Re-imagining customer segmentation, introducing multiple touch points and personalized services will unlock value for customers in 2020 and beyond.
Customer centricity is intrinsic to every service industry and retail banking is certainly no exception to this rule. Stepping in 2020, customer centricity has infinitely grown due to the pandemic. Most, if not all banks, noticed accelerated use of digital channels among its customers as Covid-19 evolved from an epidemic to a pandemic. Banks have reported active use of digital channels this year with one of the major banks in Singapore (OCBC Bank Singapore), reporting a 40% surge in online transactions conducted by customers between the ages of 50 and 64. This is a clear indication of how customers are truly willing to adapt and evolve.
Fundamentally speaking, traditional customer segmentation (age, gender, socio-economic group, region, etc) has allowed banks to target customers and cross sell products and services which generate revenues for the bank. However, this approach is slowly evaporating and is being replaced by behavioural data usually related to customers’ spending habits. For a bank to become customer centric, approaching customers based on their spending and saving habit is more viable. Another area where we see customer segmentation, is the mode or channels via which products and services are offered to the customers. While customers have always craved for an experience which offers the best of both worlds – digital interaction and in-person branch banking, retail banks have to re-imagine banking and capitalise on a multiple touch point offering. This will allow customers to reach out to banks through channels, be it the internet, on mobile, through social media, employing the direct messaging services or availing the assistance of chatbots or calling services. The use of these channels will blur customer segmentation, thereby engaging a wider pool of customers.
For a bank to become customer centric, approaching customers based on their spending and saving habit is more viable.
A multiple touch point approach ensures interest of the customers, however, the need of the customers has rapidly evolved today. By this we mean, customers crave for more than just mundane transaction services, interest on savings or current account flexibility. Customers now want banks to help them save, offer insights into spending habits, provide wealth management advice and services, recommend insurance solutions and reward them points for engaging with the bank. This personalization, if not hyper-personalization of services is currently influencing a customer’s choice of bank. The extensive use of data analytics, deploying artificial intelligence and machine learning can provide a customer with such insights at his/her fingertip.
Scalability to offer products and services which revolve around a customer’s needs, while ensuring an omni-channel service, a multiple touch point strategy and technology driven approach, is going to lead a bank towards a customer centric business. Adoption of technology, automation of processes and digitisation of products and services will drive customer retention as well as grow customer acquisition. However, according to PwC Retail Banking Overview 2020, “61% of bankers say a customer-centric business model is “very important”. Only 17% are “very prepared for it.” These numbers augment the immediate need for banks – especially retail banks to transform themselves into customer centric organizations.
Scalability to offer products and services which revolve around a customer’s needs, while ensuring an omni-channel service, a multiple touch point strategy and technology driven approach, is going to lead a bank towards a customer centric business.
