The Saïd School of Business at Oxford University has earned its reputation as a global leader in executive education and academic investigation into business management. So, it is exciting that our partnership with the School allows us to offer the Oxford Saïd Customer Executive Education to our financial services clients this autumn. This series of workshops for c-level customers will distill the best academic thinking and practical learnings into creating the Bank of the Future
People before products
How can banks compete to win and retain customers in the digital economy? The question arises every day in the conversations we have with our customers at Teradata. How can we to find cost effective and practical ways to identify and understand our customers and their rapidly evolving behaviours and expectations? From the outset of the first workshop, led by Professors Andrew Stephen, L’Oréal Professor of Marketing and Director of the Oxford Future of Marketing Initiative and Filipe Thomaz, Associate Professor of Marketing, it was clear that academics are very much aligned with what we see and advise our customers every day: customer centricity is the key to unlock growth and success for the bank of the future. The fundamental mind-shift needed in financial services is from a product focus to a customer focus. Professor Stephen highlighted the UK’s Metro Bank as an example of a business that had embraced customer-centricity at its core. Driven by a mission to win ‘Fans’ rather than customers, it focused on culture and fanatical execution to do just that.
Best is not good enough
However, being the best bank is no longer good enough. Not only are an ever increasing range of organizations competing for financial service customers, but the battle is one for attention and loyalty in a digital market where competing services, distractions and offers are all just one click away. Consumers expect the same responsiveness, personalisation and ‘always-on’ attention from their banks as from any other digital service. You are not just competing with other banks, but with all the apps vying for customers’ attention, time and money. And the battleground is the smartphone home screen.
The way to win in this fast-moving world is to take a leaf from Big Tech’s playbook and use big data to drive hyper-personalisation of services. To be successful you must reproduce the personal touch of the bank manager of the 1950’s but for the digital-first, AI-enabled world. Bank managers of old knew their customers as individuals and understood their needs and evolving requirements. They built on this understanding to offer services tailored precisely to each one. The challenge for today’s financial services players is to do that at scale and speed.
Multiple data, one platform
Big Data in finance is clearly part of the solution and collecting, integrating and analysing enough granular data to unearth valuable insights on customer behaviour is the critical first step. Professor Stephen shared an example from a different industry to underline the power of investing in data as an asset. He spoke about the Disney Corporation, also a Teradata customer, and how it digitised analogue or ‘off-line’ experiences to learn vital truths about how visitors acted in its theme parks. Through investing $1 billion in wearable and IoT technology as well as an enterprise data platform, it understood how to create the precise interactions that delight its customers – whether that’s having your favourite characters turn up at your dinner restaurant or creating an optimised park itinerary. The product becomes subservient to the customer and data drives understanding of segments of one.
Models that perform at scale
But collecting data is not enough. Banks already have petabytes of data. What’s needed is a culture that sees data as an asset to be leveraged to create value – not as a cost to be managed. Carefully analysing data for key signals is critical to unlock this value. Some signals will be obvious, but today’s banks need to go beyond the basic life-stage triggers for marketing events to create predictive analytics that know what a customer wants before they do. Professor Thomaz talked about expanding the ‘latent zone’ of signals that only the bank sees. These are the more subtle, and more valuable insights that will deliver defensible competitive advantage.
In our world these are the actionable insights that come from well-engineered analytics that combine data from multiple data sets and systems. Building, training, testing and implementing banking data models at scale is what separates the leaders from the laggards. Disney is successful in delighting its customers not because of cool wearables but because it integrates and analyses data from a wide range of sources to develop deep understanding in near real time. Not just demographics and previous spend data, but data from marketing systems, time spent in different parts of the parks, weather data and a host of other sources that can support the sophisticated analysis that underpins the magic of the experience.
Banks can, and must, learn to use the same approaches. As competition expands to anyone with an app on your smartphone, they need to get better at using data to really understand every individual customer and align products and services behind that knowledge. Being the best bank is no longer even relevant – the Bank of the Future will need to be the best at understanding the people it serves.
Next week I’ll report back from the next Oxford Saïd Customer Executive Education workshop with more detail on the technology decisions needed to support this deep customer knowledge.