Connected Consumer Drives Digital Industrialization in Banks

By Eric Disend and Jonathan Gray, Capco

Meeting the expectations of digital consumers will require banks to go through industrialization to firstly, simplify and reduce the cost of fulfilling basic customer needs, and, secondly, deliver digital banking services that provide convenience, choice and control, especially around ‘key moments’ in customers’ lives.

What is industrialization?

When we talk about industrialization, we refer to a combination of profound changes that coincide to trigger rapid modernization of an activity. In the wake of the changes witnessed by the recent banking history, banks need to go through an industrialization process – rethinking why activities exist, gaining a deep understanding of all their component elements, simplifying operations and reducing costs.

However, programs designed to improve customer experience should be viewed as revenue building tools rather than just a source of significant cost savings. Making it easier for customers to seamlessly conduct business with the bank leads to more transactions, which in turn tends to offset gains in migrating some transactions to lower-cost channels. The cost-saving component comes from the industrialization process, beginning with reducing the complexity and variability of operational support processes, simplifying and shrinking the back office and making those operations as lean as possible to deliver digital services at a lower cost.

Invest in optimizing ‘key-moment’ customer experiences

The days of undertaking large transformation projects and waiting several years for results have passed. Nowadays, banks are investing in projects focused on impacting ‘key moments’ – those interactions strongly linked to revenue creation or attrition – when customers have high expectations and when impressing customers can differentiate the institution. Examples of potential key moments include opening new accounts, providing complex advice and handling complaints. Leveraging digital to deliver on key customer moments will create a springboard to implement additional differentiated capabilities based on in-market customer testing.

First, test

When introducing programs that simplify processes and improve customer experiences around key moments, both large and small institutions should:

• Start with manageable goals
• Focus on the customer segments targeted for expansion, especially from a digital perspective
• Include the customer early in the design process and integrate customer thinking throughout
• Determine ways to support the desired customer experience with better content that aids the customer’s decision-making process and makes the institution feel smarter
• Consider all points of potential contact and interaction with customers – digital and physical
• Map out the architecture of the operations and technology necessary to deliver the required customer experiences
• Do a proof of concept to show that investment is cost defensible and determine where your firm will gain the most traction from its investment
• Measure the impact of change on the customer experience (e.g., customer advocacy, customer satisfaction metrics) as well as ‘hard dollar’ returns
• Use proof of concept results to obtain the required project funding and to get your operational partners comfortable with a broader organizational rollout

Moving towards banking of the future

Propelled by industrialization, establishing digital connections with customers will enable financial institutions to provide superior customer experiences and differentiation on that basis. Over time, the institution will earn the right to engage customers for more sophisticated services and become a partner that helps people realize their ambitions.

Eric Disend is a Partner and leader of the new Capco Digital group and The Capco Digital Innovation lab based in New York City. Jonathan Gray is a UK-based Capco Partner within the Banking team. He is responsible for the development of consumer-focused banking value propositions.