4 December 2012
The director of financial services strategy at Pegasystems, Tony Tarquini, thinks that 2013 may at last see some moves towards cross-channel retail banking integration as post-industrial banking gets underway.
Paul Tucker, the deputy governor of the Bank of England addressed the British Bankers’ Association (BBA) annual conference in October, discussing the “industrialisation of retail and business banking that occurred during the years of plenty”.
Tucker, who has recently lost out on the top job after Canada’s Mark Carney was given the governorship, observed that intelligent resolution tools are necessary for the future of financial services, prompting a discussion at the BBA Conference about what we can learn from the past and where the sector is heading in 2013 and beyond.
In banking, from the 1970’s until today, the push has been to drive down cost by centralising operations and benefiting from the economies of scale that the “industrialisation” of banking could bring. There are great parallels with manufacturing, albeit 50 years behind. In financial services we are now approaching the post industrial revolution era marked by the transition to “mass customisation”.
We are seeing the introduction into the banking of new technologies, which allow for mass customisation at a significantly lower price to serve. In the same way that car manufacturing went from hand made cars, to Ford-centralised mass production “in any colour as long as it is black,” through to today’s manufacture to order following a customer’s spec.
In short, the financial services world is maturing in the same way manufacturing has done in the decades before it. It is moving to a position where customers get what they want, when, where and how they want it, using whatever channel suits them best – whether it is branch, phone, online or mobile.
Targeting the customer
“Industrial” banking IT has previously focused all its resources on identifying the ‘who’ of a customer – bringing the branch customers into the centre by gathering a 360 degree view of the customer data from the various distributed systems. However, traditional IT systems are not able to integrate this data insight into actionable strategies, leaving operations directors with the hard task to figure out what to do with all this data.
Today’s leading edge software moves onto the What, Why, Where, When and How, guiding the operator and customer through the intended process to the right outcome for that specific customer in that specific situation. The telecoms sector has led the way in this regard, providing ‘Next Best Action’ prompts to the contact centre operator, which has revolutionised their retention and cross/up-sell results, and is widely used by retail banks.
When and where
The “industrialised” banks have created a series of disconnected channels (telephone, on-line, mobile), developed in isolation as each requirement has come to maturity. An interaction in one channel is in a separate unseen silo to any other channel. Integration is necessary for the future and I believe moves will be made towards this in 2013.
In the post industrial world, leading edge technologies allow the present connected generation to access their banks 24/7 through a variety of channels, beginning an interaction with one channel (e.g. on mobile while on the train) and concluding it online or through a contact centre when they get home. Starting communication on one device and accessing information seamlessly across different channels is essential to the future of the financial services industry.
This generation is time poor but more demanding, so they want to be kept constantly up-to-date with how their funds are being managed and what the best options are for the future. Interactive banking applications will offer customers the opportunity to track transactions in real-time, allowing them to check in via any device where their funds are, what are the service fee charges and how long it will take until the transfer reaches the recipient.
In 2013 and beyond we will see a stronger focus on financial service applications that engage customers in a more interactive manner, offering real-time services to manage communications and provide a more seamless customer experience.
What and why
Now that the “financial services industrial revolution” is over, leading edge systems are directing the customer interaction in the What and Why – achieving the specific intended outcome for that customer.
This does not rely on individual operators having to trawl through mountains of screens, windows and data to get to the necessary information. It analyses the customer position in real time and prompts the operator with suggestions as to the next best action for that specific customer interaction in that specific situation. It leaves the operator to concentrate on providing a great customer experience.
Technology can also help banks identify the best channels to contact customers and when is the best time, in order to provide targeted services and smooth on-going communication. When using an ATM, for example, customers can be given the option of requesting information about new offers and products. This information can then be sent to the consumer’s smartphone, ensuring quick, seamless and interactive updates on new possibilities.
In 2013, predictive analytics will play an even greater role in identifying the needs of financial services customers. These services can more intelligently leverage data to not only identify but also anticipate customer needs. Predicting the most appropriate services to offer customers based on their past interactions will enable product and service innovation, allowing organisations to maintain a competitive edge.
…and finally the how
In the “industrialised” world, the operator is presented with a multitude of windows onto different systems with cut and paste facilities (in secure contact centres there are no pens, paper or other means of recording customer information). The operator is there to interpret how the customer can achieve their outcome.
In the “mass customised” world, a customer’s unique profile can be recognised by their operator, who tailors the experience based on a number of criteria – for example, their lifetime value or most recent experience to offer them the best experience in getting to their required outcome.
Post-industrial banking systems can move banks towards a customer oriented architecture, using IT architectural techniques such as a shared service orientated architecture (SOA), which allows retail banks to once again treat the mass of their customers as individuals and achieve the outcomes the individual customer want, at a lower price.
The level of cross-channel customer service hasn’t happened yet – as anyone who has ever been left hanging on a telephone call to a contact centre or had to re-enter log-in details when transferring to a new channel can attest. But I believe that 2013 may start to see some moves in this direction as SOA becomes more widespread, analysis of ‘big data’ and unstructured information increases and banks realise that they need to up their game to retain 21st century customers.