“New customer demand amid changes in technology has proven itself to be one of the key forces in shaping new competitive frontiers and is carrying a high priority from a strategic standpoint.”
A fundamental understanding of how value for companies and their customers is going to be created given certain competitive forces is at the heart of good strategy. In the financial services industry, new customer demand amid changes in technology has proven itself to be one of the key forces in shaping new competitive frontiers and is carrying a high priority from a strategic standpoint. Many financial institutions are rolling out diverse digital initiatives in their efforts to adopt a customer-centric approach. Vast sums have been spent on these efforts, but for the most part, they have only served to provide banks with a list of actions, not a cohesive strategy that redefines how to create customer value.
The future belongs to banks that put the customer at the core of their business model, but how can they effectively achieve this?
Banks need to ensure that they have developed a clear and consistent customer-centric vision. For this to prove effective, they need to create measures to ensure that employee behaviours are aligned to the customer vision, which in turn provides a framework for the functional alignment of business model activities with a customer-centric approach.
Applying data-driven processes aimed at shaping customer service or product offerings, to ensure that the right experience is delivered for each of them, is a proven approach for banks to deliver the tangible vision to their customers. Banks can apply a ‘customer journey’ approach, which traces the touchpoints a customer has with their bank to yield deep insights on their behaviours, needs and preferences. These insights can then be used to tailor products and services accordingly, and make better decisions for customers across the entire value chain.
Deep knowledge of customer needs and preferences is an essential input for core functions within the bank, which need to be designed to represent the customer focus. It is important that the core functions have the power to implement solutions to the customer’s benefit. Besides such powerful core functions, banks also need overarching customer and product management to ensure that the needs of the customer are integrated in all core business processes. As banks look to achieve this, they must determine which capabilities they want to build or enhance themselves, and which they should leverage through strategic partnerships. They need to define the best approach to effectively address consumer pain points, achieve savings for the bank, or indeed both.
Giving the customer centre stage in the business model must begin with the development of a clear vision, supported by data-driven insights, overhauled core functions aligned with customer and product management, and smarter partnering. If they can do this, they will win share of wallet, market and mind – all essential to long-term success in today’s low-growth, low-margin environment.
Callum Russell, Senior Consultant at Axis Corporate.