Yesterday I sat down with Mike Panzarella, our director of financial services, on the subject of “lessons learned” in financial services technology innovation. 2012 was definitely a year for strategic transformation for both financial institutions and non-banking service providers. We saw traditional banks and non-banks that provide financial services bring new technologies to market in an effort to gain a competitive advantage. We also saw a lot of digital disruption in banking strategies from the mobile revolution and use of social media. Overall, the industry saw IT play a critical role in helping banks execute marketing, sales and operational strategies in financial services.
As we look ahead to 2013, here are Perficient’s perspectives on the top five lessons learned in financial services to help banks prepare for the challenges ahead:
1. A year of “me too” for loyalty and rewards. We saw everyone and their mother in financial services jump on the bandwagon offering loyalty rewards programs. Undoubtedly, loyalty and rewards programs help financial institutions distinguish themselves in a crowded space, enable a more personal and customer-centric brand image, support customer retention, and influence spending behaviors; however, banks have only scratched the surface with reward programs. Tied into this lesson learned, customer experience in digital channels will continue to demand more focus on delivering meaningful and customer-centric loyalty and rewards programs. Banks will need to adapt to consuming and analyzing nontraditional data sources for effective segmentation strategies. For those that haven’t yet jumped on the bandwagon, 2012 was a great year to see how others were testing the waters. Financial institutions must better handle the digital disruptions and leverage mobile capabilities to build a rewards program that delivers a more integrated and “customer friendly” user experience in real-time.
2. A competitive year for payments. As we discussed in Perficient’s October mobile payments webinar, financial institutions spent 2012 rationalizing mobile payments as a key customer channel to be more competitive against “emerging payment” capabilities of non-bank payment products. We not only saw PayPal challenge the industry with their payment strategy, but they shed some light on the disintermediation of payments for financial institutions with its P2P for Financial Institutions product. More and more we’re seeing specialty payments providers handling transactions and doing it well. Other tech giants like Google, Facebook, Apple and Amazon follow close behind. At the POS, we saw Square see success with its mobile card reader, which prompted Bank of America’s launch of its MobilePay On Demand product. Will banks see this as a necessity to do battle and compete in the payments space? Beyond the POS, we are seeing more value-added services prior to and after the transaction. Prepaid cards offered by traditional banks is yet another example of how payment capabilities can influence marketing results in the industry. Overall, we’re seeing many more full-featured mobile payment solutions in the marketplace that will help streamline payments for a more holistic mobile payment experience. Don’t get left in the dust.
3. A year of data-driven strategies. This year, big data emerged as a top topic of discussion in financial services. Research analysts, technologists, and big data vendors all support its application to the financial services industry. Many misconceptions exist around big data and we also aren’t advocates for banks using big data just for big data’s sake. Many organizations can make big decisions without the use of big data. The banking industry may be a ways off from fully embracing big data strategies, but financial institutions should begin exploring low-risk strategies to find value in data streams and untraditional data sources. Mobile and geo-locational data is already essential to offering mobile payment capabilities, customer incentives and fighting fraud. Lesson learned for banks: don’t rely on a crystal ball to make decisions when you can pan for gold using data that already exists in your own backyard.
4. A year for cross-channel customer experience integration. The term “customer experience” has evolved beyond the traditional bank experience to include online and digital channels in banking. This year banks worked towards defining a more seamless customer experience similar to nontraditional digital competitors. This shift in customer experience extends from mobile payment platforms to online banking. Mobile banking becomes “standard” as a banking channel for many of the top financial institutions. In 2012, 81 of the top 100 U.S. banks now offer mobile banking services through mobile apps and websites. Standard services such as bill pay and balance inquiries lay the groundwork for the addition of P2P payments and online offers. Gartner predicts that 665 million tablets in use by 2016. Heading into 2013, banks will also need to develop a tablet strategy. Going back to #1 and #3, banks need to better leverage customer analytics to draw insights and exhibit creativity for a differentiated customer experience across channels and devices.
5. A year where regulatory compliance becomes the new norm. With Dodd-Frank, Basel, and the Durbin Amendment celebrating anniversaries in the banking industry, banks are used to managing regulatory compliance. Despite all the regulations in the industry, the compliance requirements provide an opportunity for banks to excel. An abundance of technology for risk management is available and banks are adjusting to the reporting requirements. So instead of dwelling on these standards, banks need to focus more on data quality and governance in the new year.
