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March 29, 2014

Synchronizing customer service with the times

Posted by Anupam Garg (View Profile | View All Posts) at 1:05 PM

As I finished registering for ICICI's latest Facebook app, known as Pockets, I felt that I always wanted such a feature. Pockets allows an individual to transfer money to Facebook friends without knowing their account details. This also obviates the need to log on to a banking website. Even though this was a new innovation, I could not help but feel that it was long awaited.

Internet and tech toys have completely transformed the game plan for several industries. For example, books are not only published as e-books but also come in tablet-supported formats for easier reading. Online registration of travel and hotel tickets has posed a threat to the business of travel agents. And there is no end to the list of consumer products that can be bought online. Amidst such fast-paced evolution, the banking industry seems to have fallen behind. Of course, channels like e-banking and mobile have simplified banking, but there is much more to be desired.

The traditional format of banking, which focused solely on the transfer of money between lenders and depositors does not apply anymore. The current theme of banking is all about enabling customers to use money effectively. Banks focusing on enhancing customer experience can look forward to long and healthy relationships. Some of the activities, which may help banks in enriching customer experience, are outlined below: 

1. Correct identification of the target segment is a prerequisite for good customer experience. This can be achieved by mining customer data carefully and identifying prospects with a higher probability of conversion. Based on the mined information, banks can then provide accurate tailor-made products, offers or services to customers. For example, an overdraft facility at preferential prices may be offered to customers with a history of low account balances towards the end of the month. Another example is the offer of payday loans to customers based on their cash flows.
 
Useful information can also be obtained by drawing comparisons between customers' data. Banks can use this information to provide advisory services for a fee. For instance they could analyze the history of utility payments to advise customers about the plans best suited to them. They could then offer a higher interest on the savings generated as a result of such advice. 

2. Priority could be given to the Internet, instead of IVR, as the channel of communication for proposed campaigns. In fact, social media could be the new mode of communication with customers. If banks could obtain information from their customers' Facebook account, they could gain insights into their needs and interests and perhaps leverage that to engage them more deeply. Or they could simply reward heavy social networkers with free Facebook credits for opening a new savings account. 

3. There is scope for enhancing user experience in banking channels with facilities such as omni-channel banking. This would allow customers to begin transaction processing on one channel, such as mobile, and finish it on another channel , say a tablet. The facility can be extended at branch level. For example, details of an unfinished transaction can be made available on a bank employee's dashboard to enable fulfillment and improvement of future service.

4. Banks can make use of ecommerce websites to increase the visibility of their offers. Suppose there is a bank level campaign, which awards a cash back on spending above a certain limit. Offers like these can be displayed on the home page of ecommerce websites like eBay and Flipkart. This would not only improve service to existing customers but also attract the attention of others.

5. The business heads of various departments in a bank may work together in formulating effective campaigns. Most of the discount coupons today are offered to credit card holders. The marketing team of the credit card department can coordinate with other departments in designing mutually beneficial offers. For example, bonus reward points can be offered on a customer's  credit card upon renewal of a term deposit account. 

6. Mobile banking services can be evolved further, in keeping with the enhancements in handsets. In addition to developments, such as NFC based payments, innovations capitalizing on various smartphone features such as GPS, front camera, motion based sensors, and so on, should be considered. For example, banks could enable payments for in-store purchases by scanning QR codes. 

The advantages of using technology to improve customer service are manifold. Making banking more appealing would help to attract a completely new demographic between 18 and 23. This is a segment that is still financially dependent on their parents. Banks can begin a relationship early with these young customers by understanding their preferences and requirements. For instance, the rate of interest on an education loan can be periodically reviewed based on the customer's usage of other banking products.
 
The technology boom comes with ample opportunities for all, including the banking industry, which should leave no stone unturned in harnessing the benefits. However, unlike other industries, the banking sector has to work within strict regulatory mandates. At times, this could restrict the speed of innovation. Nevertheless, banks can tie up with vendors who have the vision to provide future-ready solutions so that they can keep pace with changing times and rising expectations of their customers. 

Dashboards and Analytics Overload in CBS?

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 1:02 PM

Banking has evolved from maintaining manual ledgers for accounting and book keeping to deploying core banking solutions for maintenance of customer data and products, as well as accounting across branches. Critical activities, including top management and regulatory compliance reporting, which were processed manually moved to multiple on-demand/ batch reports accessible to top management at any point of time. With MIS (Management Information System) and reporting tools available through software solutions, it became possible to analyze data at the central office easily and quickly. The information could be used for monitoring business at remote branches, conducting business reviews, formulating strategy and recasting and planning for the future, which was previously done at defined intervals.  Regulatory reporting could be completed as per periodicity of demand, without delay.

However, head office still needed staff to run data analytics for top management, and to fine tune reports downloaded from software. This paved the way for development of Analytic and Business Intelligence (BI) tools, and the use of software for data analysis. The tools provided information for decision-making at a few clicks.  The BI tool, which resided on a data mart, could use the underlying data for tailoring reports as per demand.  Though this was partially automated, there were challenges in providing online data from multiple back-end systems to the tool for further analytics. Some of the big banks used full-fledged data warehousing solutions to collate the data from multiple sources and feed the BI tool. However, smaller banks could neither afford comprehensive data warehousing /BI tools nor the higher vendor charges for support and maintenance.

This drove banks to approach core banking solution providers to develop the necessary dashboards within the module so that they could perform analysis using the large data available within the database. Whereas front-end users created transactions, it was the top management who used the dashboards to analyze data in the form of: 

a) Number of transactions processed
b) Number of users processing the transaction
c) Turn Around Time for completing the transaction 
d) Turn Around Time  per user
e) Transactions above a particular value etc.
f) Data wise/period wise analysis
g) Peak time transactions

The above is only a small sample of possibilities out of a huge list spanning transaction-based/ risk-based/ profitability-based/ regulation-based analyses. 

Since all data was processed within the module, presentation and display did not provide many challenges to the software developer.

However, the requirement of dashboards increased in every module/software solution to eventually become a necessity. Increasing demand for graphics/charts of different kinds added a different dimension to analysis. This resulted in complex engineering of software solutions to meet increasing client needs. With competition intensifying within the core banking space, most providers enhanced their solution offerings with dashboard and analytic functionality. Slicing and dicing of data using dashboards and analytics in multiple display dimensions was seen as unique selling points or differentiators for software solutions. 

To conclude, core banking solutions, which were developed for centralized accounting, and modules intended for creating customer data or processing transactions were engineered quite a bit to meet analytical demands. Although it is important to evolve software to meet increasing client/market demands, software solution providers should focus on developing key functionality in the modules, rather than analytics, which can always be handled by external software. Demarcation of functionality and analytics for development needs is necessary in order to avoid excessive re-engineering of the software, which often makes it heavier and causes disruption.  Though software automation enhances the quality of decisions by improving data accuracy and analytics both, top management might still like to exercise some amount of personal judgment, outside of what machines and technology can enable.

March 24, 2014

How different is selling an FMCG product to selling a banking product or software solution?

Posted by Reghunathan Sukumara Pillai (View Profile | View All Posts) at 6:37 AM

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In the early 2000s, when Indian banks hired field staff with FMCG (Fast Moving Consumer Goods) experience to sell banking products, there was a huge uproar in the community. There was a belief that only experienced bank staff could sell banking products to new consumers. Even cross selling a new concept or banking product to an existing customer, required banking expertise, persuasion and marketing skills. It was perceived that since the educated urban customer was aware of the nuances of conventional banking products offered by most banks, as well as their advantages and disadvantages, a novice would not be as effective in selling those products as an experienced bank hand. Pundits proclaimed that getting new sales staff to push banking products, which were becoming increasingly complex, would not work.

However banks went ahead with recruitment and provided sales training to the new hires, introducing them to the unique aspects of their own and rival products. The self-driven sales force approached many customers in urban areas, who had remained loyal to their banks. They advocated the maintenance of separate savings/deposit accounts for different businesses, a practice that was unfamiliar to the Indian banking customer of that time. Multiple product variants were launched to penetrate the market by meeting the requirements of different client segments.

During this time, the banks strengthened the account opening procedure and KYC check in keeping with RBI norms; they also centralized the account opening process. This ensured the proper scrutiny of documents and also ensured that no accounts were opened using incomplete or fake documentation. Stipulations of minimum & average balance, and penalties for non-compliance were introduced to check the opening of operative accounts to conduct one-off fraudulent transactions. Although a fraction of accounts were closed for poor quality, the overall number of accounts and deposit balances increased manifold.

Though there are no statistics to prove that the field staff was successful, the initiative paved the way for many banks to experiment with new ideas. The success on the deposit side was extended to the retail asset portfolio, subject to stricter controls. With a firm customer base, the staff at the branch could easily cross sell different products with varying complexity in the longer run.

This proved that a well-trained sales force could sell complex banking products, even if they lacked prior experience. It was more important to acquire the sales and marketing skills necessary to identify the client, understand the requirement and sell the right product. The selling process was the same across sectors, be it consumer goods, banking, software or any other. And although some products like software were more complex to sell, as long as their value proposition was properly explained, there would always be a chance of success. New products and solutions might take time to establish themselves in the market, but with the right branding and sales push, would eventually achieve that objective.

The lead time to sell a software solution is likely to be longer than that of a banking product. A customer might purchase a banking product without adequate assessment at times, but always has the option to exit. On the other hand, it may not be possible to get out of a software licensing arrangement with a vendor. Hence the client must conduct extensive research and due diligence before finalizing the purchase, because it usually involves a long-term relationship with the software vendor.

To conclude, it is possible to sell a simple product even with little experience or product knowledge. However, only competent field staff or those with varied experience can sell complex banking products or software solutions. That being said, it is not necessary to have prior sales experience in the same domain. What is necessary is unique marketing skills combined with knowledge of products, competition and consumer need.  Additionally, selling software solutions would require greater technical knowledge than say, selling banking or consumer products. The purchasing decision process is also different - usually an individual decides whether or not to buy a banking or FMCG product, but invariably, it is a panel of senior IT and business executives that decides about buying a software solution. For this reason, the selling process involves elaborate discussion, evaluation and analysis, and is accordingly more time consuming.

March 3, 2014

Using voice of customer analytics for better insight

Posted by Somil Mittal (View Profile | View All Posts) at 8:15 AM

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Attrition models typically consider only structured attributes and past behavior of customers to segment them based on their propensity to defect.  However, this methodology has its shortcomings. Specifically, it does not take into consideration the unstructured data, which is generated in customer conversations.  For instance, a customer, while interacting with a bank's customer service agent might show his displeasure with the bank's services and bring it to their notice through chats or messages in Facebook or Twitter.  Frequent incidents of this nature are a good indicator that the customer is ready to defect. Models based on text mining of unstructured data have clearly indicated a strong correlation between certain customer queries and intent to defect.

Analysis of this unstructured data provides useful insights into future customer behavior, which banks cannot afford to ignore. The next generations of attrition models are "blending" structured data from Business Intelligence tools with unstructured customer interactions to create models that are superior predictors of customer behavior. These can be leveraged to good effect. For example, ING Direct Canada has used voice analytics to improve customer retention by 48%. When the Bank used voice analytics to analyze the calls received in its call centers, it found that agents were not able to service customers efficiently. In response, the Bank introduced training programs for their call center agents, which helped reduce attrition.

Today, customers are interacting with their banks though multiple touch points. A bank needs to analyze each interaction to gauge customer sentiment towards its services and devise ways to improve customer experience. The majority of banks rely only on structured data today, but the day is not far off when they will start to realize the importance of unstructured data to understand the voice of the customer.