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Innovation In Banking: Meeting The Expectations Of Survivor's World
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Foremost among these are the needs of ...

Foremost among these are the needs of
customers. With the balance of power shifting in
their favour, consumers are raising higher
demands around financial products and services,
driving a re-examination of the industry’s sales
strategy among other things.

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Innovation In Banking: Meeting The Expectations Of Survivor's World Document Transcript

  • 1. Meeting the Expectations of the Survivor’s WorldUniversal Banking Solution System Integration Consulting Business Process Outsourcing
  • 2. Emerging from the worst crisis since the ‘Great involve customers in co-creating products andDepression’, what is this if not the world of services.survivors? Here, future economic success dependson how well organizations handle its expectations. However, the expectations are not limited to existing users of financial services. Thanks to theFulfilling customer needs of personalization and spread of mobile communication, even thoseparticipation without a bank account can now transfer funds and conduct simple transactions over theirForemost among these are the needs of handsets. This is one of the developmentscustomers. With the balance of power shifting in ushering in greater financial awareness amongtheir favour, consumers are raising higher the unbanked masses and consequently, ademands around financial products and services, demand for access to formal banking services.driving a re-examination of the industry’s sales Financial inclusivity is one of the imperatives of the survivor’s world.strategy among other things. Since the old pushmethod fails to satisfy the varied and granular Learning from best practices of other industriesneeds of present day customers, increasingly thecall is for a right-selling approach that proposes Drawing upon positive experiences from otherthe right combination of product, price and industries, customers are asking banks to adoptchannel to every user. This means making some of their best practices, for instance, create aproducts more flexible individually – for example, closed loop community in which they can discussallowing customers greater freedom in financial issues, enhance self-service channelsdetermining the terms of loan repayment – as well with intelligent technology that allows users toas in combination in the form of t bundles. seek human assistance when required or enable customers to transact online ‘end to end’ - fromConsequently, banks are making a natural signing up for an account to taking a loan. Theyprogression towards customer-centricity, also like to research competing banking productscustomising products and services to cater to the and services and understand public opiniongreatest number of user expectations. They are voiced in blogs, ratings and reviews before takingdiscovering that satisfying the granular needs of a decision. Those on the fringes want financialvarious segments with tailor-made offerings is offerings to go the same way as telecom, allowingcritical to both customer acquisition and retention. them to consume in very small quantities. TheAnother important realization is that in a largely amazing evolution of electronic gadgets, whichcommoditized marketplace, “quality of have progressively become faster, smarter,experience” works as a key differentiator and a sleeker and more capable, is inducing similarmeasure of customer convenience. expectations from banking.The rise of community influence is precipitating an Complying with regulations to minimize riskimportant shift in consumer behaviour. Studiesshow that nearly 80 percent of consumers trust Financial regulations, which continue to getpeer recommendations but less than 15 percent tougher to prevent another systemic failure, arebelieve advertisements! Even banking customers placing a burden of compliance on the industry.are showing a preference for searching products Central banks and other authorities are watchingand reading peer reviews online over visiting a the activities of financial institutions closely tobranch. When in doubt, they reach out to fellow ensure, among other things, that products areusers first for advice. safer and transparent, capital is prudently deployed, KYC norms are adhered to andCustomers are voicing their need for greater disclosure is adequate.participation. Simultaneously, they are asking that On the other hand, customers are morebanks be more open and transparent in their concerned about the safety of their transactionsdealings. In response, a section of the industry is on all channels in practical terms, that involvesleveraging the easy reach of social media to Meeting Expectations to Survive in the Survivor’s World
  • 3. safeguarding not only clients’ money but their data Fighting against and alongside competitionand identity as well. Hence, beyond therequirements of the law, banks are obligated to Competition, both from traditional rivals andinstitute a robust security mechanism – including emerging players is making it harder to defendmeasures such as multi-factor authentication and one’s turf. This is pushing banking organizationsdata encryption – at the insistence of their to sharpen their edge in order to maintain their gripcustomers. on existing clients and get to new ones before the next bank does.Managing post-restructuring apprehensions Since a healthy customer base is critical toSince 2008, there have been over 250 bank survival, banks are replenishing their customerfailures in the United States alone! Such acquisition arsenal with innovative offerings,occurrences have caused a spate of mergers and enhanced services, attractive marketing programsorganizational restructuring, leaving many and more. They’re seeking to make loyaltysurviving banks to deal with their concomitant programs more effective as a retention tool. Onchallenges, not the least of which is integration of the operational side, the focus is back onsystems, processes, services, workforce and lines improving process efficiency and automation andof business. manifesting that as a smoother user experience.What expectations do customers have from Conventional institutions are also entering newreorganized entities? businesses like Internet-only banking or P2P lending, frequently pioneered by innovativeMostly, customers worry about how this will companies from outside the industry.change their relationship with the bank. Willcharges go up? Will their relationship manager In some instances, competitors are joiningchange? Do they have to learn new processes? together in a co-opetition arrangement thatWill they retain their privileged account holder enables each one to leverage the other’s strength.status or cease to be as important to the newly For example, a national bank may tie up with aconstituted bank? regional co-operative to distribute its products through the latter’s network within a limitedAddressing these issues is a post-reorganization territory. In this win-win arrangement, thetop priority. Banks must take their customers into co-operative allows the large rival to access itsconfidence by giving them a fair appraisal of the customers in exchange for an additional product inbenefits of restructuring and its downsides, for its suite.instance, by telling them how the move wouldresult in improved performance, efficiency or Leveraging partnerships to meet morehigher profitability in the long run, but require them expectationsto learn some processes before that. Some banksmight even consider passing on a part of the The cost of launching a completely new product orbenefits as they accrue, back to their customers. service could put it out of reach, especially that of smaller institutions. A partner eco-system adds toIn fact, when reorganization transfers ownership a bank’s ability to serve different customer needsof the customer relationship from a single through product, technology or distributionexecutive to the entire bank, it produces several alliances and become a one stop shop for theirbenefits for both – since customer insight is now clients. Also, a bank raises a customer’s exituniformly available across the banking entity barrier by satisfying all his financial requirements,comprising different lines of business, it may be from credit card to insurance under one roof. Inholistically leveraged to improve the quality of return, the bank must nurture partners byengagement. Such restructuring also assures providing them access, information, training andcustomers of continuity and eliminates the need to support so that collectively they can create astart from the beginning with each change of superior experience for their customers.personnel. Meeting Expectations to Survive in the Survivor’s World
  • 4. Satisfying regulators’ and customers’ green service, banks are actually hoping to distanceappetite themselves from the past and restore the faith of their customers. That is why meeting the variousWith green laws becoming mandatory, besides expectations of the survivor’s world is extremelyregulatory obligation banks are facing the critical.pressure of expectation exerted by their sociallyconscious customers. Since they will beincreasingly judged by their commitment to Authorenvironmental causes in future, it is important thatthey take proactive sustainability measures today. Arunnima B SThe good news is that eco-friendly initiatives also Finacle - Product Strategyyield direct benefits to customers – for example, Infosys Technologies Limitedbranchless banking and statements over emailadd to convenience and sustainable lendingpromotes the interest of certain SMEs – even asthey contribute to the overall well-being of theplanet and its inhabitants.Using technology to meet goalsUnder the current challenging market conditions,operating efficiently and using resources optimallyis more important than ever. The role oftechnology in facilitating these goals and helpingbanks meet other customer expectations cannotbe overstated. Technology sharpens thecompetitive edge by enabling faster rollout ofproducts across all channels and bringing bothscalability and higher reliability to service delivery.Developments in biometrics, NFC and smart cardtechnologies are not only adding another layer todata security but also spreading the adoption offinancial services among the unbanked. Theoption of accessing Software as a Service hasmade it possible for banks to acquire technologyquickly and enhance it only when required.ConclusionThe survivor’s world is a tough place for banks tobe, rife with the pressure of fulfilling the variousrequirements of customers, regulators,competitors and other influencers.While lawmakers responded to the economiccrisis by strengthening regulation and theauthority of those responsible for its enforcement,customers raised their own defences throughcautious behaviour. Thus, financial institutions ofthe survivor’s world still suffer from an overhang oflow consumer confidence and erosion of trust. Infulfilling the demands surrounding compliance,transparency, personalization, efficiency and Meeting Expectations to Survive in the Survivor’s World
  • 5. Join us on Twitter, LinkedIn and Finacle Whiteboard at www.infosys.com/finacle/networking.asp