Start and end with the customer.
A gap is emerging between the financial firms embracing digital business transformation and those continuing to do things the same old way, according to Forrester.
The analyst firm points out while while leading banks increasingly understand what their customers want and expect, many struggle to deliver on those expectations.
“Rapid execution is often stymied by legacy systems, internal silos, product-centric cultures, and the outdated belief that banks can build and deliver everything alone,” write Forrester analysts Zhi Ying Ng, in a new report.
The report covers retail banking trends to watch in 2018 for digital teams at retail banks, credit unions, and card issuers in Australia and New Zealand.
“Laggards will continue to get distracted by bright, shiny technologies while customer-obsessed leaders focus on improving customer journeys, deepening customer engagement, and collaborating to deliver innovative solutions for any number of customer and business problems,” they state.
Collaborate and partner
The rise of digital technology has changed the relationship between businesses and customers.
Yet, says the Forrester report, many financial companies addressed this simply by putting a digital front end on the way they have always done business.
"If banks want to remain relevant to customers, they need to seek new ways to create value for those customers."
The report says financial firms have to factor in the tough economic conditions ahead, with both Australia and New Zealand, for instance, experiencing record levels of household debt.
Leading organisations, meanwhile, have started to shift towards open banking and collaborate with other banks/firms and fintechs to ensure that they continue to create value for customers. The report cites how Macquarie Bank is launching an open banking platform that will make it easier for customers to share their financial data with authorised third parties using APIs.
Digital leaders have an important role to play here. First is they must build a deep understanding of their customers’ needs and ecosystems.
“Envision your business not as a set of products and services but instead as part of the personal value ecosystems that your customers assemble according to their needs, wants, and desires,” the analysts advise.
Cross functional collaboration is crucial. Digital teams must work closely with their colleagues in CX (customer experience), customer insights, marketing, sales, and products to share insights and jointly improve the understanding of customers.
Some of the questions they need to answer are: "What do your customers’ needs and personal value ecosystems look like? What is your role in your customers’ ecosystems? And what are the opportunities to add value to that ecosystem?"
The report recommends the use of design thinking and Agile to build better digital experience for customers. “Start and end with the customer.”
Design thinking, the authors explain, uses qualitative research techniques like observational field studies to understand customers as people, not just categories, and to design experiences that connect with their emotions. These are then integrated into Agile “to connect ideation, design, and development”.
The report cites how some New Zealand financial firms are responding to the new competitive environment.
Westpac New Zealand’s CashNav empowers customers by helping them better understand their spending.
Heartland Bank, which already has a stake in Kiwi peer-to-peer lending marketplace Harmoney, has partnered with European online lender Spotcap to serve SMBs in Australia. This is an example of achieving new outcomes through digital partnerships - with disruptors, vendors or competitors.
The report notes the importance of creating a culture that will allow these new business models.
“Digital execs need to work with their peers to ensure that they and other leaders have the skills to drive this culture; implement programs that encourage customer centricity and collaboration across the organisation; and give employees the tools and training to make it happen.”
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