Pillar 2 of the Customer OS – Smart Banking (part 2 in a series of 4)

It’s time for the financial services industry to get smart. High-flying concepts like big data, artificial intelligence (AI), or cognitive banking have gotten very tangible. In fact these things are all part of daily banking – at least they are for customers. Question is – do banks feel the same way? If not, they are not really tuned into Smart Banking – if they are not tuned into Smart Banking, they simply cannot get the Customer OS right.

Customers already acquire products and services via a few clicks on any device, without being forced around different channels. Everything happens in an intuitive way, tailored to their immediate needs. The average customer would say that banking should be no different. Enter the importance of smart banking – a key pillar of the Customer OS.

Customer segments of one

Hyper-individualization is today’s modus operandi when it comes to customer onboarding and service delivery. Customers expect the VIP treatment, and why wouldn’t they? Companies the world over are slicing and dicing data to match offerings precisely to their requirements. Smart, relevant journeys are the norm most of the time. Yet banking remains an exception. This makes no sense – if there is one aspect of their lives where people want a personalized approach, it’s in the management of their finances.

Recently, as part of the winning showcase at Finovate Europe, Jouk Pleiter, CEO of Backbase noted how Smart Banking brings each customer exceptional, personalized experiences. He discussed three key aspects of Smart Banking.

  • Smart actions – enabling customers to define smart actions that help them easily automate manual tasks, transforming mobile banking into a personal concierge service, tailored to their exact needs.  
  • Aggregation – combining capabilities from within and without the bank, like PSD2 APIs or 3rd parties such as airlines, telco or e-commerce providers – all directly integrated in the mobile banking application.
  • Thinking outside the box – being imaginative enough to create 10 times better customer experiences.

Going big on data

A new era of personalization means banks must get comfortable with their own data and that of other parties. New analytical skills are required to handle data from users, CRM systems and other networks. A valuable mine of intel is already available to drive smart banking, it just needs to be brought together and utilized. In this way, customers can be targeted with relevant offerings and retained for the long term. The right technology turns disconnected data sources into actionable information and with the right technology partner behind them, banks can finally bring it all together.

Bring the agility A game

Banks must get granular with their data to attract, serve and retain customers, but that has to be backed up with agility. Aside from having the right systems in place to gather timely information and get it to make sense, banks must be ready to act. There is no point having the right information if real-time, cost-effective actions don’t follow. This is what Google and the big techs are doing, they collate, analyze, and act – quickly and at zero marginal cost.

Having made a good impression, banks must consolidate that with smart processes. Technologies like dynamic case management or dynamic forms come into play here, making onboarding as easy as possible. Such capabilities let banks quickly enhance services, without major organizational upheavals.

Keeping the show on the road

All of this new dynamism should be introduced to a bank’s systems without shutting current services off from customers. While innovative ideas and technologies are added to the mix, everything else should be business as usual. This is where cloud technologies come in. They support a flow of new functionality by making deployment easy. Long deployment processes that used to limit the number of new releases are no more. Upgrades and improvements can be rolled out frequently and in line with the needs of the customer.

A machine-powered effort

Machines have become a living, learning part of the customer journey. Previously programed to act in a certain way according to hard coded rules, they now think for themselves and learn as they go. They can handle the jobs that got too big for humans, one of them being data crunching. It’s difficult for people to digest massive volumes of data, so this can be automated. Machines faithfully handle compliance, customer engagement and operational efficiency, and they get it right a lot of the time. Technologies like customer service chatbots, automated reporting, and automated risk assessment are all testament to their diligence and effectiveness.

People still count

Despite the fact that AI and machine learning tackle complex tasks once reserved for humans, the people factor remains crucial. The number of branches are in decline, and less encounters are face to face, but quality still counts. AI plays a huge role in making customer experiences great, by supporting smart processes, driving efficiencies, and creating a range of powerful marketing tools to support a flexible, innovative Customer OS.

Cognitive banking

Customers are targeted everyday with highly relevant proposals based on their online search behaviour. There is no reason why banks can’t do the same, in fact, they already have all the data they need to do so. What’s missing is the proper use of that information. Banks that bring AI, big data and open banking together properly can proactively boost digital sales.

This move to smarter digital sales gives rise to the concept of cognitive banking. While rules-based engines have used real-time information to track behaviour, segment and target for years, smart banking is more than that. It’s about reaching into the future and actively crafting customer journeys. It means mining the data sources banks already have to support customer’s decision-making processes.

When they know what’s missing from their offering, banks need to go out and find it. This means filling in any gaps by tapping into the open banking ecosystem. One organization could not be all things to everyone before, but that’s not really the case anymore. By getting smart and adding incremental value from the open marketplace, banks can put all of the pieces together to create a smart platform, a platform with magnetism, something customers want to be a part of.

“Disaggregation is here to stay and banks will increasingly operate as part of an ecosystem. This creates opportunities to build banks on a platform model and it demands some decision-making. If I can’t play the role of all the parties in the ecosystem – which one do I specialize in? Answering this question sets the stage to build on social platforms, allowing a bank to essentially disaggregate itself and by doing so, specialize for success.

Kwafo Ofori-Boateng of IBM, speaking at Backbase Connect 2017.

The smart pillar of the Customer OS

Smart banking is the science of combining the technological and human elements to delight customers. It’s about collating and mining customer data already present in disparate systems, it’s about observing, watching for patterns and applying learnings. All of this is backed up with flexible smart systems and a connection to the open banking marketplace.

Smart banking increases a bank’s understanding, uses that understanding to predict and act in the right way. It creates the right back end systems and delivers a superior service that attracts customers and encourages them to stay. Smart banking will be one of the most relevant, highly discussed topics in the years to come, and the revolution has already begun!