The competitive playing field for banks is evolving quickly, introducing agile new competitors and challenging traditional formulas for success.
Customers, not products or business lines, are the centre point of strategies and business models today.
The ability to leverage large volumes of data and new technologies to understand customers’ journeys and deliver personalised offers and experiences is now considered critical to driving loyalty, engagement and, ultimately, growth.
Banks that leverage data to drive omnichannel engagement and seamlessly embed themselves in customers’ digital journeys can enhance loyalty and drive this growth – according to the latest World Retail Banking Report 2022.
Rapid digitalisation and the rise of platform business models are changing customer needs, challenging banks to embrace new ways to win greater wallet share and grow.
Customers today expect their phygital journeys – those that bridge the digital and physical worlds – to be relevant, engaging, and frictionless across channels.
Orchestrating those experiences with data- driven insights, user-friendly technologies, and customer-centric business models has emerged as a key to customer acquisition, retention, and loyalty.
This is a competition that banks could lose but don’t have to. Nimble FinTech firms and other digital natives have responded to changing customer expectations by leveraging data to hyper-personalise value propositions and grow customer mindshare and wallet share.
They understand that as customers become entwined in the platform economy, embracing one-to-one personalisation and experiential banking is the pathway to enhanced loyalty – and ultimately growth.
Incumbent banks have the customer trust, data, and delivery channels to compete in this hyper-personalised environment; the potential for growth should provide the incentive.
For example, CIBC, the Canadian bank, has seen customer acquisition rates in three primary lines of business increase by 65% due largely to personalisation efforts.
Even so, most banks are burdened by organisational and data silos and aging legacy systems. Many lack the commitment of FinTechs to build the analytics and digital capabilities needed to drive customer understanding and fuel personalisation at scale.
At a time when customers can switch banks with a tap of their screens, this gap between what customers expect and what banks can deliver poses a significant threat to long-term relevance and growth.
In the 2021 World Retail Banking Report, it highlighted the emergence of the Banking 4.X era, where banks embed themselves in customers’ digital journeys in ways that are inclusive, invisible, and sustainable.
To deliver the personalised omnichannel experiences and ecosystem journeys customers want, banks must pivot to platform business models that leverage data and new technologies.
The formula for growth today sounds simple – provide customers with the right products whenever and wherever they’re at in their digital journeys – but it is challenging to execute.
Today’s chief marketing officers (CMOs) are on the frontlines of this transformation.
In their evolving roles as chief customer strategists, they are leveraging technology to orchestrate individual customer experiences and coordinating with chief data, technology, and compliance officers to break down data silos and ensure they have the capabilities needed to deliver data-driven experiences in real-time.
As described by Zac Maufe, managing director of global financial services solutions for Google Cloud US, “the most significant business change is moving from human-to-human to technology relationships. CMOs, or chief customer officers, are core to driving that transformation.”
The goal, as always, is enhanced loyalty and growth; it’s the means and tools that have changed.
- Customers today expect banks to provide personalised experiences that are fun, engaging and consistent across all channels, physical and Banks have the data to deliver, but often fall short compared to FinTech and Big Tech competitors. They need to invest more in systems, governance and AI/ML technologies to gain insights that can help them create stronger connections and maximise customer value.
- Embedding finance in customers’ ecosystem journeys has emerged as a key avenue for growth, but also poses unique Platform-based business models require that banks think about issues they have never before considered, such as how to maintain exclusivity and avoid brand dilution or how to bundle financial and nonfinancial offerings in ways that are good for both customers and the institution. Platforms offer the potential for new revenue, but also require new metrics to gauge success.
- Chief marketing officers (CMOs) are playing a pivotal role in this. Once managers of mass-market campaigns, many are now chief customer strategists, tasked with orchestrating hyper-personalised, automated customer experiences. It’s a data- and technology-driven ask, requiring CMOs to coordinate with other C-Suite executives to break down data silos and gain usable insights.
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