Trust and Transparency in Banking – Part 2

Trust on a brand is built over years. However, it is lost with one poor customer experience and with continuous such poor experiences, the news spreads far and wide, leading to devastating effects. For many financial institutions, such loss in trust by the customers has led to them not only being charged millions of dollars in fines, but also, millions in remediation, and worst of them all, public censure, and reputation loss!

Since 1999, Harris Poll has been quantifying the public reputation of organisations in the US, across the industries, and have found that 80% of the respondents to their survey, have always rated “lying or misrepresenting facts about a product or service”, as the top reason affecting reputation. In the latest findings, there is only 4 financial services organisations in the US in the top 50 – most favourable of them is perched at 13, others are at 17, 45 and 47. Other top reasons for the fall of reputation and trust in a financial institution are “lack of fee transparency”, “providing biased advice for my needs”, “misusing my data”.

A survey by Ernst & Young, suggests that the rise of self-financial management tools propagated digitally and the rise of non-banks and neo banks, has also contributed to lack of trust in the traditional financial institutions. With the increasing dependence and ease of use of digital solutions, the trust in technology is increasing, leading to increasing trust in the non-banks and neo banks, as they fundamentally ride on technology to reach the customers and provide them solutions.

Research firm Forrester highlights the relationship among trust, advocacy, loyalty and future purchase intent in financial services. The research says, “Customer advocacy — the extent to which a firm’s customers believe it does what’s best for them, not just what’s best for its own bottom line (in other words, TRUST) — is a top predictor of customer retention and growth. US financial services customers who rate their firms highest on customer advocacy are most likely to consider those firms for future purchases.”

The bottom line is that like any other relationship, customers base trust as the cornerstone of their relationship with their financial institution. Let’s look at how banks can potentially embrace trust as the fulcrum of all their policy making and decisioning.

To drive trust as the pivot for all organisation decisions, processes, customer centricity must be the centre stage conversation. It is a cultural decision that the board and the management have to drive at all levels, with the right incentives all throughout the organisation. The most consequential way to trust building is by motivating and rewarding the right behaviour. Right from the front-end staff to the CEO to the Board, has to find and do the right thing for their customers. The senior management must become the ambassadors of customer centricity, and trust and that must drive all decision making. With the focus on earning customer’s trust, by building a culture of customer centricity, one of the largest banks in Australia, recently announced an investment of $50 million towards a coaching, education and accreditation program for each one of the 34,000 of the bank staff. While announcing the program, the CEO of the bank remarked that their customers expect their bank to know them and get behind them with products and services to help them prosper. As a bank, they will meet those needs by doing the right thing for their customers and getting the basics right – every time.

For a financial institution, delivering complete transparency in product and service features and fees is a key driver towards building trust with customers. Research has proven positive correlation between fee transparency and customer advocacy. If customers don’t find their financial institution to be transparent on its fees, they are less likely to recommend them to others, making banks lose opportunities to cross/up sell and future business. Driving complete transparency on fees and product and service features is a prerequisite for banks to own the role of a trusted advisor. A centralised product catalogue and a centralised pricing engine sitting on top of all the product systems, that drives product orchestration at the channels and automates the pricing process for the financial institutions can go a long way in enabling product features and fees transparency.

Having a streamlined and seamless approach to customer touch points is crucial to drive customer experience and build trust. Such infrastructure is key to enabling improvements in efficiency, accuracy, and service. Imagine a customer starting a loan application on the digital channel, however, must visit the branch to finish the application with assistance. Moreover, as the branch and the digital channels are disjointed, the customer must restart the application, with some data/information loss through the movement across the channels. Or a customer sees a special offer on internet banking channel, however, he does not see that offer on the mobile app. Such poor experiences can be rooted out by a centralised platform that enables data and information flow between the channels. To drive operational excellence, back end systems must be integrated with the touch points to enable easy orchestration of product and service information and fees. Such ease with operations will propel transparency across the processes, enhanced self-servicing and even empower the financial institution staff to direct the customer to right choices.

Privacy and protection of customer data is another key factor in enhancing trust. With the widespread use of digital, data assumes tremendous significance. Thus, its misuse grows. And with this the need for data protection against cybercrimes, fraud, misconduct, etc, swells significantly. Financial Institutions need to have the right mechanisms to not only protect customer data and keep it private and confidential, but also protect against, say credit card fraud, payment fraud, or similar crimes. With the increasing demand for Open Banking requirements/commitments across the globe, managing and protecting the customer data will be even more critical. Clear responsibility of holding and managing such data is going to be paramount. It is not only about having the necessary infrastructure and process in place, but also about a proactive process and a customer centric approach. The staff needs to be regularly sensitised against such misconduct and misuse of data. The country and regional privacy laws – the likes of GDPR in the EU, The Privacy Act 1988 in Australia, The Data Protection Act 2018 in the UK and similar, need to be operationalised with regular checks and monitoring in place. Financial Institutions should look at building additional controls into the products and services that restricts misuse of any customer data.

For a typical financial institution working as different sub-businesses within the single institution, having a “single source of truth” for product and services or fees, or even customer data, can be a pipe dream. However, there are institutions, who have achieved this with varying degrees of success, and continuing the path. Unless the front-line staff or the customer service representative does not have the holistic picture of the customer, it is always going to be different for him to serve the customer appropriately and “do the right thing.” And if one asks the customer to wait and come back a few days later, the battle is already lost. This is where integrating data across silos and empowering staff to deliver the right product or service, is going to enhance the customer experience and trust.

With the growing use of digitalisation, and the experiences from the other industries, customers expect the similar superior experiences from their financial institutions. Fallout from the current Covid-19 situation and ensuing spurt in use of everything digital, the trust in tech and digital is growing at a pace like never before. This will put financial institutions at the crossroads, where they not only have to shore up their balance sheet in this uncertain environment, but also invest in ways to grow their customer’s trust in them.

Trust and Transparency in Banking – Part 1

“I explained I’m a gambler...they can clearly see that I’ve got a gambling problem because of the transactions I’ve been making, and I don’t understand why they keep offering me more money.”

- a witness in the Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry (in Australia)

For last few years, Australian Banking has been rocked by the Royal Commission’s investigation into misconduct in the financial services industry. During the hearings, various institutions have acknowledged varying amounts of negligence or misconduct in their customer dealings. In the last year’s report, all the banks and financial services institutions were reprimanded and fined to varying tunes by the Royal Commission. The remediation processes and risk management processes arising from these findings are still keeping these organisations busy, with each year multi-millions kept aside to remediate affected customers and arrest the brand erosion somewhat.

Similar enquiries into misconduct have happened in the UK as well in recent years. And the UK FCA has institutionalised a conduct risk framework. All major banks in the UK were fined in recent years for either not proper giving commensurate advice, lack of fee / charge transparency, or mis-selling. Each of these financial institutions had to go through multi-million pound of redressal changes and some had to face the dreaded public censure.

Similar problems of conduct risk have been seen in other parts of the globe. With the rise in digital transactions, multiple party involvement in a transaction like payment; financial crime, conduct risk has grown multi fold across the banks. Other examples of conduct risk in a bank could be as simple as misinforming about products/fees, charging fees for no service, serving wrong product/service, administration errors pertaining to customer data, improper advice not commensurate with the customer’s situation, charging incorrect fee or interest, improper complaints handling, and many more. All of these have been found to be areas of misconduct in the Australian Royal Commission assessment (referred above), and the FCA assessment paper in the UK. In fact, the last Banking Standards Board (BSB) report on the culture in the UK Financial Institutions, highlights small but significant declines in the areas of conduct risk, which arise mainly due to lack of transparency and controls in the systems and processes. In the long run, slowly this leads to erosion of trust with the banking industry at large.

Trust is essential to relationships in all facets of life – personal, professional, financial. We have long expected financial institutions to do the right thing for their customers. Banks consider trust a strategic imperative for them, as it is a key indicator of advocacy and future business. And if it is eroded, the impact can be devastating. But trust is often found wanting in today’s world, as can be seen from the conduct risk lens described above. As the consumer trust in the fintech and big tech grows, and as these tech companies spread their wings far and wide into world of financial services, it will be a even more important for the financial institutions to be more trust worthy, to not only shore up future business, but to protect the existing business as well.

Studies have found that the lack of transparency and controls in the systems and processes can be found in anywhere in the bank – right from product design to approval to sales process, post sales servicing, to all-encompassing culture and governance at the bank. The lack of controls or the lacuna thereof, at any stage during the customer lifecycle, can contribute to conduct risk and eventual loss of trust in the institution.

Lets us look at trust from the financial institution customer’s lens. For this customer, trust starts at the very fundamental ask from these institutions – protecting money and identity (or customer data). Fulfilling this trust imperative, may not ease competition, however, not meeting these expectations can surely lead to damaging returns. Another trust imperative is the “promises” made by the financial institution to the customer. These could simply be – “mortgage application will be settled in 3 days” or “there is no annual fees applicable for a credit card”. Such promises are made all throughout the customer lifecycle with the financial institution and not meeting such promises frustrates the customers and regularly not meeting these promises leads to loss of trust and eventually leads to them switching over to more competent options in the marketplace. Another imperative for trust is the “long term relationship building” – wherein, banks are considered for the financial advice and well-being of their customers. This is where banks will consistently deliver products and services which are fair and transparent and meet the long-term financial well-being of the customer.

All these trust imperatives are needed by the financial institution to compete successfully in the market place. All of these together would make one’s brand and the brand promise are what the financial institution must live for. It also offers the most compelling differentiation from the competition.

Negative interest rates explained

Even as the world slowly “reopens” amid record low interest rate environment almost across the globe, there are calls from the leading economists like in Australia, or from the US President, urging the respective central banks to move the negative interest rates. The Fed Chair, Jerome Powell, disagrees, and seems so is the RBA Governor, Philip Lowe, as well, given that RBA held fort and continued with the ultra-low interest rates (0.25%) in Australia, in their policy announcement last week.

Well, ultra-low or negative interest rates are not new for the world. Nordics, parts of EU and Japan has seen negative interest rates for some years now. Experience from these countries says, though, these were imagined and hoped for to be short term booster shots for the economy, however, they turned out to be sticky. And these economies have seen negative interest rates for more than 4 years now. We shall come back to them again. Lets first understand what negative interest rates mean or why are we seeing increasing calls for central banks to bring interest rates to the negative territory.

In layman terms, one can say, negative interest rates would mean, one is paid to borrow money from banks, or one is charged to keep money with the banks. Essentially, you are instigating people to borrow more and spend more and trigger the ripple effects of such spending to support the slowing economy. All thanks to Covid-19, as the world economy falls into the recessionary zone, negative interest rate is being strongly proposed as a tool to stimulate growth the world over.

As the central banks mull over this, negative interest rates would essentially mean, banks would be charged money to maintain excess liquidity in the system. Thus, disincentivising them to maintain excess deposits, and forcing them to lend more money.

As a banking customer, one’s cost of money becomes very cheap. One can borrow money at very low rates and may even be paid to borrow money. In Denmark, where negative interest rates have prevailed for a while now, upon taking a mortgage, a bank doesn’t pay the cash directly to the customer, instead, adjusts the mortgage amount outstanding each month by more than what the customer has paid back. Thereby, shortening the overall mortgage payback period for the customer. Such low rate mortgages can hopefully trigger a housing boom and have a spiralling effect on the economy, as one would then consume various other products and services associated with the purchase of the house.

Borrowers with existing debts are encouraged to consolidate their debts outstanding at a much lower rate, allowing them to save money, which can then be spent on other consumption items, which can support the overall economy.

Savers are discouraged to save with the banks. They either earn no interest on savings or are charged a fee to save. Thereby, encouraging them to spend more. Banks in Denmark, Switzerland, Sweden, Japan, where negative interest rates have prevailed for some years now, give no interest to their customers who save with them. However, they do charge a fee for savings beyond a certain threshold.

Negative interest rates are bad for the savers. With no returns on the savings with the banks, and add to it the inflation (however, low it is), one is losing money by keeping money with the bank. If such a situation prevails, it is likely to change consumer behaviour in the long run, as one has traditionally been encouraged to save. This is likely to build a purely consumption driven society, as one is incentivised to spend and not save up. This may even affect the risk averse investors, as they may end up gravitating towards risky assets in search of returns, which are not available in traditional savings anymore. Senior Citizens, who are encouraged to keep their money in savings and enjoy the sunset years of their life through the steady interest income, will be another segment of customers who will be adversely affected. This is also likely to have long term effects on the retirement planning of individuals and thus investment strategies of retirement and pension funds.

Besides, the changing consumer behaviour, there are other challenges for banks as well. Negative rates would affect the bank bottom lines significantly. They will have to find ways to increase margins to maintain profitability. Prolonged ultra-low to negative interest rates, can affect the overall health of the banks and financial institutions and could eventually lead to them holding off lending and thereby affecting the economy adversely. With depositors shying away from keeping their savings with the banks, this may even lead to hoarding of cash, heard of during the Great Depression.

With changing customer behaviour, banks will have to change their product and service offerings to the customer. Innovative product offerings, for e.g. interest earnings on deposits tied to certain cash flows by the customer, can be a good start. Or simply tying interest earnings to investment products, can be options that can be looked at. Personalisation of the product or offer to the customer, depending on the customer’s individual circumstance, would be required.

Supported by some learnings from Japan, EU, one can safely say, that cheap money does not always spur business expansion and economic activity. It just takes cost of money out of equation. Having said this, economists around the world are urging central banks to go for them. And whether they will spur the world economy or not, is to be seen.

Bank revenues for the future

As banks emerge from COVID-19, sooner than later, they will have to think of revenue and profitability. The traditional business avenues of lending and fees, will be in short supply, given the economic uncertainty all over. Banks will have to move away from just being the seller of financial products and services and start behaving like a trusted financial advisor (or may be a financial planner to start with). And what better time than today, when the unsurety is palpable.

Being a trusted advisor would start from being a trusted brand across all the touch points. This is the consistent delivery of brand promise across the customer interactions and behaviour. This is where banks would reach out to their customers with a focussed and personalised or contextualised service delivery.

Today is the time when customer needs support and guidance on how to wade through these times. This can be a starting point to gradually move the customer towards day to day financial planning to life cycle based financial planning. This can be done through simple goals based banking products and services, where banks can allow simple day-to-day spend based goals, like for daily expenses, to move future based goals like “travel to Hawaii”, in 6 months, to “down payment” for that dream house. Many banks already have such products and services, like we see in Australia. However, what we see in Australia is just a starting point, this needs to be taken further towards an end-to-end financial advisory to the customer. From goals for the individual, this needs to be taken up as the goals for the family, especially, when goals are pivoted around the family, like “purchase of the house” or “child’s education”. For such big investments/expenses, funds across the family are anyway pooled in. So, why not the goals? This can be a good source of funds and cross-sell/up-sell avenues for the banks and drive usage across products and services.

One thing that everyone is observing right now and are certain to hasten even further going forward, is the customer move to everything digital. With the demand for digital services going up significantly and customer experiences from other industries, in particular the digital native tech leaders like Google, Amazon, Nexflix, Facebook, Apple, etc, of the world, customers will expect similar experiences from their banks. This is where banks will have to think like these tech giants and adopt and adapt business models that support delivery of such curated experiences.

These business models will revolve around owning the end-to-end customer experience by orchestrating ecosystems. These ecosystems will be built by the banks where non-financial product and service manufacturers will co-exist and be part of the holistic customer experience distribution framework. The Open Banking paradigms that have been regulatory driven in most countries, and are being considered or evaluated at many others, are being purely looked at from the regulatory compliance lens. This is where banks will have to challenge the status quo and think beyond banking.

The regulatory regimes for open banking, where banks have opened the bank through APIs for the use by the 3^rd parties, can be used to build and orchestrate such ecosystems. Through these ecosystems, banks will earn revenue through non-financial products and services and increased customer contact and customer journeys. Customer contacts will increase by creating new customer propositions across customer journeys, more curated experiences. Such ecosystems can also help banks increase the conversion rates, by hyper-personalisation, to the extent of segment of one.

Imagine, if banks can build ecosystem for travel journey of the customer. Right from advising travel locations (based on customer preferences), to booking air tickets, hotels, local transportation, local eateries, to travel insurance, to travel card or forex, is all taken care of, and delivered by the bank, through the ecosystem that they have built. Each of these services in the travel journey of the customer, is provided to, by the bank’s partner, which becomes part of the bank’s ecosystem. To further personalise such experience (and increase the conversion rate), bank allows the choice of multiple partners in the ecosystem, which can render the required service in the journey. Customer can make the relevant choices based on her preference. This is where, banks become relevant to the customer and deliver the right experience, at the right time, and at the right channel.

Similarly, banks can look to build specialised ecosystems for specific needs. For e.g. an ecosystem for start-ups, or for specific industries like agriculture. Much would depend on where does one’s strengths lie and how much leverage one has in the marketplace. Bank’s can look to build ecosystem for SMEs, encompassing – taxation, accounting, payrolling, etc. services built in along with say transaction account from the bank.

Another way to “cast a wide net”, is to become part of the ecosystem of the large fintech players. These large fintech companies have a huge captive customer base, which would need financial products and services to meet their needs, or even to procure necessary service from the fintech. Bank can sell their products and services on these fintech platforms and enjoy the benefits of the expansive reach of these fintech. This increases the customer contact and increases the chances of a purchase tremendously. Banks can also become part of the purchase cycle at these fintech. For e.g., for a purchase of goods at Amazon, bank partners with Amazon, to offer a credit card, or even a loan to finish the purchase.

Banks can also leverage the digital services that they have built, for e.g.: digital identification, digital KYC, etc, which can be monetized when being used by the 3rd party partners or even these fintech. This is the model that banks must leverage in this open banking and open economy world, where banks would be seen as true enablers of the digital experience of the customers.

Design Thinking to shore up banking

Design thinking involves understanding your customer much deeply...understanding their needs and how and what would interest them with the bank when the product or offer is given to them...this is the true outside-in approach, diagrammatically opposite to what the banks have traditionally been doing. It is much about empathising with the customer and giving it back to them. It is the building block of improving the customer experience that banks are trying hard (or may be hardly trying!)

It is required to do appropriate research to understand what the customer wants...what his needs are...where his needs are. The years of data and analytics investments should come in handy for some initial understanding of the customer. One can even do primary research and focus groups with customers to understand them better. Imagine your goal is to acquire deposits. Directly observe, what do customers do...where are they keeping their money...what motivates them...what leads to their frustration?

In your goal to acquire deposits as a bank, important is to think of where the problem in entire lifecycle of deposit acquisition, and deposit accumulation lies? Essentially what is the problem statement to achieve your goal? It will be worthwhile to stack up the current customer experiences and see what doesn’t and does makes sense?

Product managers need to ideate all the possible thoughts and solutions and see what resonates. There should be a capability to test these out with a limited set of resources. Initially, it could just be simple simulation of various scenarios and checking them out for different situations. And then test launch with either a select group of customers, or even the bank staff, for a limited period of time. It would be interesting to keep a feedback loop, to gather the feedback and improve the offering, before its launched for good to the wider customer base.

The most encompassing theme of design thinking is empathy, and hence, the customer, as the fulcrum of all decision making. Thus, customer needs are paramount. With this belief, product managers will have a customer centred offering, which not only serves the customer’s larger purpose and drives up the customer experience, but also meets bank’s demands of revenue and profitability.

Personalisation of the product or service to the customer needs is one such simple way of applying design thinking in day-to-day banking. To facilitate this seamlessly, banks needs a process and a capability which can enable it across the products and services and customer segments within the bank. Imagine, if the bank is able to personalise the deposit accumulation offer to the customer, who does a lot of month-on-month credit card transactions, or a personalise the deposit rates because the customer utilises the overdraft facility. Important to note, it is for “a” customer.

In the open banking and open economy world, when it can be much simpler and easier for the bank to design offerings for the actual need of the customer, and thereby, own the end-to-end customer experience. Imagine, the bank being able to fulfill the entire home buying journey of the customer, where the actual need is the house, while the mortgage provided by the bank is just incidental. Other services in this journey – brokers, legal services, utilities, white goods, logistics, etc, can become part of the bank’s ecosystem and larger catalogue of products and services that the bank can offer. The customer comes to one stop shop and gets all the services in a package that fulfills his actual need.

Another way to imagine use of design thinking to banking is the movement away from fee-fleecing account based model to customer-centric value based model. Of course, the widespread digitalisation, driving personalisation and value based experiences from other industries, leading banking customers to expect the same. Such value based models are necessitated by such customer desires. At the heart of it is customer empathy and design thinking. Instead of paying high transaction fees on accounts, customers are willing to pay for personalised experience, including relationship based pricing.

Digital companies in other industries have taken such value based models to drive supreme customer experience and brand value for themselves. One such company has recently decided to discontinue the subscription and hence, the subscription fee, for the inactive customers. Their belief to charge only if the value if being created for the customer, is the defining moment not only for their industry, but for the other industries as well.

Similarly, design thinking can be used in multiple other ways to offer curated customer experiences. It is an important management principle that banks are starting to leverage and gain wholesome benefits across the board.

Gamification and banking

Are customers rational? Think about it for a moment… And you will find that like you and me, any customer is emotional at times. At times, he is logical too, but at certain instances, intuitive and inconsistent. Guess what, he gets emotional at winning a “candy crush” level on his mobile, or even at not winning one, and wants to try again, and again, until he wins. Such behavioural aspects and learnings thereof can be leveraged in the world of finance via use of gamification strategies.

Banks can leverage simple gamification ideas like “framing” – where one presents the options carefully in front of the customer and with consistent reinforcements. It could simply be offering a positive bias for a particular financial behaviour, or, a negative bias for a different behaviour. Bank can also use “herd instinct” – where banks can drive customers like a herd towards an objective. For e.g., steering customers towards a particular goal or a financial behaviour. Goals based ideas are already picking up in many markets to achieve better personal finance objectives. However, underlying principles of gamification are at play.

Banks can use gamification to entice customers to bank with them in groups and apply these behavioural biases to guide customers to an objective that is a win-win for both the sides. For e.g. a simple offer for a family, where, as a family if they spend, say, $2,000 on their credit card each month, they get bonus cash back, and if they do more, they get more. And all along the month, one keeps track of these spends at the customer or the family level and communicates regularly to shore up the required behaviour from the customer. Such simple yet powerful strategies have given banks tremendous success in the mid to long term.

Gamification is about designing the curated customer experience that matches the needs of the customer and takes them on a journey. There has to be a sense of self expression of the customer, hence, this has to be personalised, has to be competing in nature, for e.g., competing for a campaign benefit against fellow customers, and has to be transparent to the customer, especially in the progress made at any point in time.

Simple ideas like providing comparison savings rates for similar customer population, or progress gaps shown in temperature gauges, or collection and management of individual or family savings goals, can go a long way in utilising gamification to drive right customer behaviour and achieve business benefits. Imagine, the goals based constructs discussed above, can not only help customer build their emergency funds (and improve personal finance), but allow banks to get low cost funds with them.

Gamification is not just about points and badges (ofcourse, getting name on the leader board does give one a lot of satisfaction!). More and more are engaging in these games. In such times of work-from-home, even more. According to research, 53% of the regular gamers are young, between the age of 18-49, which is a sweet spot for the bank. Engage them early for a long term relationship. Bulk of them (more than 65%) play games on their mobile devices, which would have surely gone up even more in today’s world. This opens up tremendous opportunity for banks to use gamification to direct customer behaviour.

Banking in these unusual times…

World around us it totally different than what was 8 weeks back. On one hand, all countries are working tirelessly to control the spread of Covid-19 and thus limit its ever-increasing and far-reaching impact on their respective economies, and on the other, the very countries have returned to the low interest environment, to fuel in the economy, already reeling under.

All the lockdown, work from home, is already putting pressure on banks to driver better self-service digital experience for their customers. Thereby, hastening the speed of digital transformation at the banks. Banks who are thinking to drive digital experience from front to bank, will continue to survive and come out with flying colours. This would mean, banks need to be nimbler in their systems and operations, agile in their ability to respond to the customer’s requests, and in many cases anticipate the requests beforehand, and deliver a curated experience. This could well lead to complete self-service offerings through digital channels, where customers can create their experiences, their pricing plans by themselves – based on what they want and how they want, or better be, how much they are willing to pay or commit to.

Such times will surely bring in more regulation and compliance towards customer transparency and customer experience delivery. This would lead banks to be more open with their customers in terms of what is communicated, when is it communicated, and how is it communicated. Banks will have to have automated processes of experience orchestration, which is not just jazzy front-end channels, but more around product/service, pricing, offer delivery. They should be able to deliver these on-demand and still maintain the required levels of transparency and controls. The capacity to orchestrate such experiences with compliance would segregate the best from the better.

For long, we have heard that data is the key in today’s digital world. And guess what – banks have possibly the best data on their customers – be it their demographic information or their transaction data or their balance data. To top it, Open Banking adds to such already existing data, as now you can even get information on your customer’s balances, transactions with the competition next door. Leveraging this huge amount of data to your advantage is the key. Using such data to create targeted campaigns, offers, pricing, potentially using the data to change or drive the customer behaviour, is going to deepen customer relationships, drive loyalty and delivery sustainable value for both the sides.

Such data can be used to create personalised curated offers for the customer. If we can link up the household or any such network/group, we may hit a gold rush. Imagine, a bank being able to draw in funds from the entire household, by giving a personalised pricing across the household. Banks also have one of the biggest intangible assets with them – their customer’s trust! Envision the power of data leading to targeted offerings, enhancing the customer’s experience and thereby their trust in the bank!

A micro-segment (to the segment of one) targeted approach where the special pricing and offer is linked to the profitability and propensity to accept the offer, could be a game changer in these tough times. Customers get what they prefer or want, and banks get a more sustainable business for the longer term. And this potentially creates a virtuous circle of deep relationships and better revenues and profitability.

A bank in Asia, has been able to drive family-based offers to link the funds and spending across the family. This has successfully drove up the balances and card spend multi-x and has made the bank believe in the delivery of curated experiences for their customers as the way forward for their business.

Already the world over, the banks were being forced to work on better customer outcomes, and that could mean foregoing fees and delivery of better customer experiences. Such approach to banking would orchestrate the paradigm shift from the high fee model to value-based model – wherein, you charge the customer for the value you deliver. Value through what is being delivered is what the customer wants, how he wants and when he wants, and thus the customer is okay to pay for such value being delivered. This hyper-personalised, per-customer approach, coupled with the data that banks already have, can deliver the true customer experience the customers of today desire from their banks.