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In my previous post, 4 Essentials of a Stellar Customer Experience for Banks, I elaborated on how customer experience is the fulcrum around which digital transformation has to happen. Multiple product improvements augmented with myriad channels present a unique challenge for banks – what to invest in and how to cut through the chaos to ensure maximum returns. In this blog, we will look at the three key considerations that will help banks create a robust roadmap for customer experiences over the next few years, through product and channel innovation.

Fundamentally, at the very core of this conundrum is a balance across three basic needs (both from an end user and bank perspective):

  • Maximize the perceived value of a product / service offered to customers, while making it available across carefully chosen channels.
  • Real time transaction. The transaction/ service should be in real time or as close to real time as possible
  • Additional revenue generation. FIs should be able to collect as much revenue as possible for offering/ consumption of the service – making it available for a large segment of customers could be an option here

Let’s now look at some use cases to meet those needs by leveraging product and channel innovation:

  1. Maximize the value being delivered through a product / Minimize the transaction cost for customer

    Very simply put – there are two ways that an institution can play the cost game. Either reduce the cost of the service, or increase the value being delivered and the customer is willing to pay a little more for the extra service offering. Cost reduction can be achieved through economies of scale – make more customers use the service or improve operational efficiencies. However, with Fintech disrupters upping the ante, it makes more sense to go with the second strategy – create and offer a niche service, or even better make the product contextual and personalized – seemingly made to order. It’s not as hard as it sounds, more so with so much of data available about customer preferences. Some use cases that might spark the next round of banking innovations:

    1. Identify individuals in the proximity of the branch using beacons/ facial recognition software/ proximity sensors and display contextual information on customers’ smartphones

      Make the time spent with an individual customer relevant and meaningful, while providing “in the moment” service

    2. Share specific information about customer preferences with the bank manager to facilitate personalized interactions – using analytics or data mined from existing systems

      The outcome might be a negotiated rate per service consumption that might be less than the standard service cost

  2. Create the service as close to real time as possible

    Leo Tolstoy famously said “The two most powerful warriors are patience and time”. While this might still be true in corporate boardrooms, from the standpoint of a financial partner neither is expected. The corporate world works seamlessly 24/7/365 across time zones and borders now. FIs are looking at shortening the decision making process for product acceptance by making them available faster and in real time. This leads to quicker conversion and reduced risk of uncertainty of service / product rejection or replacement.

    How about an idea that makes the home buying process more engaging (this is probably one of the long drawn decision making processes in the customer life cycle)

    1. Most of us make do with pictures of homes in the initial phase of home-buying. What if the FI is able to provide 3D-augmented images of homes to customers?

      Images where customers can get a view out of the window, picture themselves on the living room couch – this goes a long way in helping customers make the home-buying decision.

    2. Use “voice-first” interactions for certain services that currently need the user to key-in instructions – authorize voice-based payments
  3. Shore-up revenue for banks

    This is the icing on the cake. Opening up additional revenue streams while delighting the customer with impeccable service offerings. The good news is that there is a bunch of useful and proven technologies now that can help realize 1 and 2 above with ease. Some examples that might provoke a discussion:

    1. For example, applications based on Blockchain technology, have the potential to free up cash, speed up transactions while reducing the overall transaction costs. It has the potential to be implemented across the banking landscape – from loan origination, Know Your Customer (KYC) checks, loan appraisal, vetting of documents submitted to routine transactions using smart contracts. Blockchain also find applicability in use cases around Identity Management, Cross-border Micropayments, Land Titles, Digital Rights Management (DRM), Lending, Private Securities Market, Exchanges and Central Counterparty Clearinghouses, Shareholder/Proxy Voting, Contracts in Trade Finance and B2B Payments
    2. Leveraging UX bots and machine learning for effective customer engagement, leading to reduction in manual effort needed for maintenance and servicing of customer relationship. Intelligent bots that not only respond to standard account maintenance queries, but also include embedded links to partner sites, for e.g., providing indices URL for a customer interested in security investments in the chat window itself
    3. Gamification of financial decisions – banks can consider augmented reality games like PokemonGo and offer discounts on health insurance/ fitness clubs to customers if they walk 30 minutes a day. Similar use cases might have applicability for retirement planning/ wealth management.
Banking Use Cases for Product and Channel Innovation leading to Improved Customer Experience

This is how a combination of strategy and technology can help the FI continuously innovate its product and channel portfolio.

In my next blog, we will look at the BaaP of all things Digital – Bank as a Platform


About the Author

Amit Mishra
Director, BFSI Consulting

Amit is a domain consultant for the BFSI vertical in Mindtree. His hands on experience as a corporate banker and engagement in diverse assignments for banks of varying sizes, across geographies helps him build a unique perspective while thinking through ideas for solving business challenges.

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