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)”.


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”.

Surfing Omnichannel

The West has Thanksgiving, Christmas and the New Year weekends, but in India, the most hectic shopping season of the year kicks off right around Onam & Ganesh Utsav and continues well into the New Year.

Many years ago, when I worked in retail at Shoppers Stop, this festival period is what we in Marketing worked for. Organised Retail then was new & a lot of focus was around creating a powerful differentiated customer experience inside the stores. One Diwali at Shoppers Stop we recreated a shopping experience based on the theme of the 7 wonders of the world. Another time we brought in Indian artisans & created something called Parikrama.

Today the focus thanks to e commerce companies has changed almost entirely to “deals & discounts”. E commerce companies in India are currently burning cash at an average rate of 1.35X of the GMV sold, through heavy discounting. Goldman Sachs estimates that the e-tail industry will invest at least US$20bn of incremental cash infusion to sustain before it reaches a steady state in FY20. This is going to cause huge disruptions & will lead to dramatic changes in consumer behaviour.

Marketers in Brick & Mortar retail will have to prepare for this. India is at an inflection point of consumption moving online at a rapid pace as digital transformation commences. This should see the country emerge as the second-largest digital market in the world by 2020, based on connected smartphones. Goldman Sachs estimates that over the next 15 years, India will have more than one billion digital users. And yet online is going to take a while. The Indian Internet user base is just second to China but only 14 per cent of Internet users shop online in India compared to 30-35 per cent in Brazil and Russia, and 55 per cent in China. Also, the ticket size of online transactions in India is nearly 70 per cent, lower than any of the other three BRIC countries.

Yet most Brick & mortar retailers in India are still talking about a conservative 10% of their business coming from online in the coming years. But consumers are not waiting for this & unless traditional retailers move faster they will lose market share. The evolution of e tailing depends on two factors: the depth of the market (the number of online shoppers) & the breadth of the market(the categories of merchandise available for sale online)

This festival season, if you really want to beat Amazon, you need to do a few things: Allow your customers to purchase and have your products delivered anywhere they please. Transform your physical stores into interactive zones. And, meanwhile, learn as much about the people buying from you as possible. That overall approach can be encapsulated in one easy buzzword: “Omnichannelization”.

I wrote about this in Business Today at:  http://bit.ly/1TqPX5b

First it is critical to agree on what role the physical store will play in this. Over the next 6 months as brick & mortar retailers like Shoppers Stop, Landmark & Future group launch their omnichannel initiatives, they will need to put in place a huge bunch of technology middleware to enable this strategy.

OMNICHANNEL 3 resized 600

Source : Implement consulting group

According to the National Retail Federation: in 2013, 4% of customers selected BOPIS (Buy Online Pickup In Store), and in 2014, 64% of customers selected BOPIS.

omnichannel 2

Here’s what Brick & Mortar retailers need to do to beat Amazon:

  1. Make Customer experience inside their stores a very large focus area
  2. Seek customer information proactively-Cequity research shows that consumers don’t mind sharing information as long a marketers can show value for it. You can download the Cequity research here: http://bit.ly/1iiVvyv
  3. Introduce Click & collect. Get consumers to shop online but pick up offline. Shoppers who use click and collect don’t want to go inside stores. Consumers prefer convenient drive through services.
  4. Shoppers don’t want to go to the back of the store to pick up merchandise. Placing click-and-collect pickup in the back of the store doesn’t offer the convenience that customers want.
  5. Malls should focus on multi-retailer click and collect lockers. Millennials want malls to do the collecting for them and bring all of their purchases from multiple stores together to a locker or concentrated area according to Lee.
  6. Improve Self service within stores.Customers who use “self care” of any sort are great customers. They also leave a tonne of data behind as they also would tend to use credit cards for their transactions. Companies can use analytics to profile these customers and market better to them.