Make no mistake: Getting to know customers is a major undertaking for banks. It requires extensive analysis, development of consistent channels and constant encouragement to use lower cost channels like mobile and online.
No wonder banks have relied on guesswork for so long. But guesswork is expensive. By finding out who their customers are and then mapping that information to business objectives, banks can skip the speculation and create the personalized customer experiences that are the hallmark of online channels.
The first step is developing the underlying data techniques. Equally important is converting the data and newfound customer focus into business results. Data enables banks to map for multiple objectives, such as attrition and market penetration. It also allows bank of all sizes to benefit from micro-segmentation.
The strategy that your bank adopts to guide its digital evolution through 2020 and beyond depends on the data, analytics and direction it wants to pursue.
New channels require new ideas. Imagine presenting contextual offers to customers at their preferred point of consumption, for example. Or issuing merchant-funded, digitally redeemable offers to customers as they pay for purchases with mobile wallets or debit cards. Or using geolocation services to generate custom offers.
Fully digital channels also require a new value proposition: Banks and customers swap information more freely. Consumers' digital lives have changed the rules of banking: They expect personalized options—lots of them—and they want them now. In exchange, many are happy to reciprocate by divulging important personal details. According to one recent study, 70% of bank customers are willing to trade information about themselves for greater personalization or better service.1
That free exchange of data forms the heart of customer centricity and the future of digital channels. The more data that banks have on customers, the greater their opportunities to make use of Code Halos2 and deliver personalized products and offers.
Developing the Underlying Data Techniques
With mass marketing still in force at most banks, how can banks begin driving the customer journey through digital channels? Data techniques are key. Engaging customers means understanding who they are—or who you want them to be—by creating customer personas. Personas are detailed, multi-dimensional representations of your customers and prospects that illuminate their motivations and propensities. They are instrumental in shaping products and marketing strategies and determining customer needs and preferences.
While personas identify your customers' attributes, customer journey maps let you walk in their shoes. Journey maps are powerful visual tools that trace customers' steps as they travel through key banking activities, such as opening accounts, exploring additional products and services and resolving problems.
Journey maps provide the big picture. They deconstruct banking processes from the outside in: Instead of viewing customer experience from an organizational point of view, journey maps follow customers through channels, decision paths and, perhaps most importantly, emotions.
For many banks, journey maps are eye-openers. Having never traveled as customers through their organization, many institutions only guess at the routes consumers follow and they often find the reality is quite different from what they imagined. Barriers become apparent. Frustrations are noted. The customer journey is frequently revealed to be far less linear than organizations realized, requiring customers to switch channels for positive and negative reasons.
Convert Customer Focus to Business Results
How can banks convert customer journey maps to real business results? Because journey maps uncover many data points, they serve as a form of computer modeling to determine the likelihood of occurrences. Organizations can accurately predict customer behavior rather than operate on guesswork. The more variables tracked, the more accurate the predictions will be.
Banks can map for multiple objectives, including attrition, market penetration and channels of preference. For example, journey maps can quantify the likelihood that customers with specific attributes will buy new products or determine which customers are likely to be most receptive to fully embracing self-service channels (see Figure 1).
Micro-segmentation is an important outcome of journey mapping. It enables banks with sophisticated IT functions to tweak and personalize products and services right down to the level of individual customers. For example, a customer may prefer text-only communications, require preemptive notification of cyclical account activity and be interested in an auto loan.
But the strength of journey mapping is that it allows any bank to benefit from micro-segmentation, regardless of its technology capabilities. Small- and medium-sized banks, for example, can use journey maps to expand the number of segments they target from a handful to several dozen.
Encouraging the Right Channel for Each Customer
By better understanding the customer journey, banks can encourage more efficient channel use. They can empower consumers to take advantage of the channels that make the most sense for them, whether it's digital channel conveniences or hands-on attention that human-assisted channels provide.
For example, by determining the information that customers regularly request and then proactively providing it, banks can predict and preempt the use of human-assisted channels for the low-value interactions that mobile and online channels process much more fluidly.
Conversely, banks can offer mutually beneficial encouragement for use of human channels. By funneling customers with little digital propensity as well as those with high-value interactions (such as financial advice and complex sales) toward the costlier hands-on channels, they strengthen those relationships that genuinely require individual assistance and improve operational efficiency.
Five Steps to Becoming Customer-Centric
Moving toward micro-segmentation and arriving at personalization is an evolutionary journey. The customer-centric strategy your bank adopts to guide its evolution depends upon the data, analytics and direction it wants to pursue. Objectives might include increasing market share, penetrating new markets or lowering costs. Other goals might be reducing attrition, improving product take-up and increasing loyalty.
It is important to start small and show early success, gradually building your program and fine- tuning it based upon your findings and successes as you go.
Here are five steps your bank can take to begin creating insightful digital strategies and channels:
Evangelize the need for increased customer insight and the types of data and process-sharing it requires. Determine inherent organizational constraints to sharing customer data across lines of business. Examine siloed channel processes such as line-of-business-based call centers. Identify the changes that will work in your environment with the least initial disruption.
Determine potential sources of data from all channels. Prioritize the highest and lowest cost channels, as they will yield the most benefit from the least effort. Audit the data sources for availability and suitability. Assess data gaps and determine remediation. Create a data strategy that supports your objectives.
Assess the organizational changes that may be required. Reinventing your bank for greater customer focus can require organizational change to support the new objectives. Dismantling siloes is hard work, typically involving retraining and functional role modifications. How will your organization evolve in response? To ensure your bank is ready, follow best practices for organizational change management.
Review your existing technology against your short- and long-term objectives. Customer-centricity isn't just about reframing existing processes; it also involves reinventing customer-facing processes through the use of techniques such as customer journey mapping and new technologies. IT buy-in is essential. A key task is balancing short- and long-term goals. How will your organization build its infrastructure, platforms, applications and support to meet its objectives?
Examine must-have analytics capabilities and tools. Analytics is the cornerstone for achieving greater insight into customer propensity and preferences, as well as for correlating the data needed to achieve a suitable degree of digital segmentation.
Many of the standard technologies no longer do the job for banks when it comes to predictive analytics. Understanding the new options is a top priority. Be sure your organization has a plan for integrating the new functionality with its existing data sources.
While banks have lagged behind their retail industry counterparts in embracing digital—and retailers' successes have raised customers' expectations for online experiences—banks need to cater to the new digital reality as it continues to evolve and accelerate.
1 "Cisco Customer Experience Report," Cisco Systems, Inc., April 22, 2013,http://newsroom.cisco.com/release/1174098.
2 For more on Code Halos and innovation, read the book, "Code Halos: How the Digital Lives of People, Things and Organizations are Changing the Rules of Business," by Malcolm Frank, Paul Roehrig and Ben Pring, published by John Wiley & Sons, April 2014, http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118862074.html.
The author would like to acknowledge the Bank of Tomorrow …Today team for its invaluable contributions.
Code Halo™ is a pending trademark of Cognizant Technology Solutions.