Robert Kiyosaki, American investor and author (of Rich Dad Poor Dad fame), hits the nail on the head when he says, “You have to be smart. The easy days are over.” As consumers go about trying to manage their money, there is an opportunity for banks to show them that they’re not alone – by being the ideal financial partner that listens, understands needs, shows respect, acts with integrity, serves with a purpose and exceeds expectations through its products, services and financial guidance. In other words, by becoming a smarter bank.

1. Four Strategies to Build the
Smarter Bank
Thought Paper
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2. Four strategies to build the smarter bank
Robert Kiyosaki, American investor and author that such complacency does not become an
(of Rich Dad Poor Dad fame), hits the nail on the impediment to their growth, leadership and
head when he says, “You have to be smart. The relationship with customers in the future. As
easy days are over.” consumers go about trying to manage their
money, there is an opportunity for banks to
Four years since the toughest financial crisis in
show them that they’re not alone – by being
over hundred years broke, the world still hasn’t
the ideal financial partner that listens,
come to a state of equilibrium. For consumers,
understands needs, shows respect, acts with
who have been hit hard, it has never been more
integrity, serves with a purpose and exceeds
critical to make the right financial choices – while
expectations through its products, services and
building budgets, protecting assets, repairing
financial guidance.
credit history, or simply making ends meet. For
banks, this is a time of recurrent cyclical change, In other words, by becoming a smarter bank.
in which crisis is followed by recovery, only to be
But first, what is a smarter bank?
followed by crisis, to leave a lasting impact on
the global economy by redistributing influence • A smarter bank is differentiated on the outside,
and power. which makes it agile in the marketplace.
So it is no surprise that survival is the current • A smarter bank is simplified on the inside,
flavor of financial services. Consumers have traded which means it has a simpler operating model.
their fondness for debt for a smart spending • A smarter bank uses ease of execution to
mindset, with the hope of reclaiming financial deliver excellence and efficiency.
terra firma; and similarly, banks are doing what
they can to keep their heads above water. Under All the characteristics of a smarter bank, detailed
severe pressure, it is easy for banks to content in the next section, can be classified under the
themselves with surviving; they must be careful above three attributes.
Differentiation on the outside leading to agility
in the marketplace
The smarter bank eyes both organic and inorganic cautious about the cost of the service that they
growth; hence it not only enriches its own are getting from banks, affordability, convenience
products and services through innovation, but and accessibility. Differentiation cannot be on
also complements them with external offerings the product and services but on how they are
sourced through partnerships, white labeling priced, the way they are distributed and relevance
deals or co-opetitive arrangements. to the customer. For example, customer must
have convenience and flexibility to choose the
Its product innovation extends to smart bundling,
right service accordingly to their ability to pay.
which means the creation of a bundle of
In other words, customers determine the price
products and services in real time, in the context
of the service that they avail from the bank and
of the immediate situation, location or need.
use it to their convenience – a phenomena similar
With the crisis over-looming the economy and
to combining Do-it-yourself & Pay-as-you-use.
consumerism, customers are more and more
02 Thought Paper

3. The smarter bank runs a one stop shop; it’s the but become a part of organization’s DNA.
hub in a networked multi channel environment Simplification aims at achieving process
where all products and services are provided to efficiency, as a means to create differentiated
customers, from end to end, under a single roof, experience through every interaction between
through the branch or any other channel. the customer and the bank. For example, the
communication to customer in the form of
Business is rapid at the smarter bank, which is
offers, contracts and pricing can have a simplistic
quick to identify and tap new markets, zero in
approach of how it is delivered. This cannot
on the target segments, and understand their
be at the cost of burying the complexity with
unique and specific needs.
technology but simplifying the processes and
practices through technology.
Simplification on the inside leading to a
simpler operating model The operating model constituting design to
delivery of products & services need to align
The smarter bank simplifies continuously to
with the organization goals. Simplification would
sail the seas of complexity. For example, it
be one of the imperatives driving these goals.
standardizes products, processes and systems on
At the same time, quick scalability – a hallmark
an ongoing basis.
of the smarter bank has to be supported by
There is a vast area banks can include in their simpler operations and optimized cost to run
approach to simplify. This approach cannot those operations.
be just through one initiative or a program
Ease of execution leading to excellence and
efficiency in delivery
The smarter bank takes the path of online real Customer engagement
time, and high automation, to achieve ease
The smarter bank faces many challenges on
of execution.
the customer retention front: more competition,
It is a facilitator of All Time Banking, wherein including from non-traditional players; waning
every functionality, however granular, is available loyalty, especially among younger customers
to and used by banks, bank employees, bank’s who are distanced from their bank; and loss of
partner ecosystem and customers round the customer intimacy to self-service banking.
clock, independent of location. In the smarter
The answer lies in finding new ways to improve
bank everything, from technical features to
engagement. For instance, a smarter bank
system functionality to business processes
might look at improving its understanding of
to products, interactions and channels, is
customers through a more refined segmentation
Anytime, Everywhere. It achieves this by aligning
approach that takes into account customer
business processes with the bank’s product
aspiration, attitude and behavior in addition
innovation, channel diversification and customer
to objective criteria of demography, ethnicity,
experience strategies.
geography and financial status.
While there are many ways to build a smarter
It might turn the rules of product promotion on
bank, some factors will play a central role in
its head to go from product oriented customer
successful strategy. These factors, and their
communication to customer tailored product
impact on shaping the attributes of the smarter
communication, in which each message is crafted
bank, are discussed below:
Thought Paper 03

4. to suit the recipient. Or fortify the traditional and an accurate, enterprise-wide view of the
channels of product distribution – branch, ATM, bank’s products and services; tools such as
kiosk – with social media outreach. product configurators, simulators, modelers
and goal seekers that suggest the right financial
Then again, the smarter bank would be
advice for each customer; and technologies
quick to identify the benefits of using higher
like Internet, mobile and Push to Talk that give
customer information management technologies,
them – as well as the bank’s subject-matter
such as analytics and predictive modeling over
experts and product managers – easy access to
the traditional tools of CRM and offline market
customers. Indeed these technologies are also
research campaigns, in real time decision-making.
vital building blocks of the smarter bank, as
Customer and Employee Empowerment: From they help to simplify operations and improve
its extensive studies of human behavior, Gallup execution by enabling real time automation,
has established that customer satisfaction is All Time Banking, and the creation of a one
meaningless without emotional connection, and stop shop.
that businesses need to cultivate both in order
That being said, the tools of technology are
to secure beneficial financial outcomes, such as
mere tools, and most banks have them. What
higher spends per customer or lower attrition.
differentiates a smarter bank from the rest is
Therefore, the smarter bank must aim at creating that its employees know how to leverage these
a relationship from which the customer not resources to elevate customer interaction to a
only derives rational satisfaction (good products, level above the purely transactional, at which
competitive prices, easy reach) but also finds they are able to understand the customers’
emotional fulfillment. Empowerment is the key broad needs and specific context, and accordingly
to such relationships. The bank must empower make superior, intelligent suggestions and
its frontline staff with: technologies that provide guidance, instead of merely giving them what
them a unified view of the customer relationship they ask for.
Convergence of bank and customer IT
Today, the line between organizational and enabling customers to move seamlessly between
personal systems has started to blur, as a banking channel and their social network in
individuals tap into the same technologies and order to seek a bank advisor’s opinion, validate
devices during and outside of work, and companies it with their friends, and complete a purchase,
leverage what were once considered personal all during a single interaction) or product
technologies to expand their business. innovation (by using consumer insights from social
media to develop new offerings).
The smarter bank must abide by this trend and
take its business processes outside of its four
walls, into the consumer IT domain of social Acceleration:
media and personal mobility tools. This means,
This is a strategy, which a smarter bank can
for example, that the systems and processes
deploy to cope with the constancy of economic
supporting interaction between a bank and its
crisis and recovery. While other banks conserve
customers should also be available on social
their energies and resources to wait out the
networking sites.
current upheaval, the smarter bank goes into
When bank and customer IT converges in this overdrive to find a way to orientate its current
manner, it will also enhance the bank’s other business model to a future direction. It uses
smart attributes, such as differentiation (like this quiet period to revisit its priorities and
Citibank’s loyalty program application on areas of focus and investment. For the smarter
Facebook), ease of execution (for example, bank, the goal is not to survive the crisis by
04 Thought Paper

5. slowing down, but rather, to charge ahead of players. With every bank adapting strategies to
its rivals into a better future. win over their current state, what’s differentiating
now can easily become something that can
What next for banks? be imitated. Rather differentiation becoming a
milestone, it has to be a journey that banks take
The last financial crisis has left a huge impact on
to succeed.
banks, manifest as lower growth, smaller profit,
bigger demands, more regulation, and so on. Although banks may still choose to wait and
It has also driven customers into the arms of watch, they cannot remain much longer in the
new age service providers, employing creative traditional mould because there’s a breed of
technology, innovative business models, and smarter banks out there, just waiting to take their
customer-centric measures to satisfy needs that place through better engagement, empowerment,
might have been overlooked by the established and use of technology.
Sai Kumar Jayanty
Lead Product Manager, Finacle
Thought Paper 05

6. About Finacle
Finacle from Infosys partners with banks to transform process, product
and customer experience, arming them with ‘accelerated innovation’
that is key to building tomorrow’s bank.
For more information, contact finacleweb@infosys.com www.infosys.com/finacle
© 2012 Infosys Limited, Bangalore, India, Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys
acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.