Bankers need to know their cus­tomers bet­ter

Finweek English Edition - - Companies & Markets -

TO SUC­CEED IN the in­creas­ingly com­pet­i­tive global bank­ing in­dus­try, bankers need to know their cus­tomers bet­ter than ever be­fore; es­pe­cially now as the world grap­ples one of its big­gest eco­nomic crises ever.

They should fo­cus their strate­gies on prop­erly manag­ing the cus­tomer ex­pec­ta­tion, ser­vice and cost gaps, and also learn how to ap­ply tech­nol­ogy cor­rectly to im­prove trans­ac­tions and hu­man in­ter­ac­tions, not re­place them.

South African bankers could do worse than fol­low the ad­vice of­fered for cre­at­ing a new com­pet­i­tive agenda for SA banks, from key lo­cal and in­ter­na­tional bank­ing thinkers at a re­cent fo­rum hosted by the Uni­ver­sity of Pre­to­ria’s Gor­don In­sti­tute of Busi­ness Sci­ence (GIBS).

Lead­ing the charge with his un­con­ven­tional prob­lem-solv­ing ap­proach was in­ter­na­tional “poly­math” Joseph DiVanna, MD of Maris Strate­gies Ltd. He asked some chal­leng­ing ques­tions de­signed to help bankers achieve top-line growth through price en­hance­ment and mar­ket share im­prove­ment: An­other facet of his coun­sel cen­tres on banks mov­ing be­yond their growth agen­das and de­vel­op­ing a “can do” cul­ture. To em­pha­sise the im­por­tance of re­la­tion­ships he used the ex­am­ple of Eu­ram Bank, which tar­gets the 25 000 rich­est peo­ple in the world.

Eu­ram’s cus­tomers each pay bank­ing fees of US$250 000 per an­num, which gives them an exclusive, ded­i­cated per­sonal banker – the cus­tomer: banker ra­tio is 1:1. And it only ap­plies its tech­nol­ogy to fa­cil­i­tate trans­ac­tions, not as a sub­sti­tute for re­la­tion­ships. En­gag­ing the lower third of the econ­omy Lance Gourlay, Cor­po­rate Ac­counts Di­rec­tor of CR2 in Sin­ga­pore, fo­cused his ad­vice on how banks can en­gage the lower third of the eco­nomic pyra­mid i.e. the un­banked peo­ple of the world.

Glob­ally, the lower third rep­re­sents two bil­lion peo­ple; SA has 16 mil­lion un­banked and this seg­ment of­fers an ex­po­nen­tial growth op­por­tu­nity for banks.

Gourlay listed key is­sues for the lower econ-

omy sur­round­ing their un­banked sta­tus:

He added some im­por­tant fac­tors con­tribut­ing to their dilemma: -

ucts and ser­vices

The rapid evo­lu­tion of the eco­nomic land­scape is daunt­ing for banks, whose tra­di­tion­ally cum­ber­some hi­er­ar­chi­cal struc­tures make them very slow to re­act to the fun­da­men­tal and ac­cel­er­at­ing changes.

Com­pe­ti­tion from many other in­dus­tries is in­creas­ing dra­mat­i­cally and Gourlay says cost ef­fec­tive prod­uct de­sign, dis­tri­bu­tion and ad­min­is­tra­tion is key to ev­ery bank’s fu­ture suc­cess. He noted most pre­vi­ous drives to tap into this mar­ket fo­cussed on winning mar­ket share rather than cre­at­ing de­mand or defin­ing new mar­kets. He sum­marised the crit­i­cal suc­cess fac­tors: to use by low-in­come con­sumers main­tain, sup­port and ad­min­is­ter

for cost-ef­fec­tive strat­egy ex­e­cu­tion - ships and in­vest­ments - works Im­por­tance of ba­sic fi­nan­cial ed­u­ca­tion Gourlay em­pha­sised the im­por­tance of ed­u­cat­ing th­ese cus­tomers to use new prod­ucts and ser­vices and also en­sur­ing they re­main loyal to your com­pany once prop­erly ed­u­cated. Reach­ing the lower econ­omy also re­quires in­no­va­tive, ap­pro­pri­ate tech­nolo­gies, he said.

His most im­por­tant fi­nan­cial lit­er­acy top­ics fo­cus on un­der­stand­ing ba­sic per­sonal fi­nance:

DiVanna added a prime ex­am­ple in Capitec Bank, whose tar­get mar­ket is the pop­u­la­tion seg­ment who of­ten move in and out of jobs, but are good at mak­ing reg­u­lar pay­ments. This seg­ment con­tains over 19 mil­lion peo­ple – al­most half the pop­u­la­tion of SA.

The broader so­cio-eco­nomic ben­e­fits are enor­mous and Gourlay said, “In the new econ­omy it will be as im­por­tant to have ac­cess to a ba­sic bank ac­count and fi­nan­cial ser­vices as it is to have ac­cess to en­ergy and run­ning wa­ter.” In­no­va­tion and cus­tomer-cen­tric pro­grammes Paolo Zam­bonini is the head of In­no­va­tion and Spe­cial Projects at ABSA’s New Busi­ness divi­sion, and he drives the de­vel­op­ment of Is­lamic bank­ing prod­ucts and ser­vices for the group.

Hun­dreds of bil­lions of dol­lars move through the Is­lamic fi­nan­cial cir­cles ev­ery year and while the Is­lamic mon­e­tary sys­tem is over 1 400 years old, its essence re­mains the same. He noted most of the prod­ucts are eq­ui­ty­based, not debt-based.

But he also re­vealed there are very few Mus­lims who will stay loyal to an Is­lamic bank just be­cause it is Shariah Law com­pli­ant – they must also of­fer good value or risk los­ing their clients.

The se­cret to ABSA’s suc­cess here is it moved from be­ing prod­uct-cen­tric to cus­tomer-cen­tric. It also re­alised how im­per­a­tive it is to cre­ate trust-based re­la­tion­ships with the Is­lamic com­mu­nity and its leaders.

In looking to the fu­ture, Zam­bonini cen­tred on four key ar­eas:

mar­ket ex­pan­sion and prod­uct of­fer­ings

prod­ucts and ser­vices

bankers to ad­dress global skills short­age to life, Is­lamic bank­ing will ap­peal to more non-Mus­lim cus­tomers Si­mon Trupp, di­rec­tor of PIC So­lu­tions said to win.”

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