Recognising Changing Customer Behaviour

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					         POINT OF view

Recognising Changing Customer

Alex Sion, vice-president of financial services at SapientNitro, examines the impact
of technology on retail banking. He discusses what banks can do to innovate and
stay relevant as they enter into what he calls a new era of engagement banking.

There was a time, not so long ago, when community banks were the centre of civic life.
First, with branches in every village and on every high street; then the ATM and, most
recently, digital technology –- such as online banking and mobile banking –- came along
and changed the game. Digital channels have undoubtedly made financial transactions
more efficient for both customers and banks alike, but they have also distanced banks
from their customers.

Personal relationships have been cast aside in favour of more profitable, efficient and
convenient digital channels. In a recent SapientNitro consumer study, 72% of customers
said they did not know the name of a single person who works at their primary banking

Banks have become bigger, but because of a lack of personal knowledge and
understanding, risks have increased on both sides. As the global economy tanked,
consumer distrust with banks swelled. And now banks, who need to re-connect on a
personal level with customers, are challenged with how to re-engage customers through
channels they no longer frequent or treat in a very transactional way.

In the middle of the economic downturn and financial legislation reform, perhaps nothing
has affected the banking industry more in the past few years than the impact of this
technological innovation on customer behaviour and how central technology has become
in their personal lives.

In the SapientNitro consumer study, nearly half of the respondents indicated that they
would do all of their banking activities via digital channels if they could. With this in mind,
consider Morgan Stanley’s projection that by 2013, the annual shipment of smartphones
will outpace that of PCs by nearly 200m units coming from a lagging position in 2011.
Stats like these point to an inevitable paradigm shift for the financial services industry
in terms of marketing, distribution, service and the end-to-end client experience.

                     © Sapient Corporation, 2011
         POINT OF view

The rapid mainstream acceptance and ubiquity of smartphones, the explosion of
social media websites such as Facebook and Twitter, and the mass adoption of online
banking, bill paying and personal finance tools, have collectively made an indelible
impact on the way customers prefer to interact with their banks.

Banks are now having to engage current and potential customers on their own terms
–- when, where and how it is convenient for the customer, whether that is ideal for the
bank or not. Now, the offshoots of the same digital technology which created personal
distance are creating an opportunity for retail banks to evolve and become more
engaged, while empowering consumers at the same time.

‘Engagement banking’
Welcome to the era of ‘engagement banking’. Customers today demand personal,
rich and engaging experiences regardless of channel, including in-person contact at
branches, online and mobile banking, interactive voice response systems, ATMs, direct
mail and more. The consumer is now calling the shots.

There are four key areas which banks need to look at as part of a new engagement
banking model that will enable customer intimacy to be delivered at profitable scale:

•   Re-inventing online banking –- changing a very transactional client experience
    into one that is more engaging, personal and emotional
•   Digital communities –- taking the ‘community banking’ experience into the digital
    age as physical communities now become digital
•   The shift in marketing spend –- such as replacing mass media and traditional
    telesales or mail-driven direct marketing
•   Re-engineering of the multi-channel customer experience –- ‘re-stacking’ the
    customer experience hierarchy from branch, phone, ATM, online, mobile, to the
    other way around

So where is the new customer experience headed? It is going towards rich and personal
online experiences, a mobile wallet, social media, ‘branches of the future’, touch-
screen ATMs, personalised digital marketing and more. Hot new technologies, such
as geotagging, augmented reality, near field communications and radio frequency
identification, will enhance customer connectedness and engagement. Out of this will
come opportunities for location-based merchandising and personalised marketing.

The online banking experience can also leverage personal financial management (PFM)
to huge benefit. Online financial tools, such as those provided by Geezeo, Mint, Yodlee
and MoneyStrands are now playing a critical role in engaging customers. Not only do
these PFM solutions provide customers with powerful, easily accessible modeling,
analysis and transactional tools, but when executed correctly, they also can convert
data into the relevant, actionable information that consumers crave.

                    © Sapient Corporation, 2011
           POINT OF view

A successful, multi-channel PFM strategy is critical to moving beyond the transaction.
Furthermore, the mass adoption of mobile, mobile payments and person-to-person
payments will start to shape banking in the near future. However, the area which pushes
most retail banks outside their comfort zone is the social media channel, as they are not
sure how to engage successfully with influencers via this medium.

The ownership and drivers of social media typically sit within the PR/marketing department,
but banks needs to start moving it towards the customer service remit, as this is where it will
have most impact and engagement with consumers. They also need to accept that there will
be challenges in measuring the ROI of social media investment.

Innovative solutions such as American Express’ Open for small businesses, social media
customer service efforts by retail banks such as Bank of America and Wells Fargo, and
social savings and lending products such as Smarty Pig have all demonstrated good
examples of early social media/digital experimentation, and will no doubt influence the
future industry direction.

The simple truth is that banks must innovate now or be disintermediated out of existence.

This article first appeared on Retail Banker International in January 2011.

                                            Alex Sion, Vice President Financial Services, SapientNitro

                                            In his role as Vice President Financial Services based in
                                            New York City, Alex leads Digital Strategy for the Financial
                                            Services sector. He has over 10 years of experience in digital
                                            strategy for financial services firms as a management
                                            consultant and as an executive for a leading wealth
                                            management firm.

     Prior to SapientNitro Alex was with Citigroup Global Wealth Management where he was a
     Senior Vice President. Alex was part of the management team that founded myFi which
     was a new business Citi Global Wealth Management created to focus on the mass affluent
     segment. At myFi, Alex was responsible for defining and launching the core business/
     technology platform, client services environment and distribution strategy. All of these
     had a heavy focus on leveraging digital/online mediums.

     Prior to Citigroup, Alex was on the leadership team of Capgemini’s Wealth Management
     practice. At Capgemini, Alex worked with a variety of leading retail banks, brokerages and
     other diverse wealth management firms to develop sales, marketing and distribution platform
     strategies. He had a significant focus on advisor desktop and online transformation effort
     working with companies like Merrill Lynch, Morgan Stanley, ING, Ameriprise and Wachovia.
     In addition, he was a primary author of the World Wealth Report –- an annual sizing and
     analysis of the high net worth market landscape published by Capgemini and Merrill Lynch.

          For more information, please phone +44 (0) 207 786 4500,
          email or visit

                          © Sapient Corporation, 2011

Description: Alex Sion, examines the impact of technology on retail banking. He discusses what banks can do to innovate and stay relevant as they enter into what he call a new era of engagement banking.
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