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To improve loyalty and boost profits, banks must seek ways to deepen customer engagement by making use of their deep knowledge of customers to offer highly personalized services, expand beyond traditional financial services, deliver seamless, real-time experiences across channels, and provide products and services at the right price.
This new engagement model will require banks to implement a core banking platform that helps them become digitally fit, analytically strong, personalized and adaptive. For cost and complexity reasons, banks will need to develop these capabilities gradually, over time. But the sooner banks begin, the better.
Read more about Core Banking Industry Trends: American Banker Series
Similar to companies in other industries, banks are seeking ways to deepen customer engagement, improve loyalty and boost profits. That’s always been a challenge, but in today’s digital era when consumer preferences and behaviors change rapidly, sustained engagement is especially tough.
In response, an increasing number of banks are looking to revamp their core banking platforms to become more agile and responsive to consumers. It’s a critical mission for banks because customer loyalty has never been more tenuous.
According to a new Accenture report, The Digital Disruption in Banking, survey results from nearly 4,000 retail banking customers in the United States and Canada indicate that:
Customer relationships at traditional banks are susceptible to disruption. This is despite the fact that nearly 40 percent of US customers—64 percent in Canada—have been with their current bank for the past decade or more.
Most customers want a bank that’s nimble and proactive, one that can be a part of their daily lives.
Consumers want their banking interactions to feel more like their other online interactions on sites such as Google and Amazon.
Engaging customers in this new digital era will require banks to:
Plumb data for a deep knowledge of the customer.
Offer highly personalized services.
Expand beyond traditional financial services.
Deliver a seamless, real-time experience across channels to keep up with highly mobile consumers.
Monetize all customer interactions.
Offer all these products and services at the right price.
To power this new engagement model, banks need a core banking platform centered on four key capabilities:
Digitally fit. To expand beyond financial transactions to non-financial transactions and offer new products and services, the core must be open and agile, and able to integrate external information and services.
Analytically strong. To manage huge amounts of data, banks need to gather internal and external information in a structured and unstructured form, apply analytical models and deliver online, real-time relevant contextual information and insights about customer interactions.
Personalization. A personalized customer experience requires a 360-degree view of the customer, modular offerings and customized pricing that lets customers select and pay for the products and services they want.
Highly adaptive. Banks need a core that includes an application programming interface and simplified manufacturing layers, decouples data from applications, uses new technologies such as the cloud and big data, and deploys multi-tenant hubs.
For cost and complexity reasons, banks need to cultivate these capabilities gradually, using one or more approaches to develop:
An omnichannel platform to provide consistent core banking capabilities across channels.
Data as the core to better store and analyze massive amounts of data.
A customer digital ecosystem to expand the customer database.
Digital core banking to be more granular, flexible, automated and real-time.
Digital modernization to the cloud to develop a just-in-time transaction factory.
Whichever path a bank chooses, the sooner the bank begins the better. As the Accenture survey clearly shows, consumer behaviors and preferences are changing quickly and banks need certain capabilities to improve engagement and loyalty.
June 24, 2014
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