As we have now presented and consolidated our views on the Everyday Bank, it is worth making some considerations on the approach and the journey banks will need to contemplate, without necessarily giving a deterministic or closed-set solution.
It should be highlighted that the journey to become an Everyday Bank is not trivial – it is not a “common” transformation, chiefly due to the extent of management focus required and the level of resources and capability involved. And it is not “merely” about providing an excellent customer experience among all channels, powered by a backend renewal. The journey is much more involving!
I believe, principally, that it is …
- An evolution in the way a bank understands and engages its customer, by providing whatever solution is needed in any specific context;
- A strong rethink of the role the bank wants to play in the overall consumer ecosystem, made up of individuals, commercials, corporates and public institutions – and building a collaborative network of partnerships where each player finds a compelling (financial or strategic) reason to cooperate and support the bank in building and assembling new bundled solutions for the end customer;
- A fantastic opportunity to “refresh” the Bank’s internal culture and the way the customer is regarded (and thus need for a solution-driven approach);
- A transformation that effectively requires a flexible and real-time operational engine.
Having said this, I think different models of the Everyday Bank could exist – each centred on the role the bank wants (or is able) to play in the ecosystem (where the ecosystem is the key differentiator). These factors help influence a bank’s approach:
- Brand strength, and the bank’s systemic nature;
- Existing market share – of customer segment, of offer;
- Physical footprint, the regional presence and network of its merchants;
- Existing and/or possible relationships with other ecosystem players.
This will create options for banks implementing an Everyday Bank approach, including:
- The range of solutions offered, and whether to specialize on specific end-to-end solutions, centred on selected vertical areas of excellence rather than covering a full set of needs, and focus on “best” pricing;
- The level and degree of responsibility the bank is willing to assume regarding partners’ offers bundled with bank’s services (aggregator vs. sponsor/guarantor role) and related reward models;
- Governance model and the bank’s role (ecosystem bank-centric, JV, consortium)
In my view, these are not necessarily mutually exclusive options, but likely to be different stages of a continuous, complex evolution path – where, at each stage, the results and benefits are evident to customers and measurable by the Bank.
If I were to try and identify the stages I would roughly suggest these:
- No doubt the first step is to offer an innovated portfolio (thanks to the opportunities offered by digital channels) of products and services, on an omni-channel basis, with a coherent customer experience – an experience which gives the customer the ability to choose how, and through which channel, they interact with the bank (ideally, without needing to go to the branch unless highly specialized services are required). This should be facilitated by the outcomes of omni-channel programs we assume to be already in progress.
- The bank needs then to implement a minimum set of capabilities required to provide an end-to-end customer experience that results in significantly improved levels of customer engagement, and that truly shows “big change” to customers. Banks need to proceed quickly with focused interventions on specific legacies (i.e., launching digital payments/d-wallets or digital lending) whilst developing initial analytics capabilities to propose context-based offerings and real-time answers to customer needs.
- Now is the time to set up the ecosystem (bearing in mind the bank would have started work on this from Day One). The bank must define governance, business rules and a revenue sharing model, select partners and key players, define categories on offer and related steps. This is a complex stream, but the good news is that banks (from the day they were “invented”) have the first nucleus of the ecosystem inside them – now is the time to re-value this approach with digital tools.
- Finally, to succeed in becoming an Everyday Bank, a bank, in parallel with these intermediate and focused initiatives, will require a structured roadmap to evolve its capability model by holistically applying digital levers throughout Distribution & Marketing, Core Banking Operations & IT and Governance. The operational transformation will need to create a “real-time engine” able to manage (flexibly and efficiently) both mass transactions as well as personalized services. The engine should:
- Put data and analytics at the heart of the bank (across all application layers) to provide contextual information and real-time personalization
- Enable shaping and bundling of services by componentizing the offer and deploying a dynamic engine to manage real-time pricing, risk, payment, settlement, etc.;
- Make the offering components so granular that they can be “recalled” and used by distribution partners, through the use of APIs
- Implement significant levels of end-to-end digitization to enable “lights out” back-office and straight-through-processing and achieve “right first time”, thus reducing back-office effort by 80% (with the remaining 20% to be focused on post-production activities);
- Reduce the portfolio of managed applications by 50-70%:
- 20-30% from optimizing core applications (and becoming adaptive to the customer interaction context);
- 30-40% from moving into the Cloud all non-core applications;
- The IT architecture needs to be “open” to enable any-to-any integration with ecosystem partners, resulting in an ability to deploy new services/processes on-the-fly and reduce time-to-market by 40-50%.
I believe this is a once-in-a-lifetime opportunity for banks to use an ecosystem framework to rethink their role with customers and society, reclaim the centre ground in the hearts of their customers by servicing their needs as and when they materialize, and re-evaluate their profitability model!