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May 4, 2012

Building tomorrow's bank, today.

Posted by Kannan Amaresh (View Profile | View All Posts) at 11:46 AM

Banks are now facing the challenge that credit card companies confronted just a few years ago:  Growth is practically impossible without devising new ways to make products and services more useful and compelling for customers.

Three things are on banks' agenda to elevate themselves in today's fast-paced, high-tech world where the multi-banked customer grows more demanding by the day:
  • Newer products
  • Better services (delivered quickly, intuitively and seamlessly)
  • Smarter processes (the recipe to do both of the above)
So, here's one way banks can do it all and get ahead.  

Just a few years ago, credit card issuers realized they could encourage users to adopt their favorite "brands" on their cards and even personalize them. By offering reward points and other incentives, card use increased dramatically and business partners received a share of the transaction fees.  Everyone wins - customers, card companies, and the business partners.

Banks can also capture mindshare or market share of a multi-banked consumer by looking at other businesses as potential partners.  A great way to get their products to go beyond debits and credits and become "compulsively necessary".  

For example, banks can take a page out of the travel industry playbook.  Airlines, hotels, and rental car companies commonly "cross-market" each other's services.  Whenever customers surf the web looking for a good airfare, they can be sure there will be opportunities to rent a hotel room or a car, as well.
Banks can muscle into deals like these too.  If a customer is planning a vacation can a bank intuitively learn of this behavior and pitch to him a vacation loan that fits in with his holiday plans?  With sophisticated data-mining software - already in use by many large retailers - anticipating these needs without him having to first ask for it should soon be commonplace.

Here's more:  When customers log on to their accounts, smart software can add soft-sell menu choices like the following:  "It's been six months since your last vacation.  We noted you spent a week in the Caribbean.  We have an excellent deal, for our priority customers, in Antigua.  Click for details."    Customers will be surprised, and in many cases, delighted that they were asked.  This is just the beginning.  When they can book their entire trip on their smart phone on their way home from work, they'll appreciate the deal.

And, this can be extended to map to any sphere of the banking consumer's lifestyle - all those transactions she makes without ever thinking that any of her multiple banks can make a difference. Because, today her banks don't.

And there lies the growth opportunity for banks. To harness technology to woo customers who have needs that go beyond the mundane customary task of managing money.


Hi Kannan. The thing that fascinated me about your blog post and Haragopal's video was the idea of a bank becoming more pervasive as part of the "new normal."

If banks must deliver on the promise of ubiquity, of pervasiveness, then it stands to reason they must go where the consumers are, decode their context and surmise their needs. Millions of homeowners seek home equity loans - or buy new cars every year - creating opportunities for banks to sell and market relevant products to consumers at those venues.

What if a car buyer could, while still on the dealer's lot, look up various deals on financing, read reviews, and download an app that lets them secure financing in minutes rather than days or weeks?

Taking your travel example further, what if banks could offer preferential or "group deals" to a social circle of consumers who wished to buy a new insurance or investment product?

What if a bank or card issuer could partner with its largest merchants to offer personalized rewards or experiences to consumers on their birthday or anniversary?

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