A customer’s satisfaction with
a bank’s website is strongly
connected to his or her overall
engagement with the bank.
Discover BackbaseThis white paper is brought to you by Backbase – theBank 2.0 Specialist. Please contact us for moreinformation: email@example.com.
IntroductionBanks are facing rapid change. Customer behavior, technology A customer’s satisfaction with a bank’s website is stronglyand competition are all in transition. The most challenging part? connected to his or her overallIt’s all happening at the same time. engagement with the bank.Companies like Facebook have made the world social and given the customer a voice. Only “Using Technologies to Engagethree years ago Apple launched the iPad, and created a whole new product class. Tablets Retail Banking Customers,”and smartphones are taking the world by storm, soon eclipsing traditional PC sales. And Gallup Consulting, White Paper 2008in a move that no one could have predicted even five years ago, companies are branchingout from their native industries to compete with traditional banks. These competitors arealso composed of innovative entrants such as Simple, Movenbank, Google and PayPal — toname only a few. Whatever their origins, all of them show that a physical banking presencedoes not necessarily equal success. It also means that banks must act now to engage theircustomers, or risk losing them to those who will.Engagement BankingConnecting with your customer is essential for survival. An exceptional customer experience Banking is not some place you go,creates loyalty, which in turn creates ‘brand ambassadors’. This translates directly into a banking is something you do!strong, enduring, bottom line. For banks to maintain their connection to the customer and Brett King, author Bank 2.0not be relegated to a commodity role in the future they must act to engage their currentcustomers in unique ways while also finding compelling avenues to attract new customers.The good news is, technologically speaking, there has never been a better time to adopt anEngagement Banking Strategy.Valuable InsightsThis white paper will provide valuable insights aimed at outperforming the competition.- Research about the increased use of direct channels following the financial crisis;- Insight into how loyalty is created by engaging customers on their terms;- Best practices taken from other industries about how to engage customers;- Insights needed to jump the hurdles slowing down customer engagement. Discover Backbase Contact us via firstname.lastname@example.org Join our free webinars Interesting whitepapers at: Visit our website at: backbase.com/webinars backbase.com/bank20 www.backbase.com 2
Banking will never be the sameResearch shows increased use of direct channels following The Future is Anytime,the financial crisis. Any Place, Any Device Fifty percent of iPhone users haveThe Future is Mobile used online banking in the pastThe future of banking, especially when it comes to 30 days. iPad and iPhonecommunication, from a device standpoint will be almost shoppers account for 90% of allentirely about mobility. In fact, convergence in the mobile purchases; spend 19%areas of communication, mobility, device, proximity and more per order than Android users.search is poised to create a truly original and markedlycustomer-driven banking experience. New forms of “Who will Lead in Mobilecommunication have already impacted unexpected Purchasing? Apple, Google,areas of the financial world. Customers will be able to Facebook, Amazon, PayPal…orperform the same tasks they do on their computers, on your Bank?”their mobile devices. They will also be more in control of the details of the interface they use Javelin Strategy, 2012.to interact with their bank whether they are on their computer or a mobile device—with justdrag and drop—via widget technology.Frequent Contact = Good ThingA vast majority of banking customers increased their use of direct channels after the recentfinancial crisis. According to Peverelli & De Feniks, the authors of Reinventing FinancialServices, this is a good thing. They write: ‘Trust results from overall interactions. The paceat which trust is restored is a function of the quality and frequency of interactions withcustomers.’ In other words, the anytime, any place, any device attitude that customers nowhave might be demanding for your current organization or systems, but serving your currentand future clients on their own terms will bring you engaged, loyal customers who will act asambassadors for your brand. Main Points • Fierce competition is coming Pace at which Quality Frequency from customer engagement trust is restored of contacts of interactions champions like Google and PayPal. • The future of banking is mobile. • Customer trust equals Contact frequency times Contact quality.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 3
Loyal customers go beyond ‘nice to have’There’s no question that banks need to fix what has become a The Technologybroken model. Growing margins can not be a replacement for Democracygrowing a customer base. The commoditization of products In the Sixties, computers werewithin the industry is making it very difficult to compete on owned by the military, institutionsprice. The new entrants are experienced in building online and large corporations. At home we had calculators at best.relationships and are used to developing and marketing Twenty years later, personal IT istransparent products. surpassing corporate IT. In the developed world most householdsEngage the Customer: Create Loyalty own multiple devices and areOne can’t afford to stop innovating in ways that can attract new customers. Satisfying a able to use them for an excellentcustomer’s needs without developing an emotional connection with them actually creates wireless experience. Employeesno real value. Research such as that from Gallup Consulting, suggests that loyalty, too, is get free computer training fromquestionable. In fact, measuring brand loyalty the usual way banks do, by number of repeat Facebook, YouTube, Twitter etc.,purchases, misses the point. This measurement is unable to get at the ever important but as a result they have comeemotional connection. Without knowing why a customer is purchasing a bank’s products, he to expect a seamless onlineor she could simply be taking advantage of special offers or purchasing rewards, and, experience.just as easily could be swayed by better such offers from competitors. David Sieg, Vice President,The Future is About Loyalty Strategic MarketingCustomers have come to expect a more personalized, interactive online experience. Their YourMembership.comfinancial provider is no exception. The more generic, transactional services offered bymost banks today are neither personal nor reflective of ever-changing technological reality.Having established that the frequency of contact is as important in building a trusting andloyal relationship with customers, it’s easy to see the threat to incumbents that Google,Facebook or PayPal pose.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 4
Customers Punish Poor Service The Real Wall StreetWhen a bank (or other financial) begins to re-evaluate the way that it has been interacting Occupation is Onlinewith its customers, it must keep in mind that customers are accelerating their uptake of directchannels and becoming more adventurous in their use of technology. Recent research has The largest financial institutions nofound that a vast majority of banking customers has increased their use of direct channels longer have a monopoly on the wayafter the financial crisis and [most recent] recession and that they are also more focused funds travel through the system.on service quality and personal relationships as well as more willing to punish poor service. Take, for example, banking alternativeCustomers’ increasing use of both digital and mobile channels suggests that banks will have Simple (formerly BankSimple), whichto find new and better ways to connect with customers. The old ways simply won’t work was co-founded by one of Twitter’sanymore. first employees, Alex Payne. Simple refers to its service as “banking online” not as “online banking.” The company is not a bank as much as it is a personal banking alternative. To top it all off, Simple has made customer service the very bedrock of its approach. When people call for information about their accounts, they shouldn’t have to wait 30 minutes for someone to talk to them. ‘The Real Wall Street Occupation is Online,’ Dominic Basulto, The Washington Post Main Points • Satisfying customer needs without ‘emotional connection’ creates no real value. • Customers are more willing to punish poor service. • Measuring brand loyalty the way most banks do, (repeat purchases) misses the point.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 5
How do I connect?The past ten years have seen the opportunities for companiesto ‘spin’ the market greatly reduced. Internet has increasedtransparency and, more importantly, it has given consumers avoice. If your product or service is below par potential customerswill find the reviews and stories, which will influence their buyingdecisions.Be Real and Create AmbassadorsOnline, financial products rank among the most researched categories. So marketing,launching, and nurturing a successful product is no longer a matter of buying radio andtelevision time and print or outdoor space. Consumers will talk back and in doing so theywill determine your success. This might come across as a potential threat, but in fact it’s amassive opportunity. If you offer a quality product at a fair price and people are happy withtheir interactions with your organization, or your resellers, they will tell the world. They will, ineffect, become your media voice.Customers Want Anytime, Any Device Self-ServiceTaking the customer perspective would lead to developing an Engagement Banking Strategythat focuses on the capabilities customers want namely: Mobility, access anywhere and anytime, self-directed or self-service engagement with the bank and, simplicity, regardless ofthe interaction. Reassuringly, for banks, there are plenty of examples from the retail sector tolook to when revamping their digital strategy and creating satisfying customer experiences.Best Practices From Other Industries Engage CustomersHow then can a bank be sure it is providing what its customers really want? Short answer:Involve them in the design and learn to think from their perspective. If you give customers Main Pointsthe ability to choose which services they want and the way they want them to be delivered, • The opportunities for companiesthe guess work disappears. Instead, customers get what they want every time while banks to ‘spin’ the market are greatlygain a more valuable, personal, connection to their customers. reduced. • It is impossible to ‘fake’ customer centricity. • Transparency, offering real value and reaching out will be rewarded by customers.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 6
Get Inspiration From The BestThe top three capabilities that banks think banks should adoptIn the EFMA Accenture report “Inspiring Retailing Champions, Banking and Retailization:Insights for Banks from the Retailing Sector” a selection of the most inspiring initiatives fromcompanies in the retail sector have been named and ranked. Cross-Selling Amazon.com: for its real-time suggestions of related products, with an algorithm so precise that it feels like a valuable suggestion and not spam. Apple: because ‘the product IS the brand’ and its Genius application, which uses previous purchases and preferences to derive recommendations for other products. Engage and Educate BMW: ‘Build your BMW CAR Configuration’ is a way to engage customers online. Car configuration makes potential customers aware of certain upgrades and extras and converts to customer contact. People spend time thinking about BMW’s products and going into the dealership with a list of extras. This makes ‘up-selling child’s play’. Prenatal: The Europe-based maternity store Prenatal has successfully used such strategies as linking in-store workshops on topics of interest for pregnant mothers to thematic articles online and then to near listings of certain products based on their individual profiles. Their soft-selling or info-selling is rewarded with extra sales, and a deeper product and brand awareness. Customer-Centric Empowerment Starbucks Coffee: has implemented an ‘Ideas in Action’ part of their blog to allow customers to contribute ideas about new products or beverages. Others can vote on which ones they like best. This sort of interaction benefits both the customers, who have a say in what they can purchase, and the company, who has the confidence it is launching a ‘requested’ product. NH Hotels: for recognizing the need for a Customer Experience Office (CXO) with a budget, mandate and direct CEO. They know that integrated user experience is only going to happen if there is a dedicated officer who has the sole focus and responsibility for the customer journey.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 7
Implement the customer engagement visionFor the bank, the biggest challenge to joining the Engagement Banks Can Learn fromBanking era lies not just in expectations or perspective, but the Search Engineimpediments within the banking systems and infrastructure. This Current banking systems have ahas made even the best laid plans for self-directed, customer- hard time incorporating innovations even when they have been widelyrelationship-development difficult at best. adopted by ordinary users. Consider, for example, searchBanks ‘Get’ the Vision. Can They Implement? engines. As we know, searchSo far, we have established the need for customer engagement; the entry-level requirement capabilities have radicallyof serving customers on any platform, any time. This creates trusting customers who will increased the relevance of the webbe less willing to churn to a competitor, and who will tell others about their experience and for individuals. Why, then, is it oftenpotentially make more purchases. Having established the need and potential benefits we impossible for banks and insurancemust conclude that there are some barriers to actually realizing multichannel engagement. companies to search their ownMost banks do have the vision to want to provide a customer-centric offering. However, they information systems to retrievelack the right tools and organizational structure to make it happen. any client information such as addresses, signatures, accounts orAssign a Customer Experience Owner, Fast balances in the same way peopleWhile customers certainly stand to reap benefits from a more engaged banking experience, do at home?one of the biggest opportunities, from the banks’ perspective, will be the trend away fromdevelopers being in control of content and digital presence to a situation where contentmanagers themselves have direct control of how and when content is presented. This isrevolutionary from a bank’s marketing standpoint; cutting down significantly on go-to-markettimes for campaigns and enabling multiple customer conversations. Additionally, banks willwin in a number of ways related to the time and cost savings resulting from simpler, moreubiquitous, customer-initiated interactions.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 8
Depend on IT to Optimize Online Channels Twitter-Based HedgeFinancials are often locked-into one technology provider and therefore require an expensive Fund?and often unnecessary revamp of a large swathe of their infrastructure in order to modernizeonly their customer interactions. Yet, there are other ways to tackle these impediments to In 2011, the company Derwentprogress. In fact, to focus on customer experience it’s possible to place a new layer on top Capital Markets became the first inof existing systems without changing the underlying infrastructure to create a seamless, Europe to start a Twitter hedge fund,satisfying customer journey while avoiding the expense and hassle of updating old systems. which uses real-time Twitter-basedSome systems enable e-business professionals to operate without having to turn to IBM, data analysis. For years investorsSAP or other portal specialists for styling or making small changes to the portal. It allows have widely accepted that financialIT to focus on more strategic tasks and frees up valuable resources reducing business markets are driven by fear anddependency. greed but we’ve never before had the technology or data to be able toReduce Silos and Implement a Single Customer View quantify human emotion. Despite this,The hierarchy and focus in most banks is based on tradition, historical turnover, and the future of banking is less likelyseparate channels. It’s a classic inside-out perspective. The KPI’s of managers are focused to be about social networking andinward and not on offering a seamless customer experience. Most banks work with ‘product more likely to be composed of moremanagement’ responsibilities at best. Branch managers are rewarded only for turnover practical functionalities such as multi-related to ‘their products’ and this does not engender a response that is outward focused, channel access and communication.and ultimately, able to succeed in an engagement banking world. Reinventing Financial Services,Become More Enterprenural, Learn from Mistakes Roger Peverelli, Reggy de Feniks,Companies like Google, Facebook, Twitter or Amazon have not led by always ‘getting 2011everything right’. They have become leaders by agressively pursuing growth and takingrisks. In spite of all their successes, they have left a long trail of failed initiatives. However, ifcompany culture is entrepreneurial and staff is encouraged to try new things, failures shouldbe expected. The edge lies in not dwelling on mistakes, accepting them, learning from them,and embracing the successes that are the result of their pursuit. Main Points • Reduce organizational silos and implement a single view of the customer. • Dependency of business on IT hinders optimization of online channels. • Become more entrepreneurial, accept misses and invest in the hits.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 9
ConclusionBanks need to evolve in order to make certain they have a placein the future of customers’ hearts and minds. How they evolveis going to depend on many factors. Almost any success willdepend on banks making changes to how they interface with thecustomer.Think Outside-InA customer doesn’t care that a bank has multiple product groups, business units orfragmented IT systems. They don’t care that a mortgage application is handled by a differentdivision and system than where their current account balance is stored. A customer isgetting married, is becoming a parent, wants to know how much they need to save to buya new car or boat. In the Engagement Banking era it’s all about having the flexibility toassemble the right information and functionality within a customer’s online journey. In theend, the way to the customer’s heart and mind then is all about context; providing yourcustomer with an easy and, most importantly, relevant experience. It might not be an onlineinteraction that one customer wants, but rather a face-to-face one, the point is, a flexible,outside-in thinking bank will know this—and be able to react to that customer in a uniqueand relevant way.Hearts and MindsIn sum, banks are going to have to change to maintain their relationship with the customer orrisk losing out to competitors who are better able to manage the relationship. The old, inside-out, approach does not cut it in the Engagement Banking era. In the Engagement Bankingera, banks need to put the customer first and have to make interactions with the bank easyand intuitive. The changes they need to make can be accomplished now if they can indeedturn their perspective from inside-out, where their own systems and needs are paramount, tooutside-in, which is the way to start thinking like the customers they want to keep.United States: New York - 350 Broadway, Suite 1107, NY 10013 USA Toll-Free Number: +1 866 800 8996 Office Number: +1 646 478 7538 email@example.comEurope: Amsterdam - INIT Building - Het Ei Jacob Bontiusplaats 9, 1018 LL , Amsterdam-NL Tel: +31 20 465 8888, firstname.lastname@example.org 10