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Personalised Banking: How to Get Ahead of Ever-Changing Client Value Propositions

 
 

Banking | Wynn Davies |
31 August 2021

When you attend fintech events, it’s easy to get so caught up in the bells and whistles of emerging technology that you forget it’s all about what that tech can do for your clients. For instance, I attended Finovate virtually in May and was fascinated by the flurry of activity around cryptocurrency. Remember: crypto is something the banking industry scoffed at not too long ago, but global banks are reckoning with it as an emerging, formidable force. Case in point: the speaker for the cryptocurrency session was Ronit Ghose, Citi’s Global Head of Banks Research and Co-Head of the FinTech Theme Group.

Citi is not alone in its recognition of the increasing importance of crypto. Goldman Sachs formalised its bitcoin desk in May, and JPMorgan has launched a bitcoin fund in August. Financial technology company First Boulevard is creating a platform for Black American banking customers, partnering with Visa to pilot a suite of crypto APIs, which will enable First Boulevard customers to purchase, custody and trade digital assets.

Crypto is here to stay, and regional banks need to be addressing it as a mainstream offering. However, the real challenge is less about cryptocurrency and more about the constantly evolving needs of banking clients. Banks need to look more holistically at a complete cadre of offerings, so they can better tailor to individual clients. With increasing competition from larger banks, fintechs, insurance companies and other organisations, regional banks need to create personalised client value propositions now – to not just attract, but also retain, clients.

Since May, crypto has gone from a market of nearly $2.5 trillion down to $2 trillion, even dropping to below $1.5 trillion for a while. Does this mean the statement ‘crypto is here to stay’ is wrong? I hope not. That would make my numerous blogs and posts very dated very quickly. Beyond my blog angst, however, is the more important point: the constantly evolving needs of clients require banks to evolve and respond.  

SERVING SPECIFIC DEMOGRAPHICS AND INDIVIDUALS BETTER

Personalisation is a fast-moving landscape. Challenger banks like First Boulevard are already chasing specialised, underserved markets that regional bankers should be servicing. For example, fintech offering Purple Money provides a savings account based on a 529 plan, so disabled people can grow funds tax-free without impacting their benefits. And Qwil is going after gig workers’ banking business, providing on-demand capital for freelancers.

A range of demographics and individuals are within regional banks’ purview, but most have been underserved by traditional banks. This presents an opportunity to step in right now.

THE POWER OF A PARTNER ECOSYSTEM

Can regional banks become everything to every customer? No, and they’ll spread themselves too thin if they try. However, by partnering within an ecosystem, they can continue to remain viable and grow. An example from a McKinsey paper comes to mind: the State Bank of India (SBI) launched their mobile banking application YONO with the ambitious goal of giving customers one app for all their transactions – from banking to shopping, lifestyle and investment. One hundred ecommerce partners and 30 million users later, they have made significant inroads. It’s an example worth emulating; a McKinsey study referenced in the same paper shows that companies who develop business-building muscle are more likely to outperform the market. 

SERVING THE CLIENT HOLISTICALLY

No bank can function as an island in the current personalisation game. A data-led bank can gather a client’s information from various parts of the business, put that information in an app and drive traffic to it. But that’s no longer enough. 

Retail, corporate and commercial bankers need combined, holistic data that allows them to fully understand each client and the community they exist in – their needs as well as what they value. They can then use that information to connect each client to a personalised ecosystem of offerings that goes far beyond any one company’s offering capability. 

With half of all financial services companies ranking business building as one of their top three priorities, I anticipate that partner ecosystems will be proliferating even faster. Business building now means harnessing strength from combined capabilities. Your bank may participate in a one-stop-shop ecosystem, but no single entity can be all things to all clients.

HEADING IN THE RIGHT DIRECTION

I have a few ideas on how banks can get ahead of continuously evolving customer value propositions:

  • Master your data internally. Accessing and understanding your data allows you to provide the personalisation and seamless experiences customers expect, which will drive new business.
  • Expand your ecosystem. Embrace open banking and fintechs to extend your reach, offerings and service levels; you don’t need to do it all by yourself.
  • Architect for the future. Move away from monolithic solutions and embrace the open architectures which allow you to evolve and grow. Adopt the cloud and microservices to help you become a client-focused, agile firm.

As competition heats up in the industry, banks will likely find themselves partnering with competitors to be able to offer clients a host of new products and services. Those who seize the day will thank themselves for it in years to come.

Wynn Davies

EVP US Finance Sector

Wynn has 20+ years of experience in advisory and delivery for Financial Services firms. At Endava, he leads our North American Financial Services team and helps to lead our thinking for Banking globally. Wynn refers to himself as a Financial Services geek; much to his wife’s dismay, he is always happy to talk shop. Outside of work, Wynn is kept busy by his two young children, coaching rugby, and supporting his family’s focus on alleviating food poverty.

 

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