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 / Autumn 2013 / Issue 72(originally published by Booz & Company)


To an Analog Banker in a Digital World

• Treat mobile banking as a unique, separate channel, not a “small-screen Internet.” The great value of mobile technology is that it finally delivers on the Internet’s original promise of 24/7/365 access around the world. Mobile banking allows people to do everything anywhere anytime, including reporting fraud claims, making payments, managing loyalty programs, and transferring funds, with very low transaction friction. Make use of mobile’s geo-location capabilities for branch and ATM locators, and potentially for basic needs such as identity verification.

• Segment services by what customers want, not in ways that justify your business strategy. The traditional business model for many retail banks is based on the business-centric premise that high-net-worth clients deserve intensive face-to-face contact. But that’s not necessarily what they want. They want preferential treatment and a high level of care, which may or may not mean sitting in front of a person in a bank branch during business hours.

At Citibank, our segmentation analysis showed that our best customers were our middle-aged, tech-savvy, high-income urbanites and suburbanites. They were devoted to using our online and mobile capabilities, and they loved every innovation we introduced. Today, with the mobile Internet, Skype, texting, and social media at their fingertips, many high-net-worth consumers expect instant communication and delivery, anytime and anywhere. Why would they make an appointment and trek to a branch when they could just FaceTime their banker or investment advisor?

• Devote 70 percent of your investment to enabling technologies. Emphasize technological capabilities that help you reach customers without bricks and mortar—or potentially without any human intermediaries. For example, rather than building a large face-to-face sales force, use technologies such as and Skype to create “high-touch” services that provide a mix of human- and computer-based interactions. You can also use a variety of advanced technologies to further develop your marketing capabilities for competitive advantage. These include segmentation, cross-selling, most-likely-to-respond models, prospect mining through retargeting, next-best-product marketing, product and offer design, CRM, and database mining. The data provided by social media can help you better understand your customers’ motivations and intent to buy. Use LinkedIn feeds on job changes or Facebook information on new homes and new babies to trigger loan or insurance offers that will have greater response rates.

• Use Web-based channels to merge delivery excellence with customer intimacy. One of your most important steps is to consolidate customer information—for example, pulling in data from one part of operations to another, so it doesn’t have to be reentered when a customer is opening a new account. This says to a customer, “We know who you are, and we value our relationship.” Unfortunately, it’s very difficult to built an aggregated mega-data-warehouse in most institutions, but you can fake it with graphic user interfaces. We used this at Citibank to bring customer data from personal to investment accounts. Your contact center will draw from your customer data in the same way, enabling them to offer investment, retirement planning, insurance, mortgage purchasing, and other guidance, tailored to each consumer’s needs and shifting as his or her patterns of activity change. Using customer data this way will also equip you to cross-sell more effectively, to better assess customer profit contributions against the cost of service, and to change your pricing accordingly.

• Don’t abdicate responsibility for digitization to your technology or marketing groups. Because of its overall importance to your bank, digital technology should be managed as a capability within the business, not as a marketing or branding adjunct, and not as a technology deliverable. Neither IT nor marketing by itself is well positioned to fully realize the complex potential value of the Internet and mobile channels in acquiring new accounts among the tech-savvy younger consumer generation, in promoting cross-selling, and in driving business efficiencies.

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