Monday, 6 June 2016

Keeping the customer front of mind

Banks have focused their efforts on trying to create and launch products that will generate revenue for them but have forgotten the essential element to making a product successful; the customer. FIs must invest in innovation, but only if the intended product seeks to serve the customer. 

In keeping the product customer-focused it creates a need amongst customers and ensures that the offering becomes a necessity when they’re conducting everyday transactions. When a bank brings a product to market that actually solves real problems, it will ultimately become a new revenue channel.

When it comes to mobile payments, Scandinavia leads the way. Countries like Denmark, Sweden and Norway all see less than 5% of purchases being paid for with cash whilst 50 per cent of the population uses mobile actively. Where leading brands such as Apple, Visa and MasterCard have focused their efforts on bringing NFC payments to your everyday retail locations, banks in Scandinavia worked towards offering solutions that are different to the standard or have not been influenced by the norms of the international market. This region has gone in a complete different direction; they've invested in free to download mobile apps.

These do not need to be branded as a bank’s app, but be developed with a view to be a new and fresh offering powered by the trusted bank brand. Proceeding this way avoids alienating customers of other banks and can also serve customers at scale. Such an app enables customers to do their everyday banking in a social, fun and playful manner, just like most apps they currently use regularly, compared to the typical banking app that is rarely used and never for enjoyment.

Personalisation and the use of location data is essential. By providing apps that customers feel they can personalise and are able to use at new locations is a determining point of its success. Customers should be able to process a banking transaction and pay someone simply and then be rewarded for enrolling their friends. They should be able to chat and send photos/videos together with their money.

Encouraging enrollment referral will automatically contribute to pushing a viral mechanism to help take the market and help build an extremely large implementation base. The other important element is providing payment options at scale. Making an app that can provide a large base of customers with new locations where they can use their phone to pay.

eMarketer estimates that by 2018, 2.56 billion people will be using smartphones. This figure represents a third of the world’s population. Imagine being able to create solutions that customers want and where no direct interaction between customer and staff is required. For example, when you eat out, you order your food through your mobile. The first time you meet your waiter is when your order is being served. No more waiting to be served and being afraid your order wasn’t taken down correctly; the customer can do this on their phone.

Once a bank has developed solutions to solve an existing problem and has created an extensive customer base consisting of both small and medium sized merchants, it can then proceed with acquiring the rest of the market by bringing the system to e-commerce, with easy online payment solutions: No card numbers, usernames or passwords; just your phone. That’s how the world leaders in payments on a per capita basis did it, and how the number two region, China, is achieving this with Alipay.

Daniel Døderlein

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