This article is an excerpt from a white paper co-authored by Peter Alkema and Dr Jeff Yu-Chen from Gibs University.
Marcel Proust famously said: “The real voyage of discovery consists not in seeking new lands but seeing with new eyes,” and the banking sector leadership will be compelled to review how they do business.
Banks must offer customers “what they need”, not “what the bank has” and increase the quality of hyper-personalised products and services.
To combine digital and physical channels to grow market share without (or with the minimum use of) traditional branches will become the mainstream approach.
Agile banks understand that with everything they do, they must be highly disciplined in infusing their own blend of customer-focused approach.
The obsession with understanding customers’ perspectives and behaviours provides them with the greater insights to design their operations and service suites more effectively.
These banks affirm their proclivity to continually anticipate future change and improve all aspects of what they do.
The area of customer experience is arguably where technological disruption has had the greatest impact in the last ten years.
Customers expect a fully digital, seamless on-boarding experience; no queues, no forms, no admin.
And, while millennials might not be the most profitable bank customers yet, locking in their loyalty now through slick processes is crucial.
Standard Bank has gone beyond millennials and launched a kid’s savings app that encourages children aged 7-13 to save using incentivising goals and chores managed by their parents.
Children are important influencers of household spend (and brand choice), so banks must think smarter about all customer segments and how they can enhance their sales and service experience.
Banks also don’t want to become back-end utilities for someone else’s customer-centric front-end that provides additional value added services.
WhatsApp, for example, is an OTT provider of rich messaging features that uses the telco’s data network, but owns the customer experience entirely.
This innovation was rewarded with the fastest growing user base ever for an app and a $19billion purchase price from Facebook, some of this going directly to share options for WhatsApp’s 45 employees at the time.
There is now very little loyalty to the utility data provider for a Whatsapp user – they will jump from fibre at home, to LTE in the car and wifi in the coffee shop.
They just need to connect so they can use Whatsapp.
Bearing this in mind, banks need to continuously innovate to infiltrate the customer’s online and mobile experience in order to retain their current brand loyalty.
FNB’s online and mobile platforms have been rated the best for banking in South Africa for three years running; and the more innovative and customer centric experiences enabled on those platforms will ensure customers turn to their banking app for banking services.
Although Google has banking licenses and Facebook offers money transfer, they still have a long way to go to offer the breadth of banking products that any of the major banks in South Africa provide, many of them already on their digital platforms.
Disruption could, though, also come through user devices and platforms and the concept of apps and browsers may change entirely.
UnionPay could simply brand and bundle cheap mobile phones with its payment cards across Africa; putting a proprietary mobile banking platform in the hands of hundreds of millions of customers transacting and connecting across the continent on utility telcos and banking infrastructure.
Trendsetting banks have no fear of adopting new ways to view a challenge and adapting themselves to the rapidly changing needs of existing clientele, so they constantly explore viable means for service redesign and anchor their approaches on the “design thinking” principles.
Around the globe, these leading organisations within the financial institutions are increasingly embracing design thinking as a management ethos.
Design thinking is a practice originally used by product designers to resolve complex challenges and deliver client-centred solutions.
A design mindset is not problem-focused but a possibility-driven way of challenging issues at hand.
By credulously empathising with the pain-points and understanding the aspirations of the customers, design thinking seeks to experiment with creative possibilities and explore pragmatic actions oriented towards producing a desirable future for the clients.
Design thinking principles allow organisations to create offerings with added “wow” factors.
According to a 2014 assessment by the Design Management Institute, design-led companies have outdone other S&P 500 companies over by an astonishing 219% during the past 10 years.
Due to the remarkable success rate of these design-led firms, design thinking methodology has evolved beyond making objects.
Trendsetting banks must learn how to strategise like designers, and apply design thinking principles to all of their stakeholders, including the workplace itself.
Moreover, many leading banks are adopting design thinking as one of the core differentiators for strategic management and organisational change.
But it is also worth noting that while design thinking can assist organisations to innovate, the pursuit of radical innovation at times may require other auxiliary methods.
In a recent study, Gustafsson, Kristensson and Witell stated that the customers’ inputs are greatly influenced by their recent experiences.
The study found that companies can only achieve better results in its product development if customers are given the right pre-requisites for participating actively in the development processes.
Moreover, the really radical solutions are difficult to imagine based on experiences with current products and therefore it is equally important to really listen to what the customers are actually saying as well as to observe what they are actually doing.
At times, it may be just as important to pay attention to some of the “crazier” behaviours of the outliers, as customers’ action may assist the organisation to more disruptive innovation.
Moreover, do not just listen to the customers – leaders should pay attention to their frontline employees.
Empowering and educating the employees, aligned with effective feedback systems, will essentially permit the companies to become more responsive, adaptive and competitive.