Today, customers want their resources to be at their fingertips. As technology drives dramatic changes in consumer behaviors and expectations, it uproots traditional transactions for all players—including banks.
As we see the barriers and boundaries between industries blur, new players including non-banks are recognizing broader value opportunities arising from single banking services such as: advisory, payments, savings and lending. We estimate that these competitors could put at risk as much as 30 percent of bank revenues by 2020.
The opportunity for banks lies in fighting these competitors by opening up the value chain—and moving from Payment to Pre-Sale (digital marketing, targeted and localized) and Post-Sale (loyalty, social media write ups, x-selling). Digital offers the banks the opportunity to face these players head-on. With mobile banking, banks need to realize they already have a place in the customers’ online world and can be central to customer lifestyle.
The Everyday Bank
Banks are in the unique position to take a central role in consumers’ everyday activities. Thanks to the rich data banks possess about their customers’ purchasing and spending habits, banks occupy the perfect space to leverage their data management capabilities. They can ensure ecosystem partners get point-of-purchase access to buyers. At the same time banks could anticipate customers’ needs and point them to ideal providers.
We’re already seeing High Performers in the Banking industry reinventing themselves as a Value Aggregator, Advice Provider and Access Facilitator instead of being a purely transactional provider.
- Advice Provider—the bank, as owner of market information, can provide purchasing advice services enabled by unique customer trust.
- Access Facilitator—the bank, as a key player in the social community, matches individual customers’ needs with relevant suppliers (SME customer and non-customer offers).
- Value Aggregator—by knowing the customer, the bank can facilitate the buying process (online and off-line) and give easier access to services base on small ticket items (e.g. transport, daily consumption).
Banks are capable of fulfilling not only their customers’ daily financial, but also their non-financial life needs. These banks engage customers on their terms by influencing the customer at the Zero Moment of Truth, and create experiential interactions. They do no merely sell a mortgage but support the “life experience” of leaving home, getting married, having children. We call these banks the Everyday Bank.
It’s all about the consumer
By creating connections, the everyday Bank brings together an extended ecosystem of provider partners offering goods and services in every area of home and consumption, health and protection, travel and leisure, communication and transportation.
By engaging proactively and smarter on social networks and in every personal interaction, Everyday Banks can count on deeper customer relationships and increased profits thanks to a higher volume of lower-cost transactions. Most importantly, customers gain efficiency from this proactive interaction and enjoy an improved experience that meets their increased expectations, while saving time and money in a more personalized and trusting relationship.
However, recent press in the Netherlands has highlighted concerns that customers have towards the use of personal (financial) data. The relation banks have with their customers is of a different nature than in other industries and customer concerns about privacy are no strong indicator for willingness to share data. Factors that do drive (un-) willingness to share personal data and that banks have to care of are awareness, control, benefit, the right to be ‘forgotten’, and opt-in.
So what sets the Everyday Bank apart from “ordinary” banks? Instead of acting in a push environment, where banks develops products, services and content to sell, the Everyday Bank is ubiquitous, melding into the digital ecosystem where the customers already interacts. This is a ‘pull’ as opposed to ‘push’ environment in where they can drive continuous daily interaction with customers. This way banks can transform their interactions with customers, can count on more personalized and trusting relationship and in turn acquire, retain and connect with new customers.
For banks, the “to be or not to be” an Everyday Bank is a “mission-critical” decision, where those who do can expect a gap of 50 percentage points in operating income over those banks that do not!
