The social banking paradigm
Revolutionary channels are now emerging and can make a big difference, says Alexander Rauser
Corporate and retail banks are facing competition from innovative business models and new, non-finance competitors. Historically, banks have innovated slower than other businesses, however additional pressure is now being added by shrinking margins and tighter regulatory requirements. Innovation is the key to growth and competitive differentiation. The banks probable to shine are those that are willing to effectively develop new products, services and channels in response to the changing market environment. To date, the banking industry has not seen much disruptive innovation but one thing is certain, technology is driving innovation in financial services.
To this point, the internet has been at the forefront of channel innovation but now other revolutionary channels are emerging. It is processes, rather than products, that are innovating financial services, adding significant value by way of cost saving and improved productivity. Here are some ways in which banks have improved the processes connected to products and services: continue improving their user experience, in order to:
and profits services and processes designed by the bank customer and support customer retention that help solve customer problems the things customers are looking for – users want their banking to be integrated more effectively into their everyday lives.
A handful of banks are now providing financial services on social media:
- ated a banking app for its Facebook page that allows users to transfer money and monitor their accounts 24 hours a day to make transactions and pay their bills on the social network directly.
There are two significant ways that this new wave of paradigm shift in the way people bank: to be present even closer to its customers, get data insights and create a more engaging user experience and patterns in order to create content that works personalise content to customers via tailored offers based on interest, up-selling or cross- selling products based on customer profiles, products that fit the life stage of a customer and so on. For example, advertising messages can be tailored towards a specific segment such as students. This can increase the closing ratio due to targeted messaging and tailored product offerings for this specific customer segment.
When a customer is offered a service that fills a need they were not previously aware of, and this need becomes some-
feel extremely the potential to do this. Most Facebook users check their Facebook within the first 30 minutes of each day and social banking will, in turn, allow users to check their bank accounts too. This behavioural change has the potential to shift the way customers track, monitor and spend their money. At this point surely not many customers think about transferring money online to their Facebook friends, thus the need does not exist yet. However, as seen in the application created for
Rauser... ‘By providing the customer with tools, demand can be created’