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Re-Shifting Focus on Bringing Customer to the Center

May 5, 2014

Banks have long maintained that the customer is at the heart of the business model, while in reality their efforts have focused on introducing complex and complicated products. Recently, there are signs that banks are beginning to realize that a product-centric approach is not going to help in maintaining a competitive stand or even profitability in the near future. The challenges and pressures that the financial industry is facing on several fronts appear to be pushing banks to shift the focus back to the base – customers.

In the past, banks have successfully used the ‘product-oriented strategy’ to increase profitability and gain competitive edge, which has declined drastically since the financial crisis of 2008-09. Since then, banks have been struggling to maintain the stand in the current environment of regulatory pressures, fierce competition, and agitated customers. This is not bonding well with the customers who are getting more and more used to have information at their fingertips. Customers today have no patience to deal with different departments or going through the trouble of physical channels. They despair at the contractual terms, are shocked by the hidden costs and bristle at slow and tedious complaints handling. To make matters worse, there is the loud social media mouthpiece that has highlighted all these issues.

Internally, the operational costs of using legacy systems and multiple silos have been increasing. Banks have been undertaking huge projects to revamp and are consolidating the front and the back office operations, but majorly this has only resulted in high operational costs and has added very little to improve the internal and external efficiency. Adding to that are the regulatory pressures that the banks are currently in and the aftermath of the economic crisis has made it even more difficult to make a profitable stand or even focus on the customers.

The banking industry overall has been slow to adapt to the evolving expectations and new ways in which they can serve the customers. Banks need to crack the code on how to deliver a better experience to customers so that they can position themselves to seize the opportunities presented by engaging with customers. To manage customers more efficiently, Banks need to eliminate the silos of information about customers by integrating data, systems and processes of different departments to give consolidated up-to-date information about the customer. This will also avoid duplication of data among channels and banks will be able to provide a personalized, accurate service to the customers based on the single unified view of their profile. 

This simple process will also help promote customer loyalty and help banks protect and improve their brand image.  Banks would then understand customer needs and design their product offerings accordingly, adding to the profitability and thus, banks can maintain their competitive stand. This is a step-by-step process which needs to be implemented to finally reap benefits and reserve a place in the near future.

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