How to design a customer centric bank

In my earlier blog I mentioned 7 innovative concepts a bank should embrace. Summarized, these were: Contextual relevance, social relevance, multi-channel presence, fun, simplicity, interactivity and networked business models. In this follow-up post we explore how banks could apply these innovations into the next generation of customer centric banking services. 

I strongly feel that banks have the opportunity to become what LinkedIn is for my business relations and Facebook for my friends: enable me to manage my financial relations. They could put me at the centre of my financial relations and interactions, and help me managing them. Let’s try to imagine how online banking of such a bank would look like:

Social relevance: You login to your online banking, and get an instant list of your financial relations: the companies and people you have financial interactions with. The list is sorted by 'financial intimacy': the size and volume of transactions done. At a glance you can see which relations have most impact on your life, and you can act on that. For your business relations you see how others ‘rate’ or ‘like’ that relation. Other financial relations may be recommended based on their rating. 

The bank is able to estimate your liquidity for the coming weeks, using historic data and scheduled transactions / direct debits. It can predict when you have reached certain savings goals, and show the impact of expenses on these savings goals. 

Selecting a financial relation gives you an overview of all relevant information, including payment history, invoices received, receipts you received in a physical shop where applicable and any other relevant commercial messages, such as a notification of a mobile phone contract that is nearly at its end, with an offer for renewing the mobile phone contract. Relevant coupons are displayed, and purchased or received coupons can be stored in my online banking portal.

Simplicity and convenience: You can send money easily by entering an amount and a description. Any change in the amount is immediately reflected into the liquidity forecast, and if an overdraft is foreseen, a discrete alert is displayed. Scheduling of a payment could be suggested by the bank, or you can override a schedule.

It is quite interesting to realize that the average transaction initiation screen currently has 10+ data entry fields, including amount, names, debtor and creditor account information, dates, etc.  

Multi-channel and contextual relevance: When you are about to enter a supermarket, you can check in to that supermarket using your mobile banking app. You get an overview of your purchase history and spending behaviour in that shop. You can buy goods with your mobile phone, and an interactive receipt is automatically uploaded to your online bank. Any available coupons relevant for that shop are displayed. Potential loyalty programs are also displayed and can be immediately utilized.

Fun: Back home, you use your online banking to send your friend an online gift card, personalized with your content, message, and potentially a number of pre-selected coupons that can be sent with the gift card.

Managing your saving targets is easy: you can register savings targets, and the bank 'earmarks' money to specific savings goals as an alternative to having a savings account. 

Note that the problem with most current savings accounts is that they are a bank-centric service, leaving the consumer with the burden to manage multiple account balances, a current account and one or more savings accounts. The benefits of a savings account (interest bearing, transparency of one's savings status) could be easily preserved as part of a current account. In fact, the whole concept of an account is a bank designed concept, with all kind of complexities that should preferably be kept away from a consumer. The introduction of IBANs makes it even more relevant to help customers by reducing the number of account numbers needed.   

Interactive and real-time: Searching and filtering your financial data in our hypothetical future bank is just as easy as searching the Internet or your favourite social network, showing real-time results related to relations, documents and transactions. 

In this regard I’ve always wondered why searching the Internet (billions of websites with non-structured data) is so much simpler and intuitive than searching your transaction history (a few hundred structured database records). 

New business models: Given the data that a bank has, such as invoices and transaction history, a bank could share this data (with customer approval!) with for example finance providers to help me finance a big transaction in an efficient and risk-aware manner. Other examples could involve partnerships for coupons, but also online banking based e-payments solutions are example of innovative business models.

The internet is full of examples of distinct services that, if combined, can create significant synergies for the end-user. Services enabling interaction with other services (using API’s) have shown significant promise in the past few years.

I realize that these are only few examples of what could be possible for banks. However, if banks want to enshrine the relation with their customers, they should become customer centric again.

If they are unable to act, they will likely lose customer contact and brand value, and become ‘regulated pools of capital’, while new innovative companies will build online banks on top of such pools of capital. And these companies will own the customer and build a strong brand for financial services.

Tw: @jj_nienhuis