Test or get Fired! Harrah’s casino’s amazing philosophy

Analytics needs a evangelist! Without such a person, you just don’t get the impact that Analytics actually is capable of providing! Mostly this evangelist needs to be right at the top, the CEO! I have worked with a range of industries & everywhere the degree of impact shoots up once you have a CXO who is evangelising this change.

Of course, some CMOs have led their organizations into embracing the practice, including John Costello, former exec VP-CMO of Home Depot; John Elkins, head of global brand and marketing at Visa International; and Cathy Lyons, CMO-exec VP at Hewlett-Packard.

One organization which has become a huge case study in the application of a “fact” based approach to business is Harrah’s Entertainment! Recently though it had a messy bankruptcy of its casino operating unit and reportedly faced fines of up to $20 million over money laundering allegations. The most valuable of the assets being fought over by creditors is the data collected over the last 17 years through the company’s Total Rewards loyalty program.

Back in 1998, as Harrah’s was about to embark on a wave of expansion, their CEO Philip Satre asked Gary Loveman to take a break from Harvard to become chief operating officer of Harrah’s Entertainment. The important thing was the he was not brought in as a CMO but as the COO-he had the line authority to make changes that would impact the business!!

“In terms of income, it was actually a pay cut,” Loveman says, since he had to forego the consulting that supplemented his income as a professor.

He went on to develop the gaming industry’s most successful loyalty and analytics program—Total Rewards—which boasts more than 40 million members.

In an interesting article, Karl Taro Greenfeld says this about Gary Loveman, who has since then also become the CEO: the chief executive officer of Harrah’s Entertainment Inc., the largest gaming corporation in the world, sees his customers as a set of probabilities wrapped in human flesh.

Since taking over as CEO in 2003, Loveman, 50, has relied on the numbers to build Harrah’s from a regional operator of 15 casinos to one with 39 in the U.S. and 13 more overseas.

His first big move as COO was to start a loyalty program called Total Rewards, which became such a success — growing to over 40 million members by 2010, the largest database of probabilities in the industry — that by the time Satre stepped down in 2003, Loveman had become the logical choice to succeed him.

Loveman earned a Ph.D. in economics at MIT and went on to become CEO, president, and chairman of Caesars Entertainment, owner of Harrah’s casinos and other resorts worldwide.

Loveman says there are three ways to get fired from the hotel and casino company: theft, sexual harassment, and running an experiment without a control group.

But this seems like common sense, run experiments , see what works & scale up! And yet very few companies do it.

Dan Ariely, a behavioral economics professor at Duke University and the author of Predictably Irrational, outlined some of the resistance to experimentation that he’s come up against.

“I’ve often tried to help companies do experiments, and usually I fail spectacularly,” Ariely writes. For a company struggling with getting a good bonus system in place, he suggested experiments or even just a survey. Management, he says, “didn’t want to add to the trouble by messing with people’s bonuses merely for the sake of learning. But the employees are already unhappy, I thought, and the experiments would have provided evidence for how to make them less so in the years to come.”

But Gary Loveman managed to stay incredibly committed to Testing. These tests run from the use of coupons to offers of free meals or hotel stays, all designed to get customers to spend more money during their playtime.

This is what he said when asked about the Testing culture: “We need to overcome hunch and intuition with empirical evidence. . . . We can start with a hunch or strong belief, but we act on it through experiment. We want evidence. We’ve gone from the introduction of experimentation as a technique to a culture of experimentation as a business discipline. We hire people predisposed to do this by temperament and by background. Organizationally, we’re committed—and I’m committed—to making sure we have the discipline to have the decisions we make informed by this evidence”.

So what is the future for analytics in Gambling? Over time with data being leveraged by everyone, it was only natural for analytics to also start helping the players. Big data services quickly appeared that were designed to empower gamblers, giving them more information and helping them strategize more effectively. One such site that made full use of big data is SharkScope, which collects data from millions of online poker games every day. Players can track all their statistics on the site as a way to improve and increase their chances of winning.

And lastly we must also ask ourselves, is this kind of Analytics good for society! It’s estimated that 3 to 5 percent of people who gamble develop an addiction to the activity, which can lead to an array of problems for gamblers, their families, and society at large. Keeping gamblers coming back may hurt them & cause a lot of turmoil in many lives! Does analytics not have a social responsibility!

Your Bank can be Amazon & Google!

Roughly one in three banking and insurance customers globally would consider switching their accounts to Google, Amazon, or Facebook ,if the tech giants offered financial services, according to a new survey.

Google , Amazon & Facebook have been setting standards for degree of personalisation & powerful customer experience.

Newspapers are getting disrupted by online resources. These same web destinations are becoming less relevant as people simply lift and filter the information they want using RSS feeds. The music CD is being unbundled as customers buy individual tracks online Power has shifted to customers: it’s no longer about the products that marketers want to sell but about the content components that users want to consume & mash up together.

The new battlefield lies in the control of the user interface and the customer intelligence system that supports it. Companies that build highly equipped Customer intelligence units will win in the coming days.

The internet is disrupting retail & I am sure Retail banking is also waiting to be disrupted. According to Capgemini’s 2014 World Retail Banking Report (WRBR), less than 40% of customers globally reported positive customer experiences with their financial institution. But banks still push products on their own terms. Take a term deposit for 3 or 6 months? Well, why can’t I have it due on April 28th, which happens to be my birthday?

Google has launched its own mortgage calculator, and imagine what an Amazon Bank could look like, but who are the startups disrupting banking today? Mostly these are the Fintech companies! New age companies are very good at embedding design & personalisation into the fabric of their business.

The other thing, which the new-age companies do very well, is the notion of ‘profitable data sharing’. They do not hesitate to share data across partners to ensure their customers get a kickass solution. They share data through APIs. There are over 14,441 APIs offered by firms today, according to programmableweb.com.

Amit the Co-Founder & Chief Curator of Let’s Talk Payments had this interesting statement:  “As FinTech startups continue to disrupt traditional financial services, banks are also waking up to the fact that offering an open API—where developers can latch on and create very specific customized app solutions—is the way to engage and retain their customers in the future”.

Adaptive Path, a design and user experience consultancy has been acquired by Capitol One. And just before that Daniel Makoski, founder of Google’s modular Project Ara phone project joined Capital One.

In the new digital world, banking & creativity may not be oxymorons!

New banks in India have a unique opportunity to embed “digital” in the fabric of how they do business. But banks are complex with structures that don’t allow for speed. In many cases, eBusiness teams own the mobile banking strategy, but few eBusiness teams have an exclusive mandate over their firm’s mobile banking initiatives. This division of responsibility creates silos and adds significant complexity to the coordination and optimization of Digital efforts.

What does design have to do with finance, money and banking?

Brands that use design very effectively are far easier to spot nowadays because we interact so much with fast growing digital businesses, Ola, Amazon etc. Consumers, especially Millennials, are learning to expect more from the companies they choose to do business with. And they are not limiting their benchmarks within one industry-I want my Netbanking to be as easy as the Uber interface!

‘Project Pokhran’, as Paytm calls its payments bank project is due for launch the summer of 2017 & they may begin to look at banking very differently.

New banks in India ,IDFC & Bandhan, better be listening.

A few years ago Adaptive Path, a design and user experience consultancy was acquired by Capitol One. And just before that Daniel Makoski, founder of Google’s modular Project Ara phone project joined Capital One.

Then Capital one acquired Money management App, Level Money. The app is focused on the Millenials & helps users set savings goals & offers suggestions for what they can do with their extra cash.

Capital One recently launched what is called as Capital one Labs. This is what they call the “rogue innovation arm” of the bank. Lab members have opened a series of “Capital One 360 Cafes”, a hybrid of a coffee shop & a bank branch. Here employees interview café customers to get real time feedback on new prototypes.

In the new digital world, banking & creativity may not be oxymorons!

Some time back I came across this Job requiremnet at Capital one:

Design Strategist

As a strategic thinker with a focus on innovation for our banking business, you will have the opportunity to define, design, and develop new products and services that defy industry expectations and meet real human needs.

At Capital One, we’re building a leading information-based technology company. Still founder-­led by Chairman and Chief Executive Officer Richard Fairbank, Capital One is on a mission to help our customers succeed by bringing ingenuity, simplicity, and humanity to banking. We measure our efforts by the success our customers enjoy and the advocacy they exhibit. We are succeeding because they are
 succeeding.

New banks in India have a unique opportunity to embed “digital” in the fabric of how they do business. Maybe some of them will come up with teams that include a “Design strategist”.

But banks are complex with structures that don’t allow for speed. In many cases, eBusiness teams own the mobile banking strategy, but few eBusiness teams have an exclusive mandate over their firm’s mobile banking initiatives. This division of responsibility creates silos and adds significant complexity to the coordination and optimization of Digital efforts.

And yet, the user experience is the key for more consumers to adopt the bank’s digital channels.

As the infrastructure of digital technology — the chips, network connections, computing — becomes ever cheaper, they’re becoming commodities, and the value of tech products is shifting to the design and the user experience. But the real value starts to flow when companies orchestrate the User experience with Personalisation.

Personalization, it seems, is really about gathering exactly the data that’s needed in order to perform a particular task. Think about how Amazon asks users whether purchases were for themselves or as gifts, or how streaming services like Netflix and Pandora ask users to rate content. But personalization is a complex process involving multiple components:

Some areas to ponder about:

  • What do you think about the internet & mobile disrupting banks? Which areas can the banks defend and which are vulnerable to disruption?
  • What do banks need to do to modernise their architectures to compete against the new wave of startups? Will they offer API’s to other brands?
  • What is the new age Customer intelligence unit that can be the nerve centre for competing in this landscape? How do they capture unique customer data & create a competitive differentiator by mapping the Customer DNA ?
  • How will banks completely transform their digital experience? Or would the new Fintech innovators show the banks the way?

It would be interesting to see how the new Indian banks & the existing players shape up to this new reality.

Customer journeys are not good enough, we need Customer context!

It’s a rainy day in Mumbai & my daughter is furiously multitasking to find fashionable rain coats. She is looking at customer reviews & social networking sites & is on Flipkart & Amazon too! All of them know she is from Mumbai, in some cases they have profile information from her registration data but none of them suggested she buy other stuff that she may need in the rains: Boots, umbrella!! Marketers need to understand the context in which consumers are & today there is enough data to give you insight on this. Retailers like Flipkart could have further used marketing campaigns across email, sms, in app, browser push to tell her more about expected weather in Mumbai over next 3 days & also providing her recommended brands to buy.

Consumers reach out to brands in many ways. India has 1.03 mobile connections & over 350 million internet users. Consumers connect with brands for a wide variety of reasons. Consumers want more information, improved service & better deals. And technology is making it easier for consumers to connect with brands. By 2020, the average person will have more conversations with bots than with their spouse, so says Gartner. They also say that “New audio-centric technologies, such as Apple’s AirPods, Google Home and Amazon’s Echo, are turning “voice first” interactions into ubiquitous experiences. By eliminating the need to use your hands and eyes for browsing, vocal interactions extend the web experience to multiple activities such as driving, cooking, waking, socializing, exercising, operating machinery.

context marketing

Today’s omnichannel customers will end up using the retailer’s touchpoints, in all permutations & combinations. Not only will they use smartphone apps to compare prices or download a coupon, but they will also be users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. Consumers will buy online and pick-up in store, or buy in the store and get their purchases shipped. Some research done by HBR has shown that customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.

Always connected customers can’t be pigeonholed into linear journeys. These consumers automatically turn to their phones in search of information, whether they’re at the gym, commuting to work, or shopping for groceries. Google refers to these spontaneous instances of discovery as micro-moments.

But even while consumers are finding increasing number of ways of reaching brands, companies struggle to provide them a seamless experience as they use these myriad channels.

This is further complicated by the emergence of communication channels that rely on proprietary standards — like Apple’s iAd, Android’s open architecture, and Facebook’s platform.

Each channel tends to be used by it’s distinct customer segments-like customers in the older demographics who are using i pads or multi device using millennials & so messages need to be customised to appropriate customer journeys.

Banking customers often struggle to engage seamlessly with banks. Citibank saw that an important concern of customers was to stop any charges on their card after it was lost or stolen, the company introduced Citi Quick Lock that allows users to quickly lock their card from a mobile app while they look for it.

None of this can happen unless companies start to change structure & processes keeping the customer at the heart of the thinking.Overseeing all of a firm’s interactions with customers is someone in the role of chief experience officer, a relatively new position in the C-suite. Chief digital officers are also starting to have this top-level responsibility. Marketers need a structure within their teams that brings the customer journey up front & centre & connects it with context!

As all of your products and services generate more and more data, the resulting context gives you the opportunity to disrupt your competitors. Also today consumers are allowing marketers to know their location. Since 2014, the number of Internet searches using a “find the nearest” term has doubled. Customers are also beginning to see the value of revealing their location in physical environments. The number of connected devices is growing by 15% to 20% per annum and will reach approximately 30 billion in 2020.Many devices, such as mobile phones, cars, and wearables, constantly monitor their user’s location, so the volume of inbound, spatially related data has never been greater. So the ability to further drive relevance by using location context is becoming real! Marketer’s need to be conscious to not overdo this & risk looking “creepy” to consumers!

McCormick developed FlavorPrint, an algorithm representing the company’s flavors as a vector of 50 data points. FlavorPrint helps consumers decode the flavors they already love, and invites them to discover, share and bring new flavors into their homes. FlavorPrint site has a simple promise: Tell it what you like, what ingredients you have, and what cooking equipment you have, and it recommends recipes. Those recommendations become finely tuned to your context as you continue to interact with the site. McCormick’s now partners with retailers and food suppliers, as well as social media networks and third-party services like Foodily, to create more relevant customer experiences.

Over the next few years or so, we’re likely to see a radical integration of the consumer experience across physical and virtual environments. Mckinsey research says that by 2016, the web will influence more than half of all retail transactions, representing a potential sales opportunity of almost $2 trillion. All this will drive marketers towards using “consumer context” in all of their marketing engagements. Many industries have a large opportunity in looking to align their Marketing with the context in which consumers discover, buy & experience their products & services.

Forrester calls this Context based marketing:

“For all the activity you try to catalyze through campaigns, individuals more commonly interact with your brand outside of those campaigns. They may learn about your product or service prior to purchase. Then they’ll use your product, connect with others, and even organize activities around it. They spread word of mouth, positive or negative — and that, whether you
like or not, is your actual brand image.The context of all those interactions determines whether they will engage and, more importantly, transact with your brand again. Marketing’s job now is to identify and use context to create a repeatable cycle of interactions, drive deeper engagement, and learn more about the customer in the process. The more marketers can internalize and act upon what they learn, the easier it is to make future interactions that much more engaging”.

Many businesses will create data led marketing advantage as they build competency in storing , interpreting & taking action on these vast terabytes of context data. Contextual marketing will yield a new form of “owned data” that is generated from the interaction cycle. Smartphone owners pick up or glance at their mobile phones 150 to 200 times each day, spending on average over two hours a day accessing apps and websites. This leaves a huge data trail behind as well.To get the full customer portrait rather than just a series of snapshots, companies need a central data mart that combines all the contacts a customer has with a brand: basic consumer data plus information about transactions, browsing history, and customer-service interactions.

But to do this CMO’s will have to take charge & demand a level of technology hitherto not seen in the Marketing department.And yes, 2017 is the year when Gartner predicted that CMO’s will spend more on IT , than CIO’s!!

How banks are missing the “millenials” mark?

“Banking is essential, banks are not,” Bill Gates, then CEO of Microsoft, famously said in 1994.Mobile phones, however, are essential. And many of us today are doing a majority of our banking transactions on the mobile.

Forrester had this interesting thought –“The moments that characterize the mobile mind shift are getting shorter. Simple triggers — messages, sounds, even tactile sensations — spur consumers to take action, both on devices and in the real world”. Forrester defines this quick-reaction subset of mobile moments as micro moments.

Millennials are digital natives — the first generation to have grown up with Internet-enabled devices and digital technologies — and they expect real time engagement with brands.

millenials 1

According to a study by Viacom Media, banking, as an industry, runs the highest risk for disruption. 53% of the Millennials they surveyed said they didn’t think their bank offered anything different than a competing bank. 71% said they would rather visit the dentist than hear what banks have to say. 73% would rather handle their financial services needs with Google, Amazon, Apple, PayPal or Square than from their own national bank.

India has a strikingly young population, especially compared to China. It has 440mn Millennials, larger than China (415mn).

So what must banks do to engage better with the Millennials :

  1. “To service is to sell” will be the new philosophy

Banks will leverage the rich customer data to “service first” , rather than sell. Sales will happen because banks anticipate service moments that lead to a sale. This will need appropriate technology investments for banks to sense “customer moments” in real time & respond to them. Millennials will demand that. Customer service may completely morph with Marketing into a Customer Experience function. More importantly banks will need to control their “push selling” paradigm. Regulators may help by mandating an end to “mis- selling” …but that may not happen anytime soon. More progressive banks will regulate themselves & move to this new philosophy! Banks have huge data that signifies a “service need moment”-eg providing an NOC to an auto loan customer without any follow up. Also picking up a credit card airline transaction & converting that to a bunch of “partner privileges & offers for that country”.

Again research shows that “marketers will build their own contextual marketing engines to connect with customers not through campaigns, but through ongoing interactions. To do so, they will have to combine systems of insight and systems of engagement”. So the mass & blast campaign management will change & instead much more relevant service based messaging will engage customers.

2. Become “Gurus”
Financial marketers have a clear opportunity to become financial gurus to Millennials. This generation is hungry for knowledge, is ready to learn digitally, and would prefer simple, easy to understand content to make better decisions about their lives. But this content has to be created to connect to Millennials.
Bank of America’s initiative “Better Money habits” launched in collaboration with the non-profit Khan Academy is one of the examples of interactive education resources targeted at the Millennials.      http://bit.ly/1xce4Uv

3.Think ‘Outside the Bank’

 Millennials are the experiential generation. They focus on today’s needs and take on debt for vacations or education. Research from Facebook IQ has shown that Millennials tend to show off not through the ownership of things but through experiences. How can financial marketers leverage this knowledge to bring an “experience edge” to their marketing. American Express provides its members with live streaming concerts on its unstaged website, and Chase treats some of its Sapphire cardholders with VIP access to music shows who can then share their experiences via social media.

http://bit.ly/1KPmY0N

None of this is new & brands should find more exciting partnerships – with writers, photographers, Theatre artists, social sector leaders, and other influencers. Research shows that “Such collaborations could result in storytelling initiatives with advice on different experiential topics in connection with financial matters behind them. Communications should be built not so much around a transaction, but rather all the exciting things you can do with it”.

4. Tear down the silos

Define, and start executing an overall payment strategy. Not only is responsibility for payments split between retail and business banking teams, but even credit cards and debit cards are often run by separate teams. Marketing tends to be a central team but may not have as much authority across silos to own a consistent communication paradigm.

5. Embed analytics into Mobile banking: 

Help customers see an accurate forecast for their spending. DBS digibank leads in the Indian market with its budgeting and spending tool. This allows customers to manually categorize transactions and autopopulate transactions like bill payments; they can also choose to receive email alerts when they hit 70% to 90% of their budget. DBS digibank also provides a basic saving tool to enable customers to assess their spending and save money. In terms of advice and planning, ICICI Bank offers customers a few useful tools, such as calculators for mortgage payments, investments, and pensions.

Mobile banking offers the opportunity to cross-sell to existing customers and to promote additional services. “Yet few banks use the context of a customer’s current product portfolio,recent life events, location,past behavior,and other factors to offer personalized marketing in their mobile apps”.

Banks & the new Amazon bank!

Newspapers are getting disrupted by online resources. These same web destinations are becoming less relevant as people simply lift and filter the information they want using RSS feeds. The music CD is being unbundled as customers buy individual tracks online.

Power has shifted to customers: it’s no longer about the products that marketers want to sell but about the content components that users want to consume & mash up together.

The new battlefield lies in the control of the user interface and the customer intelligence system that supports it. Companies that build highly equipped Customer intelligence units will win in the coming days.

The internet is disrupting retail & I am sure Retail banking is also waiting to be disrupted. According to Capgemini’s 2014 World Retail Banking Report, less than 40% of customers globally reported positive customer experiences with their financial institution. But banks still push products on their own terms. Take a term deposit for at least 6 months? Well, why can’t I have it due on April 24th, which happens to be my birthday?

Google is launching its own mortgage calculator, and imagine what an Amazon Bank would look like,wish they launch soon!

But who are the startups disrupting banking today?

Check out the infographic below from CBInsights to learn more about the startups that are disrupting every part of bank business models:

Unbundling of a bank V2 530x471 resized 600

Rajesh Kandaswamy of Gartner has this interesting take:

The checking account solves many of the needs of customers in personal finance –to keep money safe, to be able to pay others, and the need for a place to receive money on their behalf. It bundles a few things – a uniquely identifiable account, check writing, ATM privileges, interest payment (very less nowadays) and wire transfer to name a few. Product bundling made sense for these services as it makes it easier for the consumer, while offering economies of both scale & scope to the bank. Moreover, the marginal cost of bundling is low.

Now, internet and mobile make new services possible for some of these needs, either in isolation or bundling with others. For instance, the T-Mobile’s service offers an account, debit card, bill payment and a few other features, but it does not offer check writing privileges. Square Cash is a service only to send money to others. Internet and mobile make it easy to reach a larger market, while it reduces fixed costs need for costly branches. Such technologies are available for banks as well, but as incumbents, they have to worry about cannibalization.

So a lot of the banking disruption will really be about how banks adopt Digital & simplify processes for customers.In fact,in the new digital world, banking & creativity may not be oxymorons!Adaptive Path, a design and user experience consultancy has been acquired by Capitol One. And just before that Daniel Makoski, founder of Google’s modular Project Ara phone project joined Capital One.

New banks in India have a unique opportunity to embed “digital” in the fabric of how they do business. But banks are complex with structures that don’t allow for speed. In many cases, eBusiness teams own the mobile banking strategy, but few eBusiness teams have an exclusive mandate over their firm’s mobile banking initiatives. This division of responsibility creates silos and adds significant complexity to the coordination and optimization of Digital efforts.

As the infrastructure of digital technology — the chips, network connections, computing — becomes ever cheaper, they’re becoming commodities, and the value of tech products is shifting to the design and the user experience. But the real value starts to flow when companies orchestrate the User experience with Personalisation.

Personalization, it seems, is really about gathering exactly the data that’s needed in order to perform a particular task. Think about how Amazon asks users whether purchases were for themselves or as gifts, or how streaming services like Netflix and Pandora ask users to rate content. But personalization is a complex process involving multiple components & it takes a lot of effort to get it right.

Some areas to ponder about:

  • What do you think about the internet & mobile disrupting banks? Which areas can the banks defend and which are vulnerable to disruption?
  • What do banks need to do to modernise their architectures to compete against the new wave of startups?
  • What is the new age Customer intelligence unit that can be the nerve centre for competing in this landscape? How do they capture unique customer data & create a competitive differentiator by mapping the Customer DNA & building Digital analytics capability.
  • How will banks completely transform their digital experience? “Mobile apps will go beyond banking … and banks will offer different flavors,” says Jeanne Capachin, principal of Capachin Research. “For example, an app for people buying a home will have home prices, mortgage rates, and advise from specialists. It’s all about selling mortgages, but selling with an experience that offers advisory services – not just low rates.”

Unloved, undifferentiated & intrusive-is that a Bank?

Unloved, undifferentiated, and incapable of innovation — that’s what today’s  digitally savvy users, primarily including high-school students, entry-level  workers, and thirty-something professionals, believe about the banking industry says a recent survey of Millenials.

But often a bank’s marketing only reinforces this image. Pushing hundreds of irrelevant communications to customers despite having data about them frustrates customers.

And now consumers are begining to have choices.Nonbank solutions for financial services are not just imminent — they’re already here. Today’s digitally savvy retail banking customers are rapidly turning to Geezeo, Personal Capital, LearnVest, and others for personal financial management solutions. And they’re looking forward to other technology giants entering the market such as PayPal, Apple, Amazon, Facebook, and Google. Most of these new entrants are far more marketing savvy & have disrupted other industries by bringing the customer into the boardroom.

And yet, Banks often think of Customer centricity as a “fluffy” topic. Most bankers are hard wired left brain types & the retail banking business is such that customers are often prisoners & cannot leave very easily. According to Capgemini’s 2014 World Retail Banking Report (WRBR), less than 40% of customers globally reported positive customer experiences with their financial institution.

And yet there are contradictions: banks are probably amongst the few businesses that have an “extreme level of data” about customers. Banks know when you move your house, when you get that bonus & they even know when you are eating out at a restaurant or travelling internationally for the first time. Banking also was amongst the early adopters of analytics & so has the institutional capacity to understand customers better. And Banks have invested in huge amount of technology that can enable customer centricity. And yet Technology is transforming the way digitally savvy customers think about and manage their finances. And this is where banks may not be moving fast enough.

Banking tops the list of industries at risk of disintermediation by digitally savvy customers including millennials. And banks seem secure in the belief that this business is very hard to dislodge & too regulated to disrupt. Key findings from the Millennial Disruption Index (MDI), a three-year study of industry disruption at the hands of teens to thirty somethings (Millennials) found that 71% of Millenials would welcome a new bank from Amazon, Google, Square, Apple or Paypal.

I had written about the unbundling of banks earlier.

digital banks

In India, there seems to be a mad race by private sector banks to show Digital superiority. A lot of Apps are being launched. But at its core, the issue of being Customer centric still eludes many banks. Banks need to be committed to having an innate knowledge of their customer and using that knowledge for the customer’s benefit. Today most analytics teams in banks spend most of their effort in doing analytics that will benefit the bank: reduce risk, increase cross sell & reduce cost.

Chris Skinner, Chairman of the Financial Services Club and author of the book, Digital Bank, said, “A digital bank is a bank built with a vision to reach out to customers through digital augmentation. It is built specifically to offer the customer the service of their choice through the access of their choice.”

And yet banks do an extraordinary amount of push based marketing-pushing messages to customers which may not be relevant through emails, sms & calls. Banks set up campaign management teams that mine data & use marketing technology to automate campaigns for customers. But sometimes we need to be cautious about technology & automation. Our campaigns are not customer centric; they intrude & do not provide relevant information. In such a case, automating & increasing the volume of this campaign is pointless. You are only automating a more intrusive form of marketing, that doesnt work.

Often there is this belief that complex analytics is required to become more Customer centric by providing appropriate offers.But you don’t need too much fancy analytics to become more customer centric. There is so much data that exists with a bank that you can create hundreds of examples of campaigns that connect to customers.

I saw this wonderful example from Jim Bruene at Finovate:

“Card reissues after a data breach, or lost/stolen situation, are annoying for cardholders. But it’s even worse for the issuer who has to pay for a new card, hound the customer to activate it, handle customer service calls, and then risk losing recurring revenues from now-broken automated pre-authorized charges.

So kudos to Capital One for taking an important step in solving this problem.

Earlier this week I received a new card and number from Capital One, presumably because my card had been involved in a breach. I am not aware of any unauthorized attempts to use it.

In a followup email this morning, the giant issuer reminded me to activate the new card. That’s a fairly typical technique these days. But the help didn’t end there. The bank provided a list of likely merchants where I may need to update card info to avoid the charge being denied (see screenshot below)”.

http://bit.ly/1eOZroI

Simple communication like this can diffrentiate a bank & make it more relevant to consumers.

Here is what I believe banks need to think about:

  1. Treat customer communication with the same intensity that FMCG companies treat their advertising.
  2. Look at their data to “help customers”. Banks have rich information & everyone should be thinking about simple ways to connect with customers. Most times banks engage with customers only to cross or upsell. Bankers may want to think of a paradigm where sales begins to happen because you connect with customers at relevant moments with personalised communication like the example above.
  3. Set up a Customer Intelligence unit-use them to derive insight “about customers for customers”.
  4. Use that insight to create engagement programs with customers which help them lead their daily life.
  5. Cross sell will happen as an outcome.
  6. We believe that Marketing will move towards relevancy:
    • “Marketing that is done so well that it feels like a service”
    • “Marketing as a relationship”
  7. At Cequity we call this philosophy-“To service is to Sell”.