Sergey Pavlov, Artezio The rapid growth of digital technologies has led to the development of a new vision of consumer comfort zone which has also affected the banking sector. Today banks focus on rendering services through remote banking channels, building partner networks, introducing new bank and non-bank products and solutions. In other words, banks are making every effort to attract new businesses and maintain the existing clients.
Let`s think for a while and ask a question, “Where does it all lead?”
Online and mobile banking services enable customers to quickly pay their bills and make transfers, easily open and replenish their accounts. Besides, various software tools for home accounting and personal finance are becoming increasingly common in our daily lives.
Banks are obviously trying to get closer to us, but how close are they?
Let’s imagine an ideal pocket finance system that services a private individual. Imagine that you don’t have to worry about your finances any more, as your salary goes directly to your current account. Based on your monthly costs and financial goals for the current month, the system immediately allocates your personal budget: some amount is left in the current account, a part of it goes for automatic payments, and the rest is transferred to the savings account or put aside for future purchases. If necessary (the System determines itself), the System can take out a loan or extend a loan period as well as invest unused funds into the right finance tools.
The system regularly evaluates the remaining balance on your account and your spending policy, and even gives tips to help you stick to your budget and save money, for example: you should buy less expensive cheese or have no alcohol on Fridays, or instead of attending a gym, you should start working out on your own at home or in the park. The system can also revise the cost forecast for the upcoming financial period.
As the system has access to the clients` Internet browsing history, financial, educational and professional activities, and big data analytics, it can assist in choosing the right goods and services as well as give advice on specific models and shops.
How close are banks to implementing such a paradigm?
As an example, let`s consider the development strategy of one of the largest banks in Eastern Europe.
The bank selects 7 main areas of work for the specified period:
- Crowdsourcing – development of mechanisms to involve employees and clients in search for ideas
- Multichannel sales and service – the ability to start communication with a client through one interaction channel and then shift to another one
- Development of the product range, including commission and non-bank products
- An individual approach to clients
- Investments in accumulation, storage, and analysis of data on clients
- Building an efficient cross-selling system
- Shaping ecosystems around clients that will help them solve their financial issues and provide access to educational resources and services.
Today, two years later, we can see how the present strategy is gradually becoming a reality. The crowdsourcing project has been launched, the remote banking systems are being actively developed, the range of the offered services has been extended, and the service level has significantly grown up. The next steps are big data processing, increasing the cross-selling level, and building ecosystems.
The main objective of a modern retail bank is to integrate deeply with the client, when it is not even possible to see which decisions are made by the client and which the system makes itself. The client`s task is to provide the system with money supply and follow recommendations to master it taking into account the set consumer goals.
And yet what is the balance between the freedom of choice and imposed recommendations in the new reality?