Data and analytics that can sometimes verge on the “convenient” and “creepy” will be crucial if banks are to truly address their customer needs.
Speaking at the recent RFi Group Global Digital Banking Conference in Auckland, IBM’s Kieran Hagan (pictured), opened his presentation by providing a global perspective on whether banks were meeting customer expectations.
The business conducts regular global surveys. From this research, only 30 per cent of customers believe banks provide personalisation, however, banks think that this satisfaction level is 45 per cent.
“A majority of financial initiatives are still put under the tag of customer engagement or customer experience, yet the reality is, harvesting that for a personalised experience hasn’t resonated as the statistics show. So you're not quite hitting the customer base,” Hagan said.
As team leader for big data and analytics, Hagan is a self-confessed technologist and sci-fi geek. He also acknowledged that it was “awesome to be in IT because it was also the enabler to new business models and potentially agile delivery”.
Banking at point of time
He highlighted some interesting initiates adopted by banks that were both “convenient” but a “little creepy".
A European financial institution uses real-time analytics to prudently provide overdrafts to customers. For example, if a customer’s balance is a little short towards the end of a pay period, they can get pre-approval for an overdraft on their card.
Another institution looked at ways to avoid customers pay billing fees by using predictive analysis that understood the monthly payment patterns of customers. He calls this “banking at point of time”.
Banks can also determine a customer’s product or service need using data and analytics that looks at a customer’s past propensity to spend.
The future is robots
Other bank’s like ING use analytics in their real-time marketing. What is impressive about this example is that a customer doesn’t even have sign into the website. Using cookies, they can navigate where they are on the web page.
The bank can tailor customised services while the customer is browsing. “This is a different style of interaction compared with passive log-in options.”
For Hagan, “if the future doesn’t include robots, I don’t want to be part of it”. At this point of the presentation, he explored the role of CogniToys. CogniToys are an interactive tool that includes question and answer features. As a parent, the initiative certainly resonates with Hagan and his five-year old child.
Initially funded through Kickstarter program, IBM Watson are now helping to develop a dinosaur CogniToy. What it does is it interprets naturally the question and provides the answer. “I got an hour and a half back on the weekend as the toy and my child created their own stories.”
A similar concept can be found in banking through the use of SoftBank’s Pepper the robot. This type of technology has already been embraced by Japan's Mizuho Financial Group. Pepper can understand human emotions and even talk to customers in different languages.
The robot can provide basic information as well as information on discounts. IBM Watson is also helping to further develop this technology.
According to Hagan, the cut-throat world of retail has put the sector ahead in terms of innovation. The US supermarket giant Walmart uses “geofencing” this means every device has sensors that tracks the foot traffic of its customers in its stores.
This will have lessons for the financial services sector who Hagan believes is at a crossroad. With the rise of peer-to-peer lending and new payment platforms like Paypal, financial institutions need to remain relevant to their customers. They must adopt smarter banking, that is linking their customer data and insights with their trusted brands.
“Banks have the bulk of customer information at their fingertips. They understand their needs probably better than the individual does. Banks are also still seen as a trusted brand," he said.
Where the opportunity is ripe is by bringing innovative capabilities in data and analytics and with that trust and security, to create the services needed by customers.
“By doing this, banks have the perfect scenario of essentially owning the customer experience," he concluded.
For full coverage of the RFi Group Digital Banking Conference in New Zealand, see the April issue of AB+F Magazine.