Real time engagement with data key for banks’ success

The closure of an additional 350 big four bank branches in Australia during the pandemic should come as no great surprise to any observer of the banking industry.

Even before Covid-19 hit our shores the ongoing reduction in branch footfall, particularly in non-metropolitan locations, has been a challenge across both consumer and business banking. A significant move to digital over the last 18 months has really turbocharged this shift in customer behaviour.

As opportunities for in-person contact become increasingly consolidated around key metropolitan locations, or via relatively impersonal contact centres, banks will need to work out new ways of delivering personalised experiences to their business and consumer customers.

Another issue facing banks is how to build and maintain their loan books. When announcing their results recently, the Commonwealth Bank highlighted the efforts they are making to grow their business bank loan book. This is a very competitive segment where margins are currently very slim with ultra-low interest rates. In the current cost constrained economic environment, one of the main tools banks can use to grow their business loan book is a very well designed digital end-to-end experience, which complements their in-person channels.

When interest rates finally improve, business loan books are likely to become very profitable, which explains why all the banks are chasing market share in this space. At that point, retention of that highly sought after loan book will become critical. This will be particularly challenging in a competitive and buoyant economic environment, as inflation, and potentially interest rates, start to increase as industries come back to life.

So, how do the banks ensure their existing customers continue to feel valued? Research has shown this is a key contributor to building deeper relationships, thus ensuring long term retention of their business.

First, banks need to be able to make use of the customer data they already have. Not all banks are good at this.  Recently, a senior executive at one of the big four banks told us that, despite having spent many hundreds of millions of dollars on their data strategy, they still didn’t receive timely insights which could help them prevent churn from their SME business. In fact, they often didn’t receive retention information until after customers had already left the bank.

Having the data is one thing, but being able to use it effectively in proactive, pre-emptive and contextual customer engagement strategies in real time, is key.

Secondly, it's important to be able to do this across all channels that a customer may use to interact with the bank. Having an impersonal or disjointed experience across channels will inevitably lead to customer dissatisfaction when they are not receiving what they need.

Having customer information and business logic is of no use if it can’t be accessed in the moment due to it being in a different channel aligned product or CRM platform. It is critical, in a digital first strategy, to have a decision and engagement system that is effective across all bank channels. Such a system can provide a hyper-personalised experience for the customer by leveraging information from both internal bank data and external data sets, to deliver differentiated, customised client insights.

Finally, it is important to not only create a customer journey that starts with a personalised experience for the customer, but also one that is able to deliver end-to-end fulfilment of their requirements. This needs to work seamlessly with core systems of record, be straight through wherever possible, and, where not, have clear tracking and intelligent automation in place to ensure it is as frictionless as possible for the customer.

Given the level of competition across all segments and especially business banking, being able to retain and grow market share with personalised digital and mobile engagement, is going to be a major differentiator for Australian banks over the next few years.

To accomplish this, banks will need to move away from clunky legacy programs built around individual channel and data strategies, to more agile, personalised customer experience focussed outcomes that can start small and scale rapidly across all their channels. Such a system, like the Pega platform; can provide a hyper-personalised experience for the customer by leveraging information from both internal bank data and external datasets, to deliver differentiated, customised client insights.

 

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