2. Changes in Customer Behavior
Customer Behavior is rapidly changing due to two key factors:
• The psychology of self-actualization.
self-
• Technology innovation and adoption – diffusion.
Banks can either try to reinforce traditional mechanisms and
behaviors, or they can anticipate changing behavior and build
accordingly.
The pace and rate of behavior change is speeding up, not slowing
down. Thus institutions get less time to react and anticipate the
impact of such changes on their business. The longer they wait, the
wait
bigger the gap between customer expectations and service capability
becomes.
There are 3 phases of these behavioral changes and we are at the
second phase The third phase will occur within the next 5 years and
phase.
it will be a game changer
changer.
2
3. Behavioral Shift
• 97% own a computer
• 94% own a mobile phone
• 76% use Instant Messaging
• 15% of IM users are logged on 24/7
• 34% use websites as their primary source of
• news
• 28% author a blog and 44% read blogs
• 49% download music using peer-to-peer file sharing
• 75% of college students have a Facebook account
• 60% own some type of portable music and/or video
• device such as an iPod
Source: Heidi Przybyla "Obama's `Youth Mojo' Sparks Student Activism, Fueling Campaign",
Bloomberg.com (May 7,2007)
Source: Generation Y, Business Week, February 15 1999
4. Three Phases of Behavioral Disruption
Phase 1 Phase 2 Phase 3
Mobile Wallet
Internet & Smart Device
& NFC
dot.com & App Phone
Payments
Control and Anywhere, Cashless and
Choice Anytime Ubiquitous
4
5. Changes Expected in the UK Retail Payments
(2006 – 2015)
“There will be a critical review in 2016 when the Payments Council will decide
Paul Smee,
Smee,
Chief Executive of the whether sufficient change has occurred against agreed published criteria, to press
UK Payments Council ahead to do away with the cheque in 2018. There are many more efficient ways of
making payments than by paper in the 21st century, and the time is ripe for the
economy as a whole to reap the benefits of its replacement”
6. Customer Empowerment
Product 1980 2008
Credit Card 14 days Instant Approval
Personal Loan 7-14 days Pre-approved, or 24 hours
Home Mortgage 30 days + 24 - 28 hours
John Steffens,
Vice Chairman “The do-it-yourself model of investing, centered on Internet trading, should be
do-it-
Merril Lynch,
September 1998 regarded as a serious threat to Americans’ financial lives.”
7. Measuring the Customer Experience
Customer experience is the new Holy Grail of retail
financial services, but the key is not so much about
presence and service as they are about
service,
understanding the core needs of the customer. To
build an optimal customer experience banks must be
able to measure how customer behavior is adapting
adapting,
and be able to measure the rate of innovation or
value creation within the whole organization.
While many institutions have the capability to
measure customer experience, it is considered
inferior from a data-set perspective to revenue. But
whereas revenue tells you what you achieved,
behavioral analytics can tell you why, and more
importantly, where you can do better.
8. Organization Structure
Partial retail banking org chart relating to channel priorities
CEO
Head of
Branch Head of
Network Retail
Transaction Customer
IT
Services Propositions
Alternative
Platform Marketing Call Centre
Channels
Mobile Internet
ATM
Banking Banking
Branch revenue does not equal branch sales results. The decision to “apply” for a credit card is
almost never made in the branch, unless it is a new account opening process. The branch practically
has zero involvement in credit card sales, but we often require customers to come to the branch to
actually submit the application. In this case the branch is a “step” in a compliance process.
9. Which Product works best on which channel?
StanChart and Middle-East / North Africa Surveys: Preference for Retail Banking products online, by market.
Middle-
10. Channel Improvement
In the late 90s and early 2000, banks closed large swathes of
branches in the name of cost cutting creating large-scale
cutting,
customer dissatisfaction.
Recently branches have seen somewhat resurgence in
popularity, but are branches working the way they need to
work for both customers and banks in today’s changing
landscape?
How can banks make branches work much more effectively to
create real value?
It is about less high-counter transactional support and far
high- support,
more low-counter sales and service focus The objective is to
low- focus.
leave other less costly channels to handle no or low-margin
transactions, and focus on where the value is – deep, profitable
customer relationships.
11. Branch Setup
Present Day Branch
•High counter and barriers.
•Transactional focus.
•Fixed banking hours.
Branch of the Future.
•No counters or barriers.
•Simplified branch visit.
•Low-counter , sales and service focus.
•Flexible banking hours.
12. Branch Improvements Today……(1)
Project / Initiatives Desired Outcomes
Cash / Cheque Reduce OTC (over-the-counter) transactions that are purely cost for the
deposit machines branch.
Meeters / Greeters Redirect non-optimal transactions to self-service automated capability.
Customer Improved behavioral analytics on customers across all channels to understand
Information Systems better which “tasks” customers prefer to do at the branch versus online etc.
Sales Intelligence Real-time precognitive offer management for existing customers delivered in
and automated offer the form of prompts, offers, or service messages.
capability
Branch customer Customer information dashboard that shows entire relationship footprint at a
dashboard glance, along with current risk rating, credit approvals and suggested sales
offers.
Improved staff Focused service and sales training programs, along with better KPIs that focus
mobilization on more than simply the number of applications per month, or total revenue
BPR (Business Reduction of layering between sales and service departments, including the
Process removal of duplicate “skills” within “competing” product units. Creation of
Reengineering) on “customer dynamics” capability as owners of customers, rather than product
select processes competing for revenue from the same.
13. Branch Improvements Today……(2)
Project / Initiatives Desired Outcomes
Straight-Through Enabling customers to get immediate fulfillment for an application rather than
Processing (STP) and waiting the obligatory 24, 48 or 72 hours due to antiqued manual or human
Credit Risk “processes” in the back office. Results in improved service perception and
Management reduction of abandonment due to ongoing process demands (i.e. proof of
systems income, faxing of 3 month’s bank statements, pay slips, e.t.c). Additional
benefits include reduction of compliance errors through manual mishandling.
Customer friendly Use of ethnography, usability research, audits, customer-focused observational
language initiative field studies and focus groups to improve language and simplicity of
application forms and communications with customers within branch (and
beyond).
14. Contact Centers and IVRs
Key Issues facing contact centers in the Bank 2.0 world.
Please wait
a Moment…
Capitalizing on sales Consistency and quality Quick access to the Improving IVR utilization
Opportunities: of communication. right information and effectiveness
effectiveness.
Why are we recommending Dealing with customer Respond quickly to the Through innovation like
a particular product to queries across any channel most common inquiries speech recognition
the customer?
Making new Green Issues. Customer Advocacy. Finding the balance Staff turnover and
technologies pay. Encourage customers Helpful, personable, in outsourcing. employee engagement.
Text chat, video chat, skype to use e-statements friendly customer service. Offshore cost savings Staff satisfaction,
vs Onshore quality career / skill progression
14
15. Proposed Roadmap for Channel Improvements
Project / Initiatives Desired Outcomes
Staff Retention Homesourcing as an option for retaining the best staff. Assigning new cadets to
Programmes the call centre for at least 3 months within the first year of service.
Full Integration of Integrate the technologies customers use into the contact centre; picking up
email, VOIP and IM the phone is not a superior choice for customers. Develop a communication
directly into the policy for all employees that covers the use of these tools, plus blogs, social
contact center networking sites and virtual words.
IVR Menu redesign Prioritize menu options based on traditional traffic analytics, thus reducing
IVR navigation for frequently made calls. Incorporate voice recognition
“emotive” IVR technologies to redirect upset customers to a specialist
“customer advocate” and diffuse difficult situations.
Single-screen Improve customer knowledge, process and workflow with a single-screen
customer dashboard interface for CSRs, akin to the Internet banking centre for customers. Reduce
the current workarounds with multiple disparate systems, separate logins,
screens etc.
Improved service Work to create a total service culture within the bank that gives contact
culture. centre staff pride in their role within the customer equation, rather than
feeling like they have been relegated to the call centre dungeon. Empowere
staff to solve problems., rather than create a process to frustrates resolution
through convoluted organization structures.
16. Proposed Roadmap for Channel Improvements
Project / Initiatives Desired Outcomes
Customer Analytics Use customer analytics to better understand the reasons for the call and work
to anticipate customers’ needs both collectively and individually. If a customer
regularly calls with the same request, utilize analytics to serve up and IVR
menu that prioritizes those requests by CLID function.
Customer Advocacy Build a customer advocacy team that can act as a gateway between customers
Program and the institution. Help this team to be champions for the customers and
have them involved in any decision in respect of the changes to customer
processes, new product launches, etc that impact the frontline.
Dynamic offer Create a customer dynamics team (incorporating product specialists,
management marketing staff, customer advocates, etc) to craft offers for segments that
emerge from the customer analytics. Create tons of sales scripts and offers for
unique tailored cross-sell and up-sell opportunities that feel like better service
for the customers rather than just sales pitch.
Reform Legal and Give the legal and compliance department KPIs for enabling customer
compliance solutions and improvements, so they are working for the customer and not just
departments mitigating risk for the brand.
17. Web
Mechanisms affecting online revenue generation
Mix & Journey
Cross-sell to
Existing Findability
Customers
Value Exchange
& Content Usability
Scoring
18. Web
How do we ensure it works once implemented?
CSR: Welcome to XYZ Bank. How can I help you today?
Customer: I’m having trouble transferring my funds to my overseas account in
London using the Internet Banking facility. Can you help me?
CSR: Certainly, sir. Can you explain what the problem is?
Customer: When I go into internet banking and choose transfers, the list of banks
does not show my bank in London. Can I add it to the list?
CSR: You should be able to type in the name of the bank and the SWIFT code
directly onto the page, sir. What menu option are you choosing?
Customer: Third Party Transfers…
CSR: Aah…that’s the problem. You need to be selecting telegraphic
transfers. That is the option for overseas transfers. Third party
transfers are the option for transfers within Kenya.
Case of a call centre interaction with a customer over money transfer via internet banking. To the customer third-party
third-
transfer means you can transfer outside of the bank to a third party. What if the bank simply changed the menu options
to read “Transfers within Kenya” and “Transfers Overseas”?
19. Web
The Value Exchange: Drivers for effective web presence
Improve my life Buy more
•Fit my unique needs. •Acquire new customers.
•Address more of my •Increase share of wallet.
requirements •Get longer lasting
relationships
Respect my time
•Be more convenient Value Cost Less
Value
•Be faster and simpler from the •Sell and service more
from efficiently.
customers bank
•Smarter marketing.
Save me money
•Be cheaper to own
•Give me a better deal.
20. Internet Channel Improvement Roadmap
Project / Initiatives Desired Outcomes
Usability tests for all Assess any issues with current website language, layout, design and process.
sites
Customer Improved behavioral analytics on customers across all channels to understand
information systems better which “tasks” customers prefer to do in-branch, versus online.
Content The old dot.com favorite is back, but this time enabled across the organization
management systems so we can “publish” new content continuously. The best analogy is to imagine
that your bank is publishing a product catalogue and investor information
magazine, based on your product, to customers daily.
Sales intelligence Real time and precognitive offer management for existing customers delivered
and automated offer in the form of prompts, offers, or service messages, especially within the
capability internet banking portal.
BPR (Business Reduction of layering between sales and service departments, including the
Process Re- removal of “duplicate” skills within competing product units. Creation of
engineering) on customer dynamics capability as owners of customers, rather than product
select processes competing for revenue from the same.
21. Internet Channel Improvement Roadmap
Project / Initiatives Desired Outcomes
Straight-Through Enabling customers to get immediate fulfillment for an application rather than
Processing (STP) and waiting the obligatory 24, 48 or 72 hours due to antiqued manual or human
Credit Risk “processes” in the back office. Results in improved service perception and
Management systems reduction of abandonment due to ongoing process demands (i.e. proof of
income, faxing of 3 month’s bank statements, pay slips, e.t.c). Additional
benefits include reduction of compliance errors through manual mishandling.
Customer friendly Use of ethnography, usability research, audits, customer-focused observational
language initiative field studies and focus groups to improve language and simplicity of application
forms and communications with customers within branch (and beyond).
Search engine Organic search engine optimization requires rethinking what content should be
optimization put on the site which is driven by what customers are looking for.
22. Mobile
Key areas to consider in mobile banking development
OS or
Device Needs and Bank
Software Interface Revenue
Hardware Solutions Integration
Stacks
23. Mobile
Revenue opportunities for mobile banking services
Transactional
Transactional Acquisition Revenue Subscription-Led Revenue
Subscription- Cost Savings
Revenue
Mobile payments New product Monthly fee for daily feed Reduction in branch, ATM
acquisition and call centre load.
Mobile remittance Drive to the web, Royalty and card usage Decrease in cost of
branch lead-gen offers acquisition
Virtual NFC Up-sell, upgrades Location-based usage offers Decrease in net customer
debit/credit card cost.
24. ATM and Self-Service Banking – Convergence and
Self-
Control
The ATM turned 40 recently, and it doesn’t look like its
diminishing in popularity any time soon. As banks seek to
leverage their extensive ATM network, what are the key drivers
for use by customers?
• Where should ATMs be located?
• When do people use them?
• What could prevent using a specific ATM?
• Is the ATM a cost or profit centre?
• Originally designed to reduce branch load, is it doing its
job?
The key to self-service is ease and speed use. Don’t make it too
complicated and when it comes to decisions on what to deploy,
strip the process or task down to its simplest form.
25. Channel Silos to Channel Management
Retail
Contact
Call Centre Centre
- IVR
- Phone
Banking •IP (www, i-Bank,
Retail mobile)
Internet •ATM
Comm.
- www •Kiosk
Internet •Voice / Data
- Internet
banking •Voice Recognition
•Other
Alternative Content Channel
Management Management
Channels
Self-Service Customer
Banking Analytics
Cards Call
- ATM
Center
- In-Bank
Systems
Comm. Call SOA
Center
26. The Bank 2.0 Roadmap
Analytics
Offer Mgt
segmentation
Customer
Data Mart
Core Banking
Straight –Through Systems
Processing
Credit Risk
Management
XML
Web 2.0
Tools
Content
Management
Avatars
Voice
Recognition
Contact Centre
Contact
Management
27. From Bank 1.0 Channel Architecture to Bank 2.0
Channel Architecture
Retail
Retail
Kiosk
Brokerage Kiosk
Mobile Brokerage
Mobile
Trading
Trading
www
Settlements www
Settlements
Treasury
Call Centre Treasury
Call Centre
Mortgages
Mortgages
IVR
Trade IVR
Finance Trade
POS Finance
POS
ATM Card
Services ATM Card
Services
Branch
Branch
28. The Road Ahead – Beyond
Channel
Technology appears to have reached a point
where exponential improvements are nothing
new. Adoption rates for new technologies are
sky rocketing and prices are coming down so
more people have access to these technologies.
Technology is not exceptional, nor is it an
alternative choice for consumers – it is the way
of banking in the bank 2.0 world.
• What will the future bring?
• How does this impact service providers?
• How can they prepare for it?
29. Innovation
An innovation approach will challenge the rules of the game.
Traditional Approach Innovation Approach
A different
Same Analysis Point of view
about the
future
Sustained
Differentiati
Price Competition on
Same Strategy Using new
Commoditization lenses Differentiation
Perceived
Simple Value by
Same comparison Customers
Products & for Unique
Services customers Value
Propositions
Companies pursue similar strategies often Innovative thinking will challenge
resulting in thecommoditization of their commoditization by creating sustainable
value propositions growth strategies through differentiation
30. Innovation
Business Model Innovation.
By questioning different dimensions of the business model, we can create new business concepts to deliver more customer value,
within and beyond our core business
I. Who? IV. How to create a competitive
I
Who are our customers? advantage?
In which way are we different from our
Which market segments are we
competition?
serving?
How is this difference valued by the
Which new needs are we serving?
consumers?
II. What? V I
What products and services are we I Is this differentiation sustainable?
selling?
? V. How do we make money?
What benefits and solutions are we What do we charge our customers?
delivering?
What are the major cost variables of
III. How? our value proposition?
Which distribution channels are we using?
How do we extract value?
What is the configuration of the value
chain? What is our pricing model?
I II
Who are our allies? Innovation Within the core
V I Scope Expanding the core
In which way are our allies helping us Beyond the core
delivering value?
Customer Value Analysis Value Created 2 ways to create more Customer Value:
Customers seek out Value CapturedValue Delivered 1. Reduce the Price optimizing the Cost or
‘the best deal’. Then, cutting on the Margins, and/or
companies need to Customer
Cost Margin 2. Increase the Benefits adding more
create more Value
functionalities to the P&S and/or
customer value than
Cost Price Benefit expanding the Customer Experience
competitors.
(Willingness To Pay)
31. Innovation
Innovation Principles.
A set of principles enables the development of transformation and renewal programs within our client
organizations
I. Mobilize and engage II. Use different lenses III. Build a point of view
the entire workforce for new answers about the future
IV. It is only innovation when it V. Develop and manage a VI. Embed a system of
is delivered to customers pipeline of opportunities for strategic innovation not just
each challenge a process
Source: Strategos
32. Innovation
Innovation Blueprint.
Allows the structuring and embedding of innovation throughout the organization, enabling a systematic production
of results
Innovation Factories
Breakthrough Innovation Incremental Innovation
Building Blocks
Organizational Structures Processes & Methodologies Technologic Platforms Metrics & Evaluation
Strategy & Objectives Corporate Training Brand & Communication Innovation Network
33. Innovation
Breakthrough Innovation
Create a continuous flow of experiments and pilots of business model innovation and
growth platforms that address business challenges
Discovery Ideation Elaboration Development
Experiments
Business Plans
Implementation
New Insights New Ideas New Concepts New Businesses
Process Using different Leveraging on the Building value Design and implementation of
lenses to build a new perspectives for propositions using experiments (low-cost and short term)
new point of view creating new ideas, the ideas generated. to evaluate some assumptions of the
on the challenge which arise at the Focusing the value proposed business models
(Core competencies, intersection of propositions in the Development of business plans and
Orthodoxies, different prisms core area implementation of the concepts
Customer insights,
Discontinuities) Thousands of ideas Many value Validation of the assumptions of
Results
A differentiated and generated propositions and quick selected opportunities
proprietary view Participation of wins, representing (experimentation plans)
about the future hundreds of people potential innovations Guidelines for the Business Plans
Participation of to implement on the implementation
hundreds of people business units (Venture
Plans)
34. Innovation
Incremental Innovation
Incremental Innovation is mandatory for every organization: the pursuit of small innovations that can delivery
efficiency and develop a better customer experience. Incremental innovation efforts can be leveraged
through technology platforms
Generation Collection Evaluation Implementation
Action Plans
Execution
Incremental Ideas Selection Initiatives Operational improvements
Process Focus on innovation Organizational process Marketplace of ideas Decision to Implement or to transfer
challenge for collecting ideas (negotiation with ideas) and to the relevant business unit
Spontaneous ideas Idea Forum (ranking of ideas)
Integration with the Candidates chosen for
pipeline generated on the implementation through the
breakthrough Innovation participation of all the
initiatives organization
Results Thousands of new ideas Facilitation and Identification of the ideas, Initiatives launch
through the involvement of presentation of ideas in a according to the criteria
the entire organization structured format that defined so that the
facilitates consultation selected ideas can be
and analysis implemented
36. Timeline of Disruptive Changes…..(1)
2007 2011 2014
2016
The launch of app phone, App phone sales dominate Marketing spend on digital
EU and UK governments announce
3G and WiFi represents the mobile landscape, most media in financial services
support for physical credit cards
the second disruptive are RFID/NFC enabled exceeds traditional media
to be phased out due to fraud
technology for banks for the first time
issues
1995
The Internet
phenomenon becomes
the first disruptive
technology to impact
banks
2003 2010 2012 2015
Internet banking Internet banking revenues Contact less credit cards NFC contact less phone
transactions exceed branch exceed branch-led revenues become the dominant payments exceed debit /
transactions in most in the US and UK markets for POS/Card combination credit card payments
developed economies for the the first time
first time
37. Timeline of Disruptive Changes…..(2)
2018 2020
The UK, Australia and Physical cash makes up less
others stop using cheques; than 2.5% of retail payments
the US follows two years
later
2017
Value of P2P payments via
2019
mobile exceeds ATM cash
Use of ATM Machines is
withdrawals globally
in terminal decline in
the West
38. Book Reviewed By: Bank 2.0 Author:
Brett King is a bestselling author and the founder
Peter Muya, Managing Partner at Pearl Touch International Limited, is a trusted
of a breakout new retail banking concept,
technology advisor in the ICT industry, driven by the passion to transform the
Movenbank. Voted as American Banker's Top
enterprise through the delivery of tools and insights that create a synergy
Innovator of the Year in 2012, King initially
between business needs, business information, IT systems, data, technology
achieved recognition for his bestselling book
delivery, organization, costs and standards .
BANK 2.0, which received widespread industry
acclaim and topped category lists in the UK, USA,
Having a wealth of 10+ years experience in the key dimensions of the ICT value
Germany, Japan, Canada, France Russia and Asia.
chain including IT strategy and governance, Enterprise Architecture, IT Operations
He is widely considered the foremost global
Management, Business Applications - SOA, BI, ERP, CRM, ECM, software
expert on retail banking innovation today.
development, business analysis, project management, pre-sales / business
development and service management all in a diversity of sectors – IT consulting,
telecommunications and financial services industry.
Email: peter.muya@pearltouchint.com
Web: www.pearltouchint.com/consulting
Questions?
