El futuro de la banca es el Engagement banking

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Bank 2.0 Specialist. Please contact us for more
information: discover@backbase.com.

Introduction

Banks are facing rapid change. Customer behavior, technology A customer’s satisfaction with
a bank’s website is strongly
and competition are all in transition. The most challenging part?
connected to his or her overall
It’s all happening at the same time. engagement with the bank.

Companies like Facebook have made the world social and given the customer a voice. Only “Using Technologies to Engage
three years ago Apple launched the iPad, and created a whole new product class. Tablets Retail Banking Customers,”
and smartphones are taking the world by storm, soon eclipsing traditional PC sales. And Gallup Consulting, White Paper 2008
in a move that no one could have predicted even five years ago, companies are branching
out from their native industries to compete with traditional banks. These competitors are
also composed of innovative entrants such as Simple, Movenbank, Google and PayPal — to
name only a few. Whatever their origins, all of them show that a physical banking presence
does not necessarily equal success. It also means that banks must act now to engage their
customers, or risk losing them to those who will.

Engagement Banking
Connecting with your customer is essential for survival. An exceptional customer experience Banking is not some place you go,
creates loyalty, which in turn creates ‘brand ambassadors’. This translates directly into a banking is something you do!
strong, enduring, bottom line. For banks to maintain their connection to the customer and Brett King, author Bank 2.0
not be relegated to a commodity role in the future they must act to engage their current
customers in unique ways while also finding compelling avenues to attract new customers.
The good news is, technologically speaking, there has never been a better time to adopt an
Engagement Banking Strategy.

Valuable Insights
This white paper will provide valuable insights aimed at outperforming the competition.

- Research about the increased use of direct channels following the financial crisis;
- Insight into how loyalty is created by engaging customers on their terms;
- Best practices taken from other industries about how to engage customers;
- Insights needed to jump the hurdles slowing down customer engagement.

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Contact us via
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Join our free webinars Interesting whitepapers at: Visit our website at:
backbase.com/webinars backbase.com/bank20 www.backbase.com

2

Banking will never be the same

Research shows increased use of direct channels following The Future is Anytime,
the financial crisis. Any Place, Any Device

Fifty percent of iPhone users have
The Future is Mobile used online banking in the past
The future of banking, especially when it comes to 30 days. iPad and iPhone
communication, from a device standpoint will be almost shoppers account for 90% of all
entirely about mobility. In fact, convergence in the mobile purchases; spend 19%
areas of communication, mobility, device, proximity and more per order than Android users.
search is poised to create a truly original and markedly
customer-driven banking experience. New forms of “Who will Lead in Mobile
communication have already impacted unexpected Purchasing? Apple, Google,
areas of the financial world. Customers will be able to Facebook, Amazon, PayPal…or
perform the same tasks they do on their computers, on your Bank?”
their mobile devices. They will also be more in control of the details of the interface they use Javelin Strategy, 2012.
to interact with their bank whether they are on their computer or a mobile device—with just
drag and drop—via widget technology.

Frequent Contact = Good Thing
A vast majority of banking customers increased their use of direct channels after the recent
financial crisis. According to Peverelli & De Feniks, the authors of Reinventing Financial
Services, this is a good thing. They write: ‘Trust results from overall interactions. The pace
at which trust is restored is a function of the quality and frequency of interactions with
customers.’ In other words, the anytime, any place, any device attitude that customers now
have might be demanding for your current organization or systems, but serving your current
and future clients on their own terms will bring you engaged, loyal customers who will act as
ambassadors for your brand.

Main Points
• Fierce competition is coming
Pace at which Quality Frequency from customer engagement
trust is restored of contacts of interactions
champions like Google and
PayPal.
• The future of banking is mobile.
• Customer trust equals Contact
frequency times Contact quality.

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Loyal customers go beyond ‘nice to have’

There’s no question that banks need to fix what has become a The Technology
broken model. Growing margins can not be a replacement for Democracy
growing a customer base. The commoditization of products
In the Sixties, computers were
within the industry is making it very difficult to compete on owned by the military, institutions

price. The new entrants are experienced in building online and large corporations. At home
we had calculators at best.
relationships and are used to developing and marketing
Twenty years later, personal IT is
transparent products. surpassing corporate IT. In the
developed world most households
Engage the Customer: Create Loyalty own multiple devices and are
One can’t afford to stop innovating in ways that can attract new customers. Satisfying a able to use them for an excellent
customer’s needs without developing an emotional connection with them actually creates wireless experience. Employees
no real value. Research such as that from Gallup Consulting, suggests that loyalty, too, is get free computer training from
questionable. In fact, measuring brand loyalty the usual way banks do, by number of repeat Facebook, YouTube, Twitter etc.,
purchases, misses the point. This measurement is unable to get at the ever important but as a result they have come
emotional connection. Without knowing why a customer is purchasing a bank’s products, he to expect a seamless online
or she could simply be taking advantage of special offers or purchasing rewards, and, experience.
just as easily could be swayed by better such offers from competitors.
David Sieg, Vice President,
The Future is About Loyalty Strategic Marketing
Customers have come to expect a more personalized, interactive online experience. Their YourMembership.com
financial provider is no exception. The more generic, transactional services offered by
most banks today are neither personal nor reflective of ever-changing technological reality.
Having established that the frequency of contact is as important in building a trusting and
loyal relationship with customers, it’s easy to see the threat to incumbents that Google,
Facebook or PayPal pose.


Customers Punish Poor Service The Real Wall Street
When a bank (or other financial) begins to re-evaluate the way that it has been interacting Occupation is Online
with its customers, it must keep in mind that customers are accelerating their uptake of direct
channels and becoming more adventurous in their use of technology. Recent research has The largest financial institutions no
found that a vast majority of banking customers has increased their use of direct channels longer have a monopoly on the way
after the financial crisis and [most recent] recession and that they are also more focused funds travel through the system.
on service quality and personal relationships as well as more willing to punish poor service. Take, for example, banking alternative
Customers’ increasing use of both digital and mobile channels suggests that banks will have Simple (formerly BankSimple), which
to find new and better ways to connect with customers. The old ways simply won’t work was co-founded by one of Twitter’s
anymore. first employees, Alex Payne.
Simple refers to its service as
“banking online” not as “online
banking.” The company is not a bank
as much as it is a personal banking
alternative. To top it all off, Simple
has made customer service the
very bedrock of its approach. When
people call for information about their
accounts, they shouldn’t have to
wait 30 minutes for someone to talk
to them.

‘The Real Wall Street Occupation is
Online,’ Dominic Basulto,
The Washington Post

Main Points
• Satisfying customer needs
without ‘emotional connection’
creates no real value.
• Customers are more willing to
punish poor service.
• Measuring brand loyalty the
way most banks do, (repeat
purchases) misses the point.


How do I connect?
The past ten years have seen the opportunities for companies
to ‘spin’ the market greatly reduced. Internet has increased
transparency and, more importantly, it has given consumers a
voice. If your product or service is below par potential customers
will find the reviews and stories, which will influence their buying
decisions.

Be Real and Create Ambassadors
Online, financial products rank among the most researched categories. So marketing,
launching, and nurturing a successful product is no longer a matter of buying radio and
television time and print or outdoor space. Consumers will talk back and in doing so they
will determine your success. This might come across as a potential threat, but in fact it’s a
massive opportunity. If you offer a quality product at a fair price and people are happy with
their interactions with your organization, or your resellers, they will tell the world. They will, in
effect, become your media voice.

Customers Want Anytime, Any Device Self-Service
Taking the customer perspective would lead to developing an Engagement Banking Strategy
that focuses on the capabilities customers want namely: Mobility, access anywhere and any
time, self-directed or self-service engagement with the bank and, simplicity, regardless of
the interaction. Reassuringly, for banks, there are plenty of examples from the retail sector to
look to when revamping their digital strategy and creating satisfying customer experiences.

Best Practices From Other Industries Engage Customers
How then can a bank be sure it is providing what its customers really want? Short answer:
Involve them in the design and learn to think from their perspective. If you give customers Main Points
the ability to choose which services they want and the way they want them to be delivered, • The opportunities for companies
the guess work disappears. Instead, customers get what they want every time while banks to ‘spin’ the market are greatly
gain a more valuable, personal, connection to their customers. reduced.
• It is impossible to ‘fake’
customer centricity.
• Transparency, offering real
value and reaching out will be
rewarded by customers.


Get Inspiration From The Best
The top three capabilities that banks think banks should adopt
In the EFMA Accenture report “Inspiring Retailing Champions, Banking and Retailization:
Insights for Banks from the Retailing Sector” a selection of the most inspiring initiatives from
companies in the retail sector have been named and ranked.

Cross-Selling
Amazon.com: for its real-time suggestions of related products, with an
algorithm so precise that it feels like a valuable suggestion and not spam.
Apple: because ‘the product IS the brand’ and its Genius application, which
uses previous purchases and preferences to derive recommendations for
other products.

Engage and Educate
BMW: ‘Build your BMW CAR Configuration’ is a way to engage customers
online. Car configuration makes potential customers aware of certain
upgrades and extras and converts to customer contact. People spend time
thinking about BMW’s products and going into the dealership with a list of
extras. This makes ‘up-selling child’s play’.
Prenatal: The Europe-based maternity store Prenatal has successfully
used such strategies as linking in-store workshops on topics of interest
for pregnant mothers to thematic articles online and then to near listings
of certain products based on their individual profiles. Their soft-selling or
info-selling is rewarded with extra sales, and a deeper product and brand
awareness.

Customer-Centric Empowerment
Starbucks Coffee: has implemented an ‘Ideas in Action’ part of their blog
to allow customers to contribute ideas about new products or beverages.
Others can vote on which ones they like best. This sort of interaction benefits
both the customers, who have a say in what they can purchase, and the
company, who has the confidence it is launching a ‘requested’ product.
NH Hotels: for recognizing the need for a Customer Experience Office (CXO)
with a budget, mandate and direct CEO. They know that integrated user
experience is only going to happen if there is a dedicated officer who has
the sole focus and responsibility for the customer journey.


Implement the customer engagement vision

For the bank, the biggest challenge to joining the Engagement Banks Can Learn from
Banking era lies not just in expectations or perspective, but the Search Engine

impediments within the banking systems and infrastructure. This Current banking systems have a
has made even the best laid plans for self-directed, customer- hard time incorporating innovations
even when they have been widely
relationship-development difficult at best.
adopted by ordinary users.
Consider, for example, search
Banks ‘Get’ the Vision. Can They Implement? engines. As we know, search
So far, we have established the need for customer engagement; the entry-level requirement capabilities have radically
of serving customers on any platform, any time. This creates trusting customers who will increased the relevance of the web
be less willing to churn to a competitor, and who will tell others about their experience and for individuals. Why, then, is it often
potentially make more purchases. Having established the need and potential benefits we impossible for banks and insurance
must conclude that there are some barriers to actually realizing multichannel engagement. companies to search their own
Most banks do have the vision to want to provide a customer-centric offering. However, they information systems to retrieve
lack the right tools and organizational structure to make it happen. any client information such as
addresses, signatures, accounts or
Assign a Customer Experience Owner, Fast balances in the same way people
While customers certainly stand to reap benefits from a more engaged banking experience, do at home?
one of the biggest opportunities, from the banks’ perspective, will be the trend away from
developers being in control of content and digital presence to a situation where content
managers themselves have direct control of how and when content is presented. This is
revolutionary from a bank’s marketing standpoint; cutting down significantly on go-to-market
times for campaigns and enabling multiple customer conversations. Additionally, banks will
win in a number of ways related to the time and cost savings resulting from simpler, more
ubiquitous, customer-initiated interactions.


Depend on IT to Optimize Online Channels Twitter-Based Hedge
Financials are often locked-into one technology provider and therefore require an expensive Fund?
and often unnecessary revamp of a large swathe of their infrastructure in order to modernize
only their customer interactions. Yet, there are other ways to tackle these impediments to In 2011, the company Derwent
progress. In fact, to focus on customer experience it’s possible to place a new layer on top Capital Markets became the first in
of existing systems without changing the underlying infrastructure to create a seamless, Europe to start a Twitter hedge fund,
satisfying customer journey while avoiding the expense and hassle of updating old systems. which uses real-time Twitter-based
Some systems enable e-business professionals to operate without having to turn to IBM, data analysis. For years investors
SAP or other portal specialists for styling or making small changes to the portal. It allows have widely accepted that financial
IT to focus on more strategic tasks and frees up valuable resources reducing business markets are driven by fear and
dependency. greed but we’ve never before had
the technology or data to be able to
Reduce Silos and Implement a Single Customer View quantify human emotion. Despite this,
The hierarchy and focus in most banks is based on tradition, historical turnover, and the future of banking is less likely
separate channels. It’s a classic inside-out perspective. The KPI’s of managers are focused to be about social networking and
inward and not on offering a seamless customer experience. Most banks work with ‘product more likely to be composed of more
management’ responsibilities at best. Branch managers are rewarded only for turnover practical functionalities such as multi-
related to ‘their products’ and this does not engender a response that is outward focused, channel access and communication.
and ultimately, able to succeed in an engagement banking world.
Reinventing Financial Services,
Become More Enterprenural, Learn from Mistakes Roger Peverelli, Reggy de Feniks,
Companies like Google, Facebook, Twitter or Amazon have not led by always ‘getting 2011
everything right’. They have become leaders by agressively pursuing growth and taking
risks. In spite of all their successes, they have left a long trail of failed initiatives. However, if
company culture is entrepreneurial and staff is encouraged to try new things, failures should
be expected. The edge lies in not dwelling on mistakes, accepting them, learning from them,
and embracing the successes that are the result of their pursuit. Main Points
• Reduce organizational silos and
implement a single view of the
customer.
• Dependency of business on IT
hinders optimization of online
channels.
• Become more entrepreneurial,
accept misses and invest in the
hits.


Conclusion

Banks need to evolve in order to make certain they have a place
in the future of customers’ hearts and minds. How they evolve
is going to depend on many factors. Almost any success will
depend on banks making changes to how they interface with the
customer.

Think Outside-In
A customer doesn’t care that a bank has multiple product groups, business units or
fragmented IT systems. They don’t care that a mortgage application is handled by a different
division and system than where their current account balance is stored. A customer is
getting married, is becoming a parent, wants to know how much they need to save to buy
a new car or boat. In the Engagement Banking era it’s all about having the flexibility to
assemble the right information and functionality within a customer’s online journey. In the
end, the way to the customer’s heart and mind then is all about context; providing your
customer with an easy and, most importantly, relevant experience. It might not be an online
interaction that one customer wants, but rather a face-to-face one, the point is, a flexible,
outside-in thinking bank will know this—and be able to react to that customer in a unique
and relevant way.

Hearts and Minds
In sum, banks are going to have to change to maintain their relationship with the customer or
risk losing out to competitors who are better able to manage the relationship. The old, inside-
out, approach does not cut it in the Engagement Banking era. In the Engagement Banking
era, banks need to put the customer first and have to make interactions with the bank easy
and intuitive. The changes they need to make can be accomplished now if they can indeed
turn their perspective from inside-out, where their own systems and needs are paramount, to
outside-in, which is the way to start thinking like the customers they want to keep.


Customer Engagement Solutions. Delivered.

We live in the Engagement Banking era where financials need to change their thinking.
Instead of the current product or system (inside-out) perspective, they must adopt a more
customer-centric or (outside-in) mindset. This isn’t easy. Applications and IT systems can be
fragmented and complex, which makes them difficult to change and makes it hard to create
a true outside-in, online experience. Backbase Bank 2.0 Portal overcomes this challenge. It
empowers financials to create outside-in customer interactions with a new, user experience
layer that links customers to the information and resources they need most.

Unlike traditional IT portal vendors, Backbase has created a modern business-driven solution that makes portal management easy for
e-business professionals. Backbase Portal Manager enables you to change your portal on the fly, whenever and however you want it.
Within the page editor you can create pages, add functionality (widgets/ mini apps), update content and forms, and target customer
segments or individual users with personalized promotions. All changes to the portal can be directly published or deployed to either a
staging or live production environment. Backbase Portal’s business focus means faster time-to-market for changes and more flexibility
to optimize online channels.

Customer Success
Our customer-centric design enables financials to drive self-service, fuel online revenues and turn their online banking channel into
a true Customer Engagement Platform. Global financials such as ABN Amro, Al Rajhi Bank, Bank of America, Barclays, Deutsche
Bank, ING, UBS and Visa have improved their online customer interactions and maximized online customer experience, retention and
conversion by leveraging Backbase’s Bank 2.0 technology.

The Backbase team includes more than 150 senior technology and usability professionals, with offices in New York and Amsterdam.
Backbase has an extensive partner ecosystem with 1000+ skilled implementation professionals.

Discover Backbase
Contact us via
discover@backbase.com
Join our free webinars Interesting white papers at: Visit our website at:
backbase.com/webinars backbase.com/bank20 www.backbase.com

© Copyright Backbase BV 2012
Backbase is a trademark of Backbase BV in the United States, other countries or both. Other company product and service names may be trademarks or services
marks of others.The information contained in this documentation is provided for information purposes only. While efforts were made to verify the completeness and
accuracy of the information contained in this documentation, it is provided “as is” without warranty of any kind, express or implied.
In addition, this information is based on Backbase’s current product plans and strategy, which are subject to change by Backbase without notice. Backbase shall
not be responsible for any damages arising out of the use of, or otherwise related to, this documentation or any other documentation. Nothing contained in this
documentation is intended to, nor shall have the effect of, creating any warranties or representations from Backbase (or its suppliers or licensors), or altering the
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El futuro de la banca es el Engagement banking

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