Expert opinions, FINANCE, FORECASTS

Classic banking is doomed

By Yuri Goltser – CRM practice CTO at Navicon IT company

Personalization of financial services is a major trend in the market. Oracle has assessed that due to customer experience personalization financial institutions can generate additional 14% of yearly revenues.

Real experience recommendations and prognosticating future demand for goods and services are seen by executives as vitally important in client/banking brand interaction. Therefore services which help personalize communication with clients have been and will be in demand. Thus, Accenture released its 2017 Global Distribution and Marketing Consumer Study which demonstrated that 63% of the consumers prefer personalized insurance and banking.

Yet such IT instruments have been in an effective use since just recently. Over the past few years the level of technology development and the data volume banks have accumulated, enabled employing predictive analytics and machine learning to improve customer communications efficacy. Hence at the moment a fair share of the banking providers believes that AI will have a substantial impact on their business model in the very near future.

It’s noteworthy, banks find themselves in a more advantageous position that any other companies save for the technology corporations. They gave accumulated huge volumes of data which permits knowing everything about their clients through digital footprints a client leaves in the web, namely, what a client buys, which cafes frequents, what establishments visits, where remits moneys. The said information can be analyzed to devise a most efficient customer communication. A customer can, for example, be offered the items of his or her prime interest, at the moment those can possibly be of a special interest and through the communication channels a customer regularly uses. It should be mentioned that most of the customers – about two thirds, according to Personetics – are ready to freely share such information in exchange for the growing value of banking services.

To personalize their communication with customers, these days banks employ such scenarios as Next Best Offer and Next Best Action. I am certain though those are just initial steps. In the near future, banks (or rather financial supermarkets or institutes at the intersection of classic banking and fintech) will be as personalized as, say, a smartphone or a personal computer, yet they will be smarter and more proactive.

Nowadays, companies just start experimenting with such technologies, yet some aspects are evident right now.

First, as a separate business, banks are now of only limited interest to a consumer whose concern is sorting out his or her daily problems while banking is merely one of the instruments to accomplish that. Therefore banks gradually evolve from being purely financial institutions to becoming sort of supermarkets offering diverse financial services, whereas in the future they will become personal assistants and advisers.

Second, customer experience has a growing importance for clients. Nobody likes lining up, wasting time waiting, and making a dozen calls to a call center to resolve a minor issue, and receiving at every step piles of highly intrusive while hardly interesting offers. Hence a personalized and, most importantly, superior customer experience is not even an issue of greater conversion only, but a challenge of customer retention and persistence in a highly competitive market.

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