immersive, and Integrated in the customers lives and the importance of being Channel agnostic.


[9] Retail Banking 2020

[10] Retail Banking Strategy 2020

[11]  Small Business Ecosystems: Banks’ Next Challenge

[12] How can Banks Maximize the Value of their Customer Data?

[13] Retail Banks Need to Personalize the Customer Experience Right Now

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