Intelligent Financial Networks: The Future of Information Architecture in Banking
| By Yang Jianguang, Senior Finance Industry Marketing Manager, Huawei Enterprise Business Group
Customer-centricity is a long-term strategy for banks since the inception of money. Modern service culture, advancements in precision marketing, and sophisticated customer experience innovations continue to improve banking service levels. Technology innovations allow for increased integration among bank IT systems, with new IT-enabled integration and a new level of maturity. To the benefit of customers small and large alike, banks are embracing the trends of intelligent financial networks.
Customer-Centric Banking Service Transformations
Duplicate financial products make it difficult for banks to compete for any single financial product. Personalized financial services, however, are helping banks improve customer loyalty. Reknowned management expert Peter Drucker once said, "There is only one valid definition of business purpose: to create a customer." Ever since Citibank first proposed the idea of marketing banking services in the 1970s, bank after bank has adopted a customer-centric focus for their long-term strategy. To this end, banks will continue to adopt innovative approaches to workplace climates, processes, facilities, and employee image.
- Precision Marketing: Customer-Centric Service Transformation
New theories and techniques emerge with the continuing advancement of statistical analysis, data management, and computer technologies. New developments include adopting a 360-degree view of customers, examining the customer value pyramid, and using the "three levels and one rate" approach (levels of contribution, loyalty, and satisfaction, plus churn rate). Other techniques include investor psychology analysis, Pareto principle insight, and applied data warehousing.
Putting theory to practice, banks are implementing precision marketing methods such as customer segmentation based on banking and investment needs. Banks are empowered to recognize the customers who need ordinary versus private banking services, and identify high-value customers who would benefit from wealth management services. Customer relationships are maintained by the considered use of customer demographics, selected interests, and other factors of each customer group. The result of precision marketing is the allocation of resources based on the needs of each different group. For example, investment teams are delegated to provide custom services for private banking customers, while basic savings and loan services are provided for ordinary customers.
- Experience Innovation: The Most Exciting Customer Service Innovation for Contemporary Banks
The 3G era of mobility and converged communications dramatically enriched lifestyles and interaction modes. Smartphones have brought an exciting era of innovation to user experiences. Devices that stream and transmit high-definition video make on-the-go collaboration possible at the push of a button. Banking customers are liberated from the confines desktop computers at fixed locations. Mobile digital services enable users to communicate "face-to-face," anytime, anywhere. The next clear opportunity to adapt mobile applications to the banking industry is to incorporate Bring Your Own Device (BYOD).
Mobile, remote banking is a great example of innovation. Early adopters such as Citibank, Barclays, Lloyds TSB, and HSBC are very experienced in deploying powerful mobile banking services. Current generation advancements are combining the conveniences of remote banking with the friendliness and customer attentiveness of in person services. Banks assign wealth management experts to interact with customers through multimedia and converged voice/video. Bank transaction systems are integrated with customer management platforms to provide comprehensive banking transactions, advisory investment, financial product sales, and other value-added services in realtime. Ding Wei, executive vice president of China Merchants Bank, a pioneer in China's joint-stock commercial banks, stated that, "All business that can be processed via remote banking should not be processed at any physical bank location." Banks are now providing many innovative experiences to supplement traditional branches and banking outlets.
IT Advancement for Banks: Four Challenges
To support customer experience innovations, banks must address four challenges concerning IT advancement: perception, analysis, collaboration, and management. Regarding perception, banks must diversify the channels through which customer requirements are promptly recognized and services appropriately targeted. Social network sites are important for showing the ways in which banks can build customer analysis platforms capable of identifying diverse patterns in the market. To address collaboration, converged communications technologies are delivering enhanced efficiencies in collaboration and bringing seamless BYOD experiences to end-users. Improving integration is required to help banks simplify IT management.
Today, people enjoy an abundance of the choices in banking services. Whether at the local branch, on a website, or using mobile applications on a smartphone to conduct normal business activities: depositing, transferring, or withdrawing money, or making Point of Sale (PoS) payments at the mall. People expect their banking services anytime and anywhere through a variety of channels. Citibank, Wells Fargo, and Bank of America, are each fully engaged in building channels to satisfy these needs. Li Zhaoning, general manager of China Construction Bank's e-Banking Department, underscored this trend: "Future e-banking should enable new value creation models beyond traditional channels."
As the numbers of channels grow, so too will Service Access Point (SAP) deployment continue to expand. SAPs can be deployed in homes, offices, or during travel, as well as in shopping malls, theaters, and schools. In the face of so many form-factors and points of presence, it is clear that channel convergence and security management are critical concerns for banks to ensure a safe and consistent user experience for their customers.
Putting it all together, banks are able to leverage comprehensive and convenient service systems through a growing range of multi-channel financial and auxiliary services. In this way, banks are improving the customer experience, precision marketing effectiveness, and business processing accuracy. Just as important, they can enhance highly targeted banking services through intelligent financial networks, further honing their competitiveness.
As we adapt to easier access to services in both real and virtual communities, people are placing more diversified requirements on banking services. According to Gartner, by 2014, 25 percent of consumer-driven banking products and services will come from new external social networking and cloud computing services. Consumers will have greater interaction with banks, exchange information indirectly through the swap models of cloud services, portals, and social networking sites, choosing simpler methods to obtain banking services access with a higher level of personalized support.
To respond to these changes, many banks have begun to cooperate with social networking sites, such as Facebook, Twitter, YouTube, Flickr, and LinkedIn, to integrate the URLs of online banking transactions and services. Lloyds TSB, a UK-headquartered bank, established a social media team tasked with handling comments (both positive and negative) regarding their bank on these popular websites, in order to respond to complaints within 30 minutes.
The customer-centric services of banks are now challenged to act on insights discovered through new pattern analysis techniques that consumer service industries can derive from social networking sites. Apart from quantifying traditional consumer behaviors, modern data analysis tools are expected to uncover more complex interactions that will help banks much better understand contemporary consumer habits.
- Challenge 3: Collaboration
With the emergence of converged communications technologies (video, voice, and data), comes the widespread adoption of high-definition telepresence, IP telephony, Instant Messaging (IM), and web conferencing. In support of their incorporation of remote banking services, China Merchants Bank has converged its telepresence, IP telephony, and web conferencing systems to provide high-end customers with remote "face-to-face" wealth management services, even from thousands of miles away. Convergence also enables the quick selection of call center agents for customer support. Such services cost banks far less than on-site expert staff services in bank branches and outlets.
With the popularity of smart devices, IT consumerization, and cloud-based applications, the general public is increasingly using mobile devices to communicate and acquire information. The same applies to the office environment, in which bank employees use their own mobile devices, or those provided by their employers, to access the corporate Intranet. Thanks to mobility made possible by BYOD, banks can now respond to customer needs anytime and anywhere. Supported by converged communications technologies, BYOD makes it possible for bank employees to make eye contact with colleagues or share a remote computer desktop. BYOD also enables more efficient business collaboration and provides a virtual mobile office and mobile marketing experience by integrating functions such as IM and conference calling.
Diversification of channels and ubiquity of services raise the need for more complex customer analysis and integrated business collaboration. To support these new banking service models, banks need a more complex IT-enabled infrastructure. Consideration must be given to the banking industry's macroscopic three-tier structure of "Infrastructure – Datapipe –Access channel," which is similar to Huawei's three pronged "Cloud – Pipe – Device" strategy, as well as overall security controls applicable to resources, data channels, and service access points, all of which add to management complexity. Banks are focusing more on core services; therefore, their requirements for integrated, convenient, and intelligent management are all the more pressing. Regarding IT maintenance, banks will surely favor the one-stop maintenance services of IT equipment encompassed in one cabinet on a single network. No single effort will fully manage all bank IT systems, and adding more information management staff to handle the increase in information equipment is not economical. This is especially true for IT management in bank branches and outlets with far less data traffic.
Banks Embracing the Future
During the September 2012 World Economic Forum's sixth Annual Meeting of the New Champions (also known as the Summer Davos), bank executives and experts from around the world shared their ideas about the future of the banking industry. At the China International Financial Exhibition, held at the end of 2012, attendees were invited to experience a dedicated exhibition on the future of banking. Featuring a blend of such elements as "efficiency and convenience," "ultimate experience," "exclusive service," and "intelligence features," the future of banking was shown taking shape. These new elements are not only eye-opening for customers, but also attract banks that aim to be more customer-centric.
How will banks embrace the future? Huawei is a leading ICT solutions provider that has served more than 200 banks in the evolution of their IT requirements. Huawei continues to analyze and identify these trends in IT evolution for banks, with "intelligent convergence" as a main feature, consisting of the following four aspects:
• Perception: Integrated customer service channels.
• Analysis: Integration of more customer data.
• Collaboration: Integration of Voice, video, text, multimedia, and desktop sharing.
• Management: Integration of security controls, as well as maintenance of basic architecture, datapipes, and access channels.
Perception, analysis, coordination, and management are the defining elements that determine a bank's IT architecture, while convergence determines the extent the IT architecture allows users to be networked.
Intelligent financial networks will define and enrich the ways in which banks communicate with and serve their customers, better positioning them for the future.