Protecting your brand, your customer franchise, and your future

Retail banks face ever more stringent challenges around increasing their profitability, acquiring customers and firming up on strategies and business models that drive customer retention. Enhancing the customer experience is critical in the attainment of all such objectives, particularly as the risk of commoditisation settling upon the retail banking sector is intensifying. Defining what is encompassed in the phrase and the practice of ‘customer experience’ is where winning banks must now focus their efforts.

Banking services are fragmenting at the instigation of cloud-first challengers and digital native global corporates such as Facebook and Amazon. The basic tenets long valued by retail banks are being eroded. By that I mean the advent of open banking the Open Banking Standard and APIs, effectively opening up competition on a broad scale.

It’s more than that, however. It’s also that the digital age has shaken the foundations of all industries and businesses. We’re in a foreign place compared to the recent past that so many of us are familiar with. We do things differently here. As customers, we have acquired new behaviours and we have higher expectations. As business people, we have to deliver on these expectations since there is now rarely a second chance to make a great first impression.

Smart banking

A dissatisfied customer or even a moderately confused one is a lost customer in a matter of seconds. As the 5G standard in telecommunications comes along – ETA 2020 – people will be able to consume services more easily, with faster broadband connections and greater efficiency in video streaming and, here it comes, VR video streaming. Everything is smart.

Everything is also fast; or as it is defined now: instantaneous. “The technology promises to change our lives” says Cnet, “by connecting everything around us to a network that is 100 times faster than our cellular connection and 10 times faster than our speediest home broadband service.” These trends, capabilities and expectations are upon retail banking. Innovation has become the order of the day, but what does it really mean?

New players who focus either on online only banking or mobile mainly banking or both, are entering the banking market– some examples are Atom, Monzo, Starling, and Tandem; they don’t have call centres, postal services, burgeoning overheads, siloed approaches, of expanding legacy systems. It’s all done from an app and it’s all sorted out in the cloud: they promise to offer digital products that live on your phone, with potential features like real-time balanced information, deep-dive spending data, biometric security, open API integrations, no foreign exchange charges, simple money transfers and artificial intelligence layering for more predictive banking.

Do these three things

Do customers care what you do now if they have such wide and instant choice in getting it done elsewhere? My colleague, Caroline Hambridge, recently discussed the ‘theory of disruptive innovation’ in a blog focused on getting jobs done. The guiding principles of delivering on customers’ needs reside in simplicity, convenience, and trust:

o  Make it simple: Remove all and any barriers to using your services (obstacles that may be encountered in complex stages, and any user interface design that is not as intuitive as it can possibly be).

o  Make it fast and relevant: Ensure the right products for every need; not an old version, or a yet-to-be fully integrated version; not a product created in isolation in a siloed department. While we’re on that topic, discontinue all siloed practices.

o  Make it human: Be open about what you do with any information you ask customers to provide.

Becoming the provider of choice

In setting out to acquire customers and retain them, banks must look at innovation from the outside in – the trick here is turning the overall question on its head. The question is not ‘do customers care about what you do’, but do you care enough about what they do? One of the biggest gifts all this technology, enabling, scale, scope and reach brings to the man on the Clapham omnibus is choice. Customers can get their jobs done easily and quickly with any provider. An integrated approach to innovation can help you increase your chances of becoming the provider that people choose.

In its ‘Retail Banking 2020’ survey report (page 22), PwC suggests that: “Banks today typically do not know their customer very well…Customers are redefining their expectations, taking their cues from other industries that offer multi-channel access, product simplicity, seamless integration and ‘segment-of-one’ targeting.”

Treat customer data as you’d like your own data to be treated

The DXC Innovation Model looks at these issues and shows to what degree certain technologies have been adopted within both banking and the retail sector. Hidden behind every business model is the importance of data both for the information it provides to the business regarding customer behaviours and needs, and for its value as a catalyst for building relationships with customers.

Note here, however, that the slightest sniff that any organisation is less than 100% ethical in how it uses the data, and/or fails to comply with data privacy laws and regulations such as GDPR (effective from May 2018) can lead to disaster, fines, negative reactions, bad press, loss of customers and any other negative result you can think of, usually wrapped up as a commercial disaster.

Supermarkets and banking

Our Innovation Model identifies a growing trend towards the provision of banking services by retailers such as supermarkets. Such players can be considered to rank alongside the social media players, for example, for bringing a fresh perspective to the sector. Their survival and success depends on the rapid acquisition and apotion of the right skills and technologies to leapfrog the sector and, in many regards, make up for lost time.

Whilst supermarkets’ banks have come from a standing start, they have the major advantage of large existing customer bases, vast databases (watch out for the caveat) and a profoundly logical rationale for being a provider of choice from the customer perspective; supermarket shopping is in everyone’s DNA, lifestyle and terms of reference.

There’s also often a high degree of innate trust and an existing relationship conduit/loyalty mechanism in the form of the store loyalty scheme. Such banks then must address innovation with the right strategic mix of priority options. New initiatives coming into banking go through numerous maturity stages before they hit the mainstream. It can be considered that early adopters of such initiatives are those who gain prime advantage.

Our model enables you to benchmark where you believe your own efforts compare to the industry. The adoption of behavioural economics’ principles, for example, can encourage customers to take certain actions that are in their best interests. This might be saving for example, through nudges, and the way choices are presented. Supermarkets can also consider the monetisation of data; earning revenue from selling aggregated customer data to third parties and from acting as a channel for cross-promotions.

To sum it up, I’ll conclude, once again, with a quote from the PwC report:

“…banks know that better customer experience leads to greater loyalty, advocacy and revenues. The winners of 2020 will develop a much deeper, holistic understanding of their customers. They will need to acquire, integrate and analyse multiple sources of internal and external data. They will be able to understand their customers’ needs, and be present with a relevant solution at the time of need. They will simplify their product sets. And they will redesign their core processes.”


The challenges ahead are extensive. So, too, are the technologies to address them. One thing’s for sure: no organisation about retail banking can slide by with its past achievements. Every organisation must commit to the ethos that the best is yet to come.