Low cost and personal


Low cost and personal

Australian banking

Deloitte partner Maickel Sweekhorst explores how by working together the CIO and the CFO can take the box seat to fix the vexed question of trust and ‘stickiness’.

If you step back and look at the financial services industry globally, customer trust is still declining, margin pressure increasing, and banking is being commoditised. Sentiment continues to troubled when it comes to investment.

Australia is a bit better positioned than the rest of the world, supported by our stronger economy, higher customer satisfaction rates, and fewer reputational issues. Nevertheless, it is the best of times and the worst of times, and there has never been a more opportune time than now for the CIO to shape business performance and competitive positioning.

Taking the reins of ‘the fragile’ – the personal – and combing it with the agile – ‘technology’ – to deliver a low cost, high touch solution in a highly regulated, demanding market, is the answer.

The question is how? What are the options for the CIO after rationalising the technology space and executing the strategic sourcing agenda?

The fragile

It’s only a decade ago that the banks had a personal relationship with the customer who entered their branch offices on a regular basis. And when something happened in the industry, there was always a friendly face at the counter to serve their needs and offer reassurance or a solution.

Today the headlines around greedy senior executives, the Eurozone struggle and occasional stability issues in the transaction space, triggers the: “Is my money safe?” doubt. The friendly face has been replaced by a touch screen and therefore doesn’t have the same reach when it comes to influencing personal emotion positively.

If you add the increases in the costs of lending, competitive discounting, additional costs to comply with new regulations – personalising the technology agenda has to be about making the right moves.

Data, digital and design

The answer is, to apply the insights data can provide in a consistent way to the front-line. Digital does not have to be impersonal. With the front-line more and more a touch screen (with a voice interface), it requires design thinking – putting the customer at the centre of the equation – rather than just pushing the cross-sell agenda. Reinvest in the customer’s needs and preferences, be he or she a retail or business customer.

Australians have a long culture of preferring to build on what works and what was successful. The teller in the past knew me. He/ she knew my job, credibility, standard transactions, family and personal circumstances as well as my hobbies, travel preferences, risk appetite and buying behaviour.

The same amount of information is available today, either as part of the bank’s core data or through external warehouses. Without breaching any privacy laws, different sources of data can be matched in a way that connects the bank back to the individual.

Push vs. pull

Most banks have progressed their cross-sell capability, the push perspective. But to reactivate the ‘personal’, it is important to focus on the pull, re- creating loyalty back to their brand. In the conversation with the teller the customer was put at the centre. The concepts of “people like you”, personalised cards, smart ATMs and a mortgage within 30 minutes are strong examples.

By adding the option to have a five minute video call for instance with his or her advisor – a pull notification to optimise the customer’s financial benefits – or offering a discounted ticket to his or her favourite footy game, event or concert – can open the door to journeying back to ‘stickiness’.

Personally I have yet to receive pro-active advice from any bank, which means I compare the options in the market myself and best deposit options available and figure out my preferred term. Would my loyalty increase if my bank suggested how I might generate more interest by re-balancing my savings with deposits and/or other options?

 would if the advice were in my best interest, and I would feel even more connected if that advice was confirmed by a five minute video call from the same person who helped me last time. This will also influence my response to the push sales and cross sales initiatives.

The perceived constraints

You can argue that initiatives like personalised video conferencing will further dilute the bank’s margin, adding cost to an already squeezed business. But without travel and preparation time, due to smart data – the technology can cut costs and add value.

Margin pressures, competition and demanding customers are all transforming the CFO for instance into a business partner to the business units, to enable them to make better decisions on who to target and how – where to play and the way to do that best. What this means is that after rationalising the general ledger, optimising the reporting processes and instituting a business process optimisation push, the focus is now on simplifying the data landscape and bringing performance insights to the executives so they can genuinely bring customer profitability to the front.

The new landscape

The new tools like a management ledger enable the CFO to take an advisory role on the levers that are influencing the return on equity, give guidance on product rationalisation, and leverage best practices on comparable products and regional investments. The CFO and CIO can work closely to bring their resources The answer is to be smart in the data landscape.

An effort to create a common language, define master data management and governance, and implement ‘straight through processing’ of data is an essential approach. We have seen good progress made by some Canadian and North American banks in creating a management ledger on top of the landing and staging area of the data, to provide management dashboards and multi-dimensional views and alerts.

Leveraging this information gives the bank the agility to be able to bring the friendly face back to the bank/customer interface and rationalise the business with new management instruments.

This article was first published in Australian Banking & Finance.

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