Bankers need to know their customers better
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.”