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From data to value: the future of bespoke banking

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Businesses today compete as much, if not more, on customer experience as they do on price. Delivering that across all channels, digital and physical, drives a win-win of engagement, profitability and tailored service. But to achieve this, banks need cutting-edge data analytics to provide the necessary insights.

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In banking, customers’ requirements for omnichannel services are evolving quickly. This is clearly illustrated at Spain’s leading retail bank, CaixaBank: branch-based payments and cheque deposits have fallen by 52% over the past four years and cash deposits and withdrawals by 42%; but in the last year alone, total transactions at the bank surpassed 10 billion, a compound annual growth rate of 14% between 2015 and 2018. Within this same period, the number of digital clients has grown by over 30%, with 6.3 million clients now using a digital channel, 1.5 million of whom are connecting daily. 

Big costs but bigger returns

This customer transition gives banks a headache. They need to maintain a physical presence for more traditional customers and for services that require a face-to-face element. They need purely digital channels for digital natives. And they need a hybrid – “phygital” – model for those who wish to use both. Creating this omnichannel environment is a huge undertaking, but it is already delivering significant returns to those banks that understand its full implications.

Take the productivity numbers at CaixaBank. Of the bank’s 6.3 million digital customers, over 60% use both digital and physical channels, while 38% use digital alone. But the omnichannel clients – the 60% – show higher loyalty and profitability. The digital-only clients use on average 6.2 products each; the omnichannel clients 7.8. And measured by the number of monthly interactions per client, digital-only clients touch the bank an impressive 18.9 times, but the omnichannel customers average 28.5 interactions. 

Why is this? A deeper look at one channel/model helps explain the customer-bank win-win. CaixaBank‘s new omnichannel relationship model, inTouch, combines phone, chat, video call and email connections with a personal remote human account manager. This may look like simply the provision of the core omnichannel interface customers are starting to regard as “the basics”. However, inTouch, like other CaixaBank channels, uses sophisticated data analytics to tailor each step of the customer journey to the individual user. First, those algorithms help to target potential customers for on-boarding, resulting in a 93% acceptance rate. Second, continued data modelling is then used to target personalized products and services appropriately, raising the number of products purchased by each customer.

This algorithmic approach is channel agnostic. So, for customers who want a single, mobile-based entry point for their banking, CaixaBank created imaginBank, Spain’s first mobile-only bank providing services exclusively through mobile apps and social networks. Because of the investment the bank has made in data and analytics, clients who log on to the imaginBank app are presented with a completely personalized menu of products and services based on their profile with the bank. 

In 2017, imaginBank customers became the first in Spain to use an intelligent chatbot, Gina, to explore new products and services. Gina inspired the launch of CaixaBank’s own chatbot, Neo, built into the CaixaBankNow platform and accessible via Google Home and Alexa. 

These bots are getting smarter all the time. Most recently, the application of advanced artificial intelligence systems has enabled Gina to offer suggestions on the best ways for customers to make their credit payments, making it one of the first chatbots to manage real funds in real time.

Transforming distribution 

CaixaBank’s experience demonstrates that just creating an app, or new digital channels, is not by itself enough. The real benefits to both customer and bank come from the use of sophisticated analytics to deliver personalized product recommendations and suggestions in real time. This significantly increases customer engagement and product uptake. But providing a bespoke banking service requires a profound rethink of banks’ operations and infrastructure, starting with data.

To provide a seamless customer journey across channels, and to understand individual clients well enough to offer the right products, banks need to de-silo their data and create a single data universe. CaixaBank has consolidated 17 data marts into one. This has enabled the advanced analytics and business intelligence required to extract value from the data and has given CaixaBank a head start in terms of the agility required to drive future digitalization. 

On top of the data challenge, banks are having to adapt their distribution networks to the demands of a phygital model that can satisfy different customer bases. So, for example, CaixaBank is rolling out a re-engineered branch concept based on banking ‘stores’; and it is reskilling its 37,000 staff to enable them to move from purely transactional roles to the higher value-added services that clients still want, whether face-to-face or via another digital channel. 

Building the best experience 

Customers are not interested in the details of channels, they just want the best way to complete a given task at a given time. If that means using an app to quickly check a balance, then they will use an app. If it’s discussing a significant investment with an experienced advisor at a branch, then they will do that. They expect to experience those channels as almost indistinguishable parts of a new whole, as a journey through a single organization that knows who they are and what else they have done with them. And they expect a truly personal experience relevant to their own unique circumstances.

Get this right and, as CaixaBank’s experience indicates, engagement rises, product use rises, profitability rises. But getting it right requires deep data centralization, the creation of new brands and channels tailored to different client needs, and a joined-up platform underpinning them. It’s not just an app, or a brightly-coloured card. 

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