The Future of Retail Banking: Customized product offerings and self-service selection
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With the best of intentions, banks often assume what customers want, push the wrong products and services, work in siloes and generalize. Banks tend to forget that their customers are human beings that evolve and so do their needs. Not everyone makes the same choice, so banks need to reflect this in their product offerings. For banks to differentiate themselves and move forward, they need to allow customers and Relationship Managers to dynamically bundle products and services based on the customer’s preferences. The more you bank with me, the more value we will provide in return. Under a Product and Pricing Lifecycle Management (PPLM) model, create suitable products and product bundles based on customer or other data across lines of business and business units. Presented by Zafin’s Meenaz Sunderji, General Manager, Asia Pacific, at the 20th meeting of the World Savings and Retail Banking Institute’s (WSBI) Asia/Pacific Regional Group in Vietnam on May 21, 2014. www.zafin.com
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The Future of Retail Banking: Customized product offerings and self-service selection
- 1. The Future of Retail Banking Customized product offerings and self-service selection: The road to increased revenues and retention Meenaz Sunderji General Manager, Asia Pacific
- 2. Wrong strategy? Assume what customers want Push the wrong products and services Work in siloes Generalize With the best of intentions, banks often… 2
- 4. Three types of retail banking customers I want my bank to recommend a set of products or services that will benefit me. 4 1 2 3 Banks should focus on the first two types of customers. I want to choose what I want, when I want and have the ability to change my choices whenever I need to. I use my bank for basic needs as per how banks have been traditionally used by society.
- 7. Value-added products and services Banking services 7 Why use them? Generate additional revenues Single point of service Value in the form of convenience or price Create a captive forum Non-banking services Non-banking products Text alerts for overdraft limits Gadget insurance Travel insurance Television Internet
- 8. Bundling at a glance 8
- 9. Bundling in other industries Fast food industry Value meal Kid’s meal 9 Some banks do basic bundling. Is that enough? Apple Select and purchase products and services Apps, songs, videos Nike Personalize your shoes Combine with technology options
- 10. Leap forward 10 Bundle products to consolidate banking relationships Average # of banks per consumer: 4 Average # of products per bank: 2 Total # of products per consumer: 8
- 12. Make it happen 12 Across lines of business Suitable products/bundles based on customer data Right price based on the entire customer relationship Right channels Product and Pricing Lifecycle Management
- 13. Thank you! www.zafin.com Meenaz Sunderji General Manager, Asia Pacific Telephone: +60322721792 Mobile: +60146333027 Email: meenaz.sunderji@zafin.com
Editor's Notes
- Assume – how many banks actually ask their customers what they would like from a service or product perspective? How many banks try to sell the wrong products at the wrong time? Many banks have a push strategy? We will create a product and we will sell it to our customersMany banks work in silo and that reflects on how they sell their products and treat their customers. Products become more important that customers because decisions are made based on siloed product managers and teamsGeneralize – everything applies to everyone – for the most part. Sometimes they will have 2 or more segments but the products or services offered are not so different.
- Banks tend to forget that their customers are human beings that evolve and so do their needs. Not everyone makes the same choice or want the same things out of life!Banking and Non Banking products are required and desired by all customers!Introduce both to your mix!
- Banks should focus on the first two types of customers.
- Product bundling is a concept that has been applied successfully by various industries for many years. Recently, it has begun to catch interest in the banking world. A bundle is a group of two or more products or services offered to a customer, from which a customer derives better value than if the products were purchased individually.Product bundling is the concept of tying products together to create an appealing package for customers. These products do not have to belong to the same line of business and can introduce customers to additional businesses and ideas that they otherwise might not have been exposed to.Bundles can be categorized into simple offerings where convenience or price is the main factor, or integrated bundles where non-price benefits (such as additional product features) provide added value. Other lifestyle-oriented bundles may look at the overarching need of a customer.- Bundle is a group of two or more products or services offered to a customer from which a customer derives a better value than purchased individually.Different types of bundles:-Closed Bundle: Is a bundle where all the products or services are mandatory. Based on subscribing to all the products or services, a customer gets some value.-Open Bundle: Is where at least one or more products or services is mandatory and others are optional. As you add optional bundles or services, you get additional benefits or value=
- A dynamic dundle is created on the fly by the customer or Relationship Manager and comprises value-addedproducts and services to meet the needs of the customer at a point in time.
- People pay Facebook for the time users spend on their website to advertise and generate revenues. You are creating your own forum to do the same!
- What makes product bundling so appealing?One of the best-known everyday examples comes from the fast food industry: the McDonalds’ value meal. What is a value meal? It is a combination of various items from the McDonalds menu offered at a discounted price. Customers are drawn to value meals due to their cheaper price, as well as the ability to get more for a better price, rather than buying each product individually.What makes selecting your own products or services interesting?Choice – you chose what you want, when you want it and understand the price point for each selection including any applicable discount.
- Dynamic Bundling -Empower relationship managers or sales staff-Empower customerGoing to the next levelIt’s time for banks to move towards the next level of customized offerings and services. For banks to differentiate themselves and move forward, they need to allow customers and relationship managers to dynamically bundle products and services based on their preferences. The value should vary based on utilization of each of the product or service within the bundle.Simply put, “the more you bank with me, the more value we will provide in return”.By applying these concepts, the revenue uplift could be tremendous. Statistically, the average person has three or four banks with two or more products in each bank. Using bundles, or providing the ability to customize products and services based on preferences, banks can shift customer behaviour, assets and utilization. If a customer was to move his or her assets or products to your bank or if you were to influence the customer to utilize more of your products or services, imagine the revenue uplift and increased customer wallet share.
- Personalize your bankingOffer suitable products – based on existing customer dataExample – when a 20 year old customer logs into online banking account, based on her age, product holdings, spending habits, etc, the system should be able to offer the right products or bundles. For example, offer her 2 free movie tickets every time she spends “x” amount from her account every month and subscribes to gadget protection instead of Life Insurance policy.Another approach would let the customer pick and chose what she wants and based on her selection, give her some incentives or incentive options
- Under a Product and Pricing Lifecycle Management (PPLM) model, suitable product and product bundles can be generated based on customer or other data, across lines of business and business units, allowing product and relationship managers to create dynamic bundles at the right price point and with appropriate customer benefits.The above can only be done if banks introduce a horizontal layer that goes across their silo based product systems such as Core Banking System, Credit Card, Insurance, Wealth, etc. This layer should be responsible for manufacturing new products or services and creating product and/or service bundles to be offered to the end customer. Additional functionality can be incorporated such as generating suitable bundles or products based on customer or other data; allow dynamic creation of bundles and in return offer them at a suitable price point or with appropriate benefits to end customers.