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It’s starting to come together

The technology-customer centricity-profitability linkage emerges

It’s starting to come together

Every year Gartner comes out with a fascinating graph detailing the “hype cycle” of scores of new technologies, plotting them on a time curve that traces them through various stages, starting with “innovation trigger,” “peak of inflated expectations,” “trough of disillusionment,” “slope of enlightenment,”—and ending with the “plateau of productivity.”

Some of the technologies listed are familiar to bankers. Gamification, for example, now is seen topping off at the peak of inflated expectations. Near-field communications now is sliding down deep into the trough of disillusionment. Location intelligence now has progressed all the way to the border between slope of enlightenment and plateau of productivity.

Gartner predicts gamification to enter the desirable stage of productivity plateau in five to ten years, while NFC is seen rebounding to that level in only two to five years. Meanwhile, predictive analytics is already far in the green zone of productivity.

Which is interesting, the part about predictive analytics. Gartner probably expects people to take their hype cycle with a grain of salt, in light of the vagaries of scientific advances, economic exigencies, and pure luck. But predictive analytics seems to be taking hold in solid, business-sense ways.

Predictive analytics can be defined in a number of ways, but for bankers it can be directly applied to customer relationship management, which in turn is the practice of adjusting a bank’s products and services to the needs of individual customers. In order to do that, bank technicians need ways to predict those needs by analyzing customer behavior, needs, and preferences. In other words, predictive analytics.

Recent literature bears this out. Looking from a very wide perspective, KPMG surveyed more than 900 U.S.-based multinationals and asset management firms and uncovered “a new alliance between CFOs and CIOs.”

“Technology that is geared to help drive performance in support of a customer-centric focus is taking center stage,” says Stephen Hasty, a KPMG partner. “In fact, more and more company leaders see that emerging IT advancements can drive business improvements to help them grow their business and maintain a competitive posture in the market.”

Tellingly, he sees intensifying customer demands ranging from wanting mobile access to shop and pay for products and services, to expectations of better product quality, and improved access to customer-service questions. In other words, mobile is taking over.

Kony, which provides multichannel application platforms, labels the financial services response to this “mobile banking 3.0.” “Banks must address mobile banking 3.0’s new challenges, which include eliminating silos of customer engagement to deliver a unified experience, driving new revenue streams, and managing risk,” it says in a report.

It goes on: “Despite the challenges, banks today are in a unique position to tap mobile data and leverage a holistic view of the customer to deliver segmented applications based on behavior and location.”

Using such technology, new revenue streams in the mobile environment could open up, it says, including new account enrollment, prepaid card top-ups, and enhanced remote desktop connections with fees for immediate access to funds.

Javelin Strategy and Research focuses this theme even narrower, seeing a connection between a huge segment of Americans who both bank and pay bills online and through mobile devices, but not together.

“Javelin estimates banks can increase household adoption of online banking by 22% by targeting 29 million Americans who are just one step away from paying their bills at the bank,” it says in a recent report.

“Mobility is rapidly rewiring the way consumers think. Mobile-toting Americans demand simplicity, any-time convenience, immediate answers, pre-emptive alerts, personally relevant information and advice, an attitude of transparency, and time-saving options—all done safely and securely. To win converts, bill-paying services must satisfy those broad expectations and also offer specific bill-payment capabilities that clearly outperform the methods consumers use today,” says Mark Schwanhausser, director of Omnichannel Financial Services at Javelin.

So there’s that one step that CFOs and CIOs are starting to take together, aligning technological potential with business opportunities in order to meet increasingly sophisticated customer demands.

KPMG”s Hasty sums this up. “Constant change in the business environment requires internal and external capabilities with a deep and current knowledge of each component of a transformation effort—including market dynamics, regulatory and tax rules, technology advances, operation practices, and program implementation techniques.”

Sources used for this story include:

Mobile is Key to Boosting Adoption of Paying Bills at Bankers’ Websites

Mobile Banking 3.0: Kony Highlights Multi-Channel Approach

Gartner's 2013 Hype Cycle for Emerging Technologies Maps Out Evolving Relationship Between Humans and Machines

KPMG Survey: Executives Cite Customer Demand, Technology As Top Reasons They Are Changing Their Business Models

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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