20141119_ White Paper_TheDigitalBank2.0_English

Jonas Munk
Business Advisor
Nordic CoE Integrated Marketing Management
SAS Institute
November 2014
White Paper: The Digital Bank 2.0 – Decision Support
– Putting the Customer First
Review of perspectives and opportunities for realizing customer-
centric strategies within the financial sector

SAS er registreret varemærke af SAS Institute Inc., Cary, NC, USA. ® indikerer registrering i USA og andre lande. SAS Institute A/S, København, er et
datterselskab af SAS Institute Inc., Cary, NC, USA. © Copyright 2012.
Page 2/14/
Table of contents
1 Executive summary............................................................................................ 3
2 Increased digitalization in the financial sector creates opportunities................... 5
2.1 Shift focus from channels to interactions ..................................................... 6
2.2 Increase the relevance of interactions......................................................... 7
2.3 Tie interactions together via profiles............................................................ 9
3 Realization of customer-centric strategies – The Digital Bank 2.0 .................... 10
4 Omni-channel decision support in real time...................................................... 11
5 Cases from the financial industry...................................................................... 12
5.1 Danske Bank – shift focus from channels to interactions........................... 12
5.2 ABN AMRO – increase relevance of interactions ...................................... 12
5.3 Westpac – tie interactions together via customer profiles.......................... 13
6 Perspectives .................................................................................................... 13

Page 3/14/
1 Executive summary
At present, the financial sector experiences great changes. Digitalization and growing
competition make entirely new demands on the sector. On the one hand, customers
demand more interaction and advice through both traditional and digital channels, and
the increasing digitalization has resulted in customers doing much of their banking
through the digital platforms accordingly. On the other hand, the need for improving
the profitability through more effective and coherent processes has grown. In other
words, there is a great demand for designing efficient digital banking operations without
compromising on the customer experience.
The Digital Bank 2.0 – decision support for putting the customer first
The purpose of this white paper is to describe a specific strategy leading the way to
effective digitalization and greater profitability without deteriorating the customer
experience. It is necessary to strengthen the decision support focusing on the
customer as opposed to the present one focusing on products and processes. For this
reason, SAS introduces The Digital Bank 2.0. This concept rests on a holistic way of
thinking with regard to the actual customer interaction, in which digital and analogue
touchpoints act on the terms of each customer by means of underlying, automated and
coherent processes.
Omni-channel decision support in real time
Several investigations1
indicate that the majority of digital processes and touchpoints
in financial companies presently cover relatively basic functions, which not necessarily
are consistent with the needs of customers. The Digital Bank 2.0 makes it possible to
increase the relevance of interactions using real-time coordination where focus is
shifted from channels to interactions with analytically optimized messages. By means
of integration across organizational systems, it is possible to tie interactions together
via customer profiles. To ensure a seamless interaction with customers, a central
decision-making mechanism is required to administer the vast amount of decisions
made continuously.
Perspectives to get underway
The Digital Bank 2.0 is introduced as a suggestion to how modern organizations within
the financial sector can develop a strong foundation for supporting the work on
realizing customer-centric strategies.
Specific activities in this context comprise:
 Engage constructively with management on the customer-centric strategy and
win support for a unique and growth-stimulating vision for realization of this
across the organization as well as specific objectives.
 Start mapping the overall customer interaction and focus on key touchpoints
both in the short and long term.
 Identify underlying processes of key touchpoints to concretize a number of use
cases reflecting the future aspects in order to visualize both the value to the
customer and the organization, but also clarify the necessary requirements to
roles and systems.
 Mapping could also be about challenging the current customer experience in
relation to competitors – or in relation to meeting unmet or future customers
needs.
1 Olanrewaju, Tunde (2014): The rise of the digital bank, McKinsey Insights & Publications

Page 4/14/
 Prioritize these use cases and develop a road map reflecting the realization of
the customer-centric strategy both in the short and long term.
In a dynamic market characterized by ever-changing customer interests and needs
with regard to digital banking transactions in particular and new potential competitors
in several of the core areas, many companies within the financial sector realize that
they need to become much more customer-centric and design more flexible and
efficient organizations in order to act more proactively in the market.

Page 5/14/
2 Increased digitalization in the financial sector creates opportunities
The financial sector presently experiences intense market dynamics due to increased
digitalization, which on the one hand creates new opportunities, and on the other hand
puts organizations to the test. In this context, recent investigations2
indicate that many
European companies within the financial sector are not keeping pace with this
development, which ultimately may open up to new and unprecedented competitors.
’There is a complex threat against the banks, which they have not experienced before.
It has taken the banks a long time to realize that other players are actually threatening
them. The reason for this is presumably that the banking industry is conservative, and
its core competences have not been to transform the business in the same way as
Google or Apple have done. [Translation]
Mads Raahede, Managing Director, Accenture3
Digitalization has led to several changes, on which companies and CMOs in the
financial sector should rightly focus. In our opinion, the most significant change is the
shift from multi-channel to omni-channel focus. In the former, many resources were
used to ensure that messages were presented through both the existing touchpoints
and all the new touchpoints between the company and the customers.
An omni-channel focus requires more coherence between the different touchpoints in
order for an interaction in one channel to influence immediately what happens in one
or more channels. Besides much greater integration to ensure real-time transfer of
immediate response and behavior combined with the existing insight and history, it is
also about being able to support decisions within a split second.
To adjust to this new reality and thus enable the organization to act on the customer-
centric strategies, we recommend CMOs to focus on these main areas:
 Shift focus from channels to interactions
Change the understanding of channel and product focus as isolated entities and
consider them interactions which together form one greater entity with focus on the
customer experience.
 Increase the relevance of interactions
Create more relevance in each interaction meaning a more customized selection of
messages depending on previous and/or immediate insight about the customer.
 Tie interactions together via profiles
Tie the underlying processes together with regard to the insight generated by data
across the organization, but also the possible actions and rules we can apply in relation
to the customer.
In order to manage the new reality in the market, the next sections introduce the above-
mentioned focus areas.
2 Olsen, Søren Martin (2014): Banker halter på den digitale udvikling, Berlingske Business
3 Olsen, Søren Martin (2014): Banker halter på den digitale udvikling, Berlingske Business

Page 6/14/
2.1 Shift focus from channels to interactions
Concurrently with the technological development, it has become possible to access
digital platforms through far more types of touchpoints, which today is a fundamental
part of customers’ decision-making process4
. As customers interact through a large
number of different channels depending on the situation and need, companies should
aim their focus at the actual interaction in each channel instead of the actual channel.
In addition to analogue channels such as bank advisor, customer service and letter,
customers expect to interact to a greater extent through digital channels such as e-
mail, SMS, website, net bank, mobile and tablet applications as well as social
platforms.
More companies are organizing and managing the customer experience over time, and
a few have started to adapt their organizations according to a more customer-centric
approach. In an interplay between digital and analogue touchpoints, we see obvious
possibilities in understanding and creating better interaction based on an underlying
touchpoint policy and channel mix upheld by a central decision-making mechanism.
An example of this focus could be real-time coordination.
2.1.1 Real-time coordination shifts focus from channels to interactions
Figure 1 shows how a message is presented automatically when a customer is invited
to communicate with customer service through net bank or website. The example
illustrates a bank advisor’s user interface, but it could be any operational system, in
principle, used by customer service. At the bottom left, the specific messages are
displayed which will be presented, but all areas of the user interface can be used and
adapted with insight. This is illustrated below where among others Net Promoter Score
(NPS), Customer Lifetime Value (CLV) and satisfaction score for the individual
customer are displayed – in order to support the ongoing conversation in the right-hand
side – in real time.
4 Edelman, David C. (2010): Branding in the Digital Age: You’re Spending Your Money in All
the Wrong Places, Harvard Business Review

Page 7/14/
Figure 1: Example of interaction focus where the system automatically displays the message.
A central system controls the underlying logic for the messages and insights illustrated
in figure 1. In the system, the selection takes place automatically based on possible
actions, existing insight and the rules applying to contact and priority. The system also
controls whether to present a message through digital touchpoints, to send it to a bank
advisor or to present it through several touchpoints simultaneously.
2.2 Increase the relevance of interactions
In recent years, digitalization has affected the everyday life of most customers who
make extensive use of digital applications for private and work-related activities. The
rapid development in relation to this type of applications and in a reality containing
more than one million options in e.g. Apples’ App Store5
, customers are more selective6
as to which applications to use than ever before, and this makes heavy demands on
function, user friendliness and relevance7
.
In the financial world, it differs widely to what extent the individual bank has introduced
applications for supporting banking operations besides the traditional touchpoints. For
the majority, it covers basic functionalities such as account status and bank transfer,
5 Ingraham, Nathan (2013): Apple announces 1 million apps in the App Store, more than 1
billion songs played on iTunes radio, The Verge
6 Perez, Sarah (2014): An Upper Limit For Apps? New Data Suggests Consumers Only Use
Around Two Dozen Apps Per Month, TechCrunch
7 eMarketer (2014): Ever Wonder Why Consumers Don't Click on Mobile Ads?, eMarketer

Page 8/14/
for which reason we see great potential for incorporating more types of services and
content personalized through automated decision-making support.
2.2.1 Analytically optimized messages increase the relevance of
interactions
As most customers use net bank or mobile bank besides the traditional touchpoints,
the opportunities are very good for creating interactions that are more relevant rather
than simply presenting information. In this respect, the mobile phone provides the
financial sector with a great deal of opportunities in the future. Today, customers use
the mobile phone to take care of various businesses during the day – and here it is
possible to gain much value. Conversely, it makes heavy demands on the way in which
banking operations traditionally have been carried out. In this connection, analytical
optimization of messages becomes crucial when switching from a quantitative product
view to a qualitative view focusing on what is most relevant in a particular situation.
Figure 3 shows an example of how different parts of a website or net bank can be
organized and optimized with automatically presented messages based on existing
knowledge and/or immediate behavior. The red box below is one of the automatically
optimized messages – for instance, when a customer has just accepted an offer from
a bank advisor, the system will ensure that the offer is removed and replaced by a
more relevant one.
Figure 2: Example of how a message is presented to a customer automatically when logging in
to the company’s website, net bank or mobile application.

Page 9/14/
With increasing customer engagement in the digital channels, it is thus possible to
achieve a significant business effect by being able to present relevant messages,
which are analytically optimized. The advantage of system-aided management is that
the company is able to present messages to a far greater audience at a time than one
single person would – and that the entire customer experience is taken into account
when the different messages are prioritized.
2.3 Tie interactions together via profiles
A growing number of digital touchpoints have resulted in customers spending more
time on banking transactions than previously. Investigations8
indicate that these
customers communicate more frequently via customer service or bank advisors. This
interaction combined with the existing touchpoints generates large amounts of data in
terms of behavior and response – often across organizational entities and in more
diversified formats depending on whether it is about status updates and ’likes’ on
Facebook or detailed behavior in net bank. Having more than half of the customer
interactions through different channels, the digital data is more important than ever
before in order to ensure relevance and interest.
‘Today, 65 percent of customers interact with their banks through multiple channels.
Human interactions are generally reserved for more complex problems: only 25
percent of agent phone calls are inquiries that could be serviced in other channels.
Most intriguing, digital channels have not replaced physical channels. Customers
who use mobile and online banking more than once a week are over 60 percent
more likely to be active retail-branch users than those who do not.’
Albert Bollard, Neel Doshi and Marukel Nunez Maxwell, McKinsey9
When establishing a unified foundation for customer data, it is possible to create
customer profiles to be used across the organization.
Several companies have come far in relation to creating customer profiles based on
existing data on transactions, engagement, segment, history etc. A few companies are
incorporating the large amounts of data, which they have collected through digital
channels as detailed behavior via websites, net banks and applications in order to
support decisions to a much greater extent both in the real-time interaction and the
planned activities. A foundation like this can thus be seen as a cornerstone for realizing
the customer-centric strategies.
2.3.1 Integration ties interactions together via customer profiles
With a growing number of touchpoints and interactions over time, the majority of
companies experience that large amounts of data are generated across the
organization. For this reason, it can be difficult to gain an overview of previous
interactions and thus appear as relevant as possible. In some cases, it can also imply
that a company disturbs customers unnecessarily with offers they previously have
accepted through net bank – or vice versa.
8 Bollard, Albert; Doshi, Neel; and Maxwell, Marukel Nunez (2014): The future of US retail-
banking distribution, McKinsey Insights & Publications
9 Bollard, Albert; Doshi, Neel; and Maxwell, Marukel Nunez (2014): The future of US retail-
banking distribution, McKinsey Insights & Publications

Page
10/14/
This is why The Digital Bank 2.0 recommends one unified foundation for the various
customer data. The foundation is illustrated in figure 3 and should be seen as a
dynamic foundation, where it is possible to add existing data sources continuously, if
these are considered relevant, but also new types of data from e.g. digital platforms of
all sorts. The foundation can also comprise other types of insights such as analytical
scores relating to credit assessment, risk etc.
Figure 3: Example of the structure of a customer profile, which forms the basis of a coordinated
and relevant interaction putting the customer first.
When establishing a unified foundation for customer data, it is possible to create
customer profiles to be used across the organization. A foundation like this can thus
be seen as a cornerstone for realizing the customer-centric strategies.
3 Realization of customer-centric strategies – The Digital Bank 2.0
To support the realization of customer-centric strategies, SAS has introduced The
Digital Bank 2.0. Several investigations10
indicate that despite the fact that many
financial companies have introduced digital processes and touchpoints, they only
cover relatively basic functions, which not necessarily are consistent with the
expectations and needs of customers.
The next step is to introduce a more holistic way of thinking with regard to the actual
customer interaction where digital and analogue touchpoints act on the terms of each
customer by means of underlying, automated and coherent processes – this is how we
define The Digital Bank 2.0.
The concept is about enabling the company through the interaction to pick up and
address the signals, which customers continuously leave behind concerning their
situation and hence any banking requirements, to increase the probability of relevance.
For instance, one signal can thus be the young family’s loan demand for down payment
identified by increased activity on real estate portal and repeated calculations in net
bank, or the businessperson’s demand for a better car identified by increased car loan
calculations on website and questions to the bank advisor etc.
In the real world characterized by a large number of customers and many different
touchpoints, it becomes a complex task to determine exactly where the customer is in
his/her decision-making process and how important the customer is to the bank. In
addition to this, the issue arises about having the requisite data at hand. It is altogether
10 Olanrewaju, Tunde (2014): The rise of the digital bank, McKinsey Insights & Publications

Page
11/14/
necessary to make each touchpoint able to make the right decision on which message
will be the best one to present at that particular point in time.
To ensure the relevance of each single interaction, it is necessary to automate the
orchestration of the steadily increasing myriad of decisions in an efficient and profitable
manner and thus the way to adjust our banking transactions to the customer-centric
strategies.
4 Omni-channel decision support in real time
To ensure a seamless and consistent interaction with customers over time, a central
decision-making mechanism is required to administer the vast amount of decisions
made continuously. The Digital Bank 2.0 rests on the foundation illustrated in figure 4.
Figure 4: The digital bank 2.0 is based on a central decision-making mechanism.
The left-hand side of the model illustrates the various touchpoints through which
customers interact with a company (External), and where it is necessary for the
company to decide on how to react. To make the specific decision, the concept
includes the organizational dimension (Organization). For each single interaction, a
number of possible actions (Actions) are connected which are supported by different
types of insights (Insights) and in many cases some rules (Rules) on how and whether
the company can perform a given action.
In this context, an underlying foundation helps to orchestra both the individual channels
and internal processes which in this way provide a relevant message. For instance,
when a customer is logged in to net bank, accepts an offer presented here and at the
same time contacts his/her bank advisor. The advisor’s user interface replaces the
presented offer instantly with a new message of relevance.

Page
12/14/
The Digital Bank 2.0 provides opportunities within the following areas:
 Real-time coordination shifts focus from channels to interactions
 Analytically optimized messages increase the relevance of interactions
 Integration ties interactions together via customer profiles
To incorporate the above-mentioned opportunities, the following chapter contains
specific examples of each of these.
5 Cases from the financial industry
As a large number of financial companies already work with customer-centric
strategies in Denmark and abroad, we have chosen three interesting cases illustrating
the potential in relation to the areas reviewed.
5.1 Danske Bank – shift focus from channels to interactions
Danske Bank and SAS have developed a fully integrated solution together combining
analysis with traditional campaign management that targets customers effectively
across all channels. By means of the SAS solution, a team of only six employees is
responsible for providing 40,000 and 20,000 qualified leads each month to the
branches and the contact center respectively. More than 100,000 letters and a similar
number of net bank contacts are also provided each month. In addition, the solution is
applied for contacting customers, who have a poor risk profile, so that the bank
proactively can reduce losses for both the bank and the customer. In an article
published in the Danish newspaper, Børsen, Danske Bank has estimated the annual
profit to above DKK 100 million relating to direct marketing activities alone. Read more
about the remarkable solution here11
.
’The advantage lies in speed. In principle, we could develop an idea today and
tomorrow morning relevant customers would receive our proposal in net bank. Also,
we are free to choose the mix of channels – and thus gain the experience and become
even sharper’. [Translation]
Simon Steen-Petersen, Head of Marketing, Retail Banking, Danske Bank12
5.2 ABN AMRO – increase relevance of interactions
ABN AMRO, one of the largest banks in the Netherlands, has realized the true value
of using data as a strategic asset and the importance of data. The bank has an
enormous amount of data and makes intensive use of analytics to retrieve and apply
insight. It enables the business unit to assess risk and make better decisions in areas
such as lending. In relation to marketing, it enables the bank to increase relevance and
thus get messages across to customers, and in this way deliver timely and relevant
messages across channels. Hence, ABN AMRO has come a long way in becoming a
data-driven organization. Hear more about the fascinating solution here13
.
11 SAS Institute (2014): Bankens intelligente kanalvælger: Pluk kirsebærrene!, Kundehistorier,
Danske Bank
12 SAS Institute (2014): Bankens intelligente kanalvælger: Pluk kirsebærrene!, Kundehistorier,
Danske Bank
13 Hagstrom, Mikael; and Barrier, Lars (2013): livestream.com/sasglobalforum/video?clip

Page
13/14/
’In the bank, we have an enormous amount of data and make intensive use of analytics
to retrieve insights (…). To us, assessing risk and making decisions on loan, marketing
in general etc. implies that we more smoothly can come across with timely and relevant
information through the relevant channels for the benefit of the customer’. [Translation]
Lars Barrier, IT Manager, ABN AMRO14
5.3 Westpac – tie interactions together via customer profiles
In recent years, the Australian company Westpac has worked systematically and
targeted on enhancing the customer experience. With growing competition, it has been
necessary to increase the focus on customers and services provided. By means of the
program ’Know Me’, Westpac has made all data available on each customer and uses
this insight in combination with all the rules existing regarding all possible customer
transactions. Westpac has built a large number of analytical models, which together
with a planning and execution foundation has strengthened the customer engagement
significantly. For more info, please see here15
.
6 Perspectives
In a dynamic market characterized by changing customer interests and needs in
relation to especially digital banking transactions and new potential competitors in
several core areas, many companies within the financial sector experience that it is
necessary to become far more customer-centric and create more flexible and efficient
organizations in order to act more proactively towards the market.
Digitalization has developed rapidly and is extensively driving the development in the
market – both in terms of changed customer habits and needs, but it has also opened
up to new types of players like Google, PayPal etc. It has increased the number of
touchpoints, which to some types of customers even means more engagement with
their banks than previously. An excellent opportunity to develop closer and more
profitable relations with customers – but also a challenge as organizations are put to
the test.
In relation to the requirements, modern organizations are facing when the customer-
centric strategies have to be observed, especially three specific areas have to be in
focus in our opinion:
 Companies should change their understanding of channel focus and product
focus as isolated entities and instead consider them interactions, which
combined create a greater entity focusing on the customer experience.
 In addition, it is about providing more relevance in each interaction, i.e. a more
customized selection of messages depending on previous and/or immediate
insight about the customer.
 It all requires that we become far better at tying all underlying processes
together – in relation to both the insight generated across the organization, but
also the possible actions and rules we can apply in relation to the customer.
14 ABN AMRO (2013): Data essentieel voor verbetering klantervaring, Business Analytics.biz
15 Westpac (2014), Westpac Bank enhances the customer experience, YouTube

Page
14/14/
The Digital Bank 2.0 is SAS’ recommendation to how modern organizations within the
financial sector can establish a unified foundation to support the work on realizing the
customer-centric strategies. Based on a central decision-making mechanism, it
becomes possible to orchestra the large number of customer interactions and in this
way determine in real time what is most expedient to present at one particular point in
time, when the interaction takes place or will take place.
One typical starting point for this journey is to enter into dialogue with management on
the current customer-centric strategy and develop a strong vision for realizing this.
Such a vision can be used for winning support to focus on a seamless execution across
the organization. We experience that mapping of the entire customer interaction
subsequently can be a good point of departure – and then focus on some of the central
touchpoints both in the short and long term by way of specific use cases, which are
prioritized in a road map. In this way, it becomes crucial to focus on existing and
required data, which are necessary for realizing the defined use cases – and an
overview of the system situation and any requirements.
For more information on The Digital Bank 2.0, please contact SAS:
Jonas Munk
Business Advisor
Nordic CoE Integrated Marketing Management
SAS Institute
Mobil: +45 51 38 75 26
E-mail: Jonas.munk@sas.com
Twitter: Mkt_advisor
SAS Institute
Koebmagergade 7-9
1150 Copenhagen K
www.sas.com/dk
Phone: +45 70 28 28 70

20141119_ White Paper_TheDigitalBank2.0_English

Recommended

Recommended

More Related Content

What's hot

What's hot (18)

Viewers also liked

Viewers also liked (9)

Similar to 20141119_ White Paper_TheDigitalBank2.0_English

Similar to 20141119_ White Paper_TheDigitalBank2.0_English (20)

20141119_ White Paper_TheDigitalBank2.0_English