12 minute read
Enabling the Market
Speaking with MEA Finance, Amit Malhotra General Manager, Personal Banking Group says that traditional banks cannot rely on their legacy alone and foresees data as being key in the coming years with personalised offerings helping secure loyalty however, neobanks must become more than just a valuation play if they want to succeed
Amit Malhotra, General Manager, Personal Banking Group, CBD
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To thrive in the near to medium term requires agility. The landscape of the financial sector is changing dramatically. With technological disruption, the emergence of new entrants, both FinTechs and digital giants, as well as constantly evolving customer expectations, organizations are forced to continuously adapt to these changes.
Improving customer experience and delivering personalized offerings are no longer “nice to haves”. Results have shown that satisfied customers spend more, exhibit deeper loyalty to companies, and help organisations lower costs and increase profitability. In this dynamic of value creation and sustainable competitive advantage, delivering digital services and operations has emerged as a key enabler in reshaping customer experience in almost every sector. As digital giants such as Amazon, Netflix, Apple, and Uber continuously reinvent themselves by delivering simple, immediate, and individualized experiences, banks are also taking bold moves to build dynamic shared digital ecosystems around customer needs.
Data will continue to be a key differentiator for retail banks in the coming decade. Analytics can help banks find new business models and provide more personalized offerings and improve risk rating of customers. Banks have enormous amounts of data which they get through ATM deposits/ withdrawals, point-of-sale purchases, online payments, loans etc. However, until they fully leverage these data sets, they will remain “data rich” but “insights poor”.
Legacy retail banks will need to evolve and cannot depend on their legacy and customer base alone. They need to adapt to the new digital world and offer relevant and customized solutions to retain and grow their customer base. Neo banks will have the advantage of speed and agility and a digital only approach for all their products and services. However, they will need to quickly figure a way to scale their business to reach optimal levels and more importantly make it a profitable business and not just a valuation play. I foresee a future where there will be
an increased level of collaboration and partnership rather than competition between legacy banks and neo banks and FinTechs. This is an area where we, at CBD, have had some fantastic success. By partnering with FinTechs from across the globe we have been able to offer our customers world class offering in remittances, wealth management and robo advisory. In fact, in recognition of the benefits through FinTech partnering, we have established a Digital Lab in the heart of the Dubai International Financial Center Innovation Hub, the largest FinTech innovation ecosystem in the region.
I definitely feel there is room for further innovation in this space.
CBD has been actively driving digital transformation and investing in state-ofthe-art technology to provide customers with a seamless onboarding experience. Almost two years ago, we launched our “Digi Account”, which enables customers to open an account instantly, our ‘Digi Cards’ which provides customers a credit card instantly and our ‘Digi Loan’ product which allows customers to avail of a personal loan within minutes, all by simply using their Emirates ID. Last year we launched the region’s first Robo Advisory automated investment solution “CBD Investr”. The app has a fully digital on-boarding process, and we are currently extending this approach to mortgages as well where customers will be able to get pre-approvals on their mortgages within a few clicks using their Emirates ID only.
For our SME customers, we have launched our “CBD Rise” proposition which allows customers to open accounts digitally and within thirty minutes provides them with an IBAN number and the ability to make transactions instantly. We continue to innovate to back the ambitions of our Retail and SME customers. spends. Cardholders get up to 10% cashback in these four categories, a maximum of up to AED 150 per category per month. For other spend categories, customers will earn 1% cashback on every AED 2 spend.
Moreover, Super Saver cardholders enjoy a range of lifestyle benefits including complimentary lounge access at over 900 airports globally, free valet parking, discounts of up to 50% on cinema tickets and dining offers across 500+ outlets in the UAE.
In a time of more options and easier onboarding, how are you encouraging customer loyalty?
At CBD, we constantly work to provide our customers with value-added benefits and exclusive privileges to enrich their lifestyle and drive customer loyalty. We also recognize the varied needs of our customers and provide them with personalized and relevant offerings ranging from travel, dining, health and wellbeing offers to cashback and ‘buy one get one free’ offers.
Our credit card “CBD One” is one such example. “CBD One” is the first credit card in the UAE that empowers the customer and offers them the flexibility to choose the card benefits according to their own needs and desires, all enabled digitally. So, if you love watching movies, you
can choose to get cashback on Netflix, Amazon Prime, Spotify, VOX cinemas, Roxy cinemas and Reel cinemas. If you love food and exploring new restaurants you can get cashback on Zomato, Deliveroo, Talabat, Starbucks, Costa and lots more.
We have also partnered with Etisalat to introduce the CBD Smiles Visa Credit Cards which offers Smiles points to customers on their purchases. Those points can then be redeemed seamlessly via the Smiles mobile app for a wide range of discounts, deals and experiences across categories such as shopping, entertainment, travel, dining, wellness and bill payments at over 300+ partners.
Our Super Saver Credit Card is also another example of rewarding our customers as it offers customers cashback across all Bills, Education, Supermarket and Transport related
Different generations typically exhibit differing needs and expectations.
While the younger generation like the convenience, speed and accessibility that digital banking offers, the older generation might still prefer the human touch and the personal connection that we offer through our distributed branch network. The current pandemic has, however, reduced the generational difference with both younger and older audiences now more quickly adopting digital solutions.
In the future, I see an increasing proclivity to use both physical and digital channels, giving rise to a new set of expectations for interconnected experiences. It may become increasingly normal for consumers to engage in multichannel journeys, and banks will need to evolve to be able to provide these interconnected journeys across multiple touchpoints straddling the physical and digital worlds across devices and formats to meet customer needs.
Yustus Aribariho Head, Digital & Data, AME/E, Standard Chartered
To Be Continued
Talking with MEA Finance, Yustus Aribariho Head, Digital & Data, AME/E for Standard Chartered Bank, explains that change remains on-going with meeting customers’ needs as central to the success of retail banking in the region, and that there is much room for further innovation
There is no doubt, COVID has further accelerated disruption of the banking and financial sector which was already happening with the advent of new technologies, client demographics and new players coming into the sector. The pandemic has created a sense of urgency and brought forward technology advancements in the sector changing the pace of innovation. We are seeing a race in digital investments as the primary driver for business success. As consumer needs continue to evolve, their expectations grow. Digital adoption has increased at terrific pace driving a reshape of distribution channels. On the backdrop of this, there are 3 critical strategic components that retail banks must focus on to thrive. A. They must look for avenues of revenue growth in a diversified manner
B. Be more efficient and optimise their costs
C. Make digital the integral part of their business and use it to open new business opportunities, grow revenue and cut cost of doing business
At the centre of all this is the evolving customer needs. Retail banks in the region must use data to understand client behaviours and needs and customise solutions. The advantage is that the opportunities exist, and banks must look at using technology to unlock these opportunities.
Their co-existence will be driven by the evolving needs of customers. The desire to meet these needs will determine how the neo-banks or legacy retail banks will turn out. The two have different approaches but converge at one point which is solving customer problems. What Neo-Banks bring is the new approach driven by design thinking, executed using agile methodology. This encourages creativity, new approaches to product development and alternatives to financial needs. However, they still have a long way to go to build brands that are trusted and can withstand a test of time in an over regulated environment. Incumbents or legacy retail banks on the other hand are not sitting and watching. True they are characterised by slow pace of response to consumer needs, lengthy processes etc., but at the same time, they have built resilience over the years and created trusted brands. Most of them are investing significantly in the digital to transform themselves into entities that can respond quickly to consumer needs. They are embracing new technologies
and engaging in partnerships that create value.
In the region, neo-banks are starting to set up. In preparation for their arrival, we have seen legacy banks start on massive transformation programs. You look at what we have done at Standard Chartered, transforming our Africa franchise into a digitally driven business and now recently in Pakistan. We have also seen other banks creating moon shoot digital banks on the back of their brands to leverage the advantages legacy banks have over neo banks. We however cannot avoid the impact of changing demographic dynamics and how younger generations are being influenced by technology. To survive, both Neo and legacy banks must adapt to this new way of thinking which the neo banks seem to have an upper hand by virtue of their set up. In a nutshell, changing customer needs, adoption of new technologies and regulatory framework will determine how legacy and neo banks will exist.
What you see so far is just a tip of the iceberg. There is still huge room for improvement. The developments in onboarding you see today are due to the technology we have so far, existing regulatory environment and infrastructure in markets to support these initiatives. On the technology front, I believe the advancements in facial recognition technology or virtual reality for that matter, could further revolutionalise how we conduct KYC which is a fundamental part of customer relationship creation. Partnerships and collaborations between banks and other entities that have client bases will also play a big part in improving this space. The partners have data that can be leveraged. Regulators are also aggressively putting in place frameworks to govern open banking and data, all these will further enable banks innovate more to make client onboarding seamless. our Relationship Managers can access relevant data and information on the go in order to have meaningful discussions and be true advisors to our clients.
In a time of more options and easier onboarding, how are you encouraging customer loyalty?
Customers will only come to you if you are solving their problem and fulfilling their needs. If you solve these consistently, you will get their loyalty. We are differentiating ourselves, creating unique solutions that are targeting specific client segments. We are obsessed about client experience and everything that goes with the client
journey thought process. It is these thoughts that drive loyalty. In line with that, we have been able to do a number of things.
First, we have invested heavily in digital servicing. What this has done is to enable customers to engage with us on a click of a button via their mobile device. As a result, over 80% of our servicing is digitally initiated, and we see this encouraging clients to engage.
Secondly, we have deployed technologies that are enabling us create cohorts of clients in specific segments for us to engage them regularly. This way, we create a community of consumers according to their needs and provide tailored solutions for common needs.
Thirdly, we have invested in our employee experience by providing them with digital tools that simplify customer interactions. For example,
We have always applied a no single size fits all kind of philosophy to meet the different needs of our clients. We have drawn a baseline on commonalities that delight customers or basic expectations. For example, providing convenience by digitising journeys and make these available on the mobile device, speed to respond to customer queries etc. On top of that, we have differentiated offering and engagements with clients cognisant of the generational differences. We understand the lifecycle of our clients and meet the needs at the stage of the journey.
For example, we are fully aware that millennials are generally big transactors, and their needs are around how quickly they access products and information that can enable them to complete the transaction on their own digitally. On the other end, we have the baby boomers as we refer to them who are at a stage of making meaningful investments. These clients require advisory services and hence our deployment of relationship management model. Our distribution models are also in line with the generational differences. As we attract an increased number of younger populations, we have gone into agent banking distribution models to increase the number of transaction touch points. At the same time, we are remodeling our branch network to convert into advisory centres to cater for those that require investment advice.
At the end of the day, it is all about understanding your customer needs and meet them at every point of their journey. We are striving to do that and make sure that we have differentiated product offering and servicing that meets the needs of different generations.
