There are digital natives and digital immigrants. Digital natives, having grown up around computers and mobile phones, have radically different needs, wants and expectations.
The market trend is that digital immigrants are naturally being replaced by digital natives.
The market force is that companies must (at this time) address the needs of both types of customers.
There are digital natives and digital immigrants. Digital natives, having grown up around computers and mobile phones, have radically different needs, wants and expectations.
The market trend is that digital immigrants are naturally being replaced by digital natives.
The market force is that companies must (at this time) address the needs of both types of customers.
Closely related to the “Cloud” trend, it makes sense that banking services running in the cloud would be offered for consumption by the computer systems of other organizations (as an API) in addition to humans (as in a mobile app).
From Digital Bank by Chris Skinner…
“PayPal launched X, a developer-based service for PayPal processes as application program interfaces (APIs), … The result is that PayPal’s relevance increased greatly overnight and led to Citi following a similar approach when it announced that its transaction services would be offered as APIs at the SWIFT International Banking Operations Seminar (SIBOS) in 2013. In other words, all bank processing is just open-source coding, offered to anyone to plug and play with their offerings through APIs.”
I am not sure that I would equate an API with open source code, but I agree with his points — Such as the need to open the API’s up to start-up developers. This will make sure the bank is involved in the “next big thing” and reduce the pressure on the bank to keep on top of everything going on in the industry.
According to Digital Bank by Chris Skinner society now create 2.5 exabytes of data per day. An exabyte is a 1 with 18 zeroes after it, or 1,000,000,000,000,000,000 bytes.
“Organizations will begin pursuing dual strategies: to continue the focus on core business in their primary industries; and to seek growth opportunities in their chosen specialized functions across other industries. Specialization will drive industry convergence as competition expands around specific, common value chain functions.”
From IBM’s Digital reinvention Preparing for a very different tomorrow by Saul Berman, Anthony Marshall and Nadia Leonelli
Accenture notes that “Google Wallet, T-Mobile, PayPal, Simple, and Moven have all relied on the “white-label” services of The Bancorp Bank to provide regulated banking services to their customers.”
See The Everyday Bank by Accenture.
Customers are becoming more open-minded about banks providing services beyond traditional financial services. This includes modest extensions from providing proactive advice on spending and investing to dramatic extensions such as finding and researching products.
See the 2014 North America Consumer Digital Banking Survey study by Accenture.
Accenture comments: “In becoming an Everyday Bank, the bank evolves beyond its traditional boundaries to build a digital ecosystem with existing provider partners and other key players in areas such as home goods, health, travel and leisure, communication, and transportation. The bank customizes its offerings in these areas based on its analysis of a customer’s transaction data, and it presents these offerings in a consistent, omnichannel setting, with presale advice, discounts, post-sale support, cross-sale opportunities, and more.”
A good example of this is Cardlytics, who analyze credit card transaction data and match it to merchant offers–all without any data leaving the bank’s firewall. Offers are included in the account statement. Accenture notes that “For the customer, this is virtually effortless cash-back on day-to-day spending. One major U.S. bank has given more than $17 million back to customers through the program. Banks share in merchant commissions, which are typically in the range of 10 percent on resulting purchases.” in The Everyday Bank.
Also in The Everyday Bank, “BBVA’s acquisition of Simple, a digital U.S. bank, cast a spotlight on the new generation of personal financial management (PFM) tools, which are central to Everyday Bank‘s strategy. To help customers analyze their spending, the bank captures more than 80 transaction characteristics each time they use their debit card. By helping consumers manage and forecast day-to-day spending, these kinds of tools help drive trust, loyalty, and revenue. Whereas the average U.S. consumer visits their bank branch three times per month, Simple customers interact with the bank twice a day.”
The report has other stories about banks extending their reach including:
Customers are becoming more open-minded about receiving financial services from non-banks.
See the 2014 North America Consumer Digital Banking Survey study by Accenture.
Accenture estimates that “competition from digital players could erode as much as one-third of traditional retail bank revenues by 2020.”
…and notes that “Alibaba, China’s equivalent to Amazon, became the world’s fourth largest money-market fund only nine months after entering the business.”
…and “Google now offers a plastic debit card to go with its mobile wallet.”
…and “bank leaders cited ‘new market entrants’ among the three biggest risks they saw in the year ahead.”
See The Everyday Bank by Accenture.
Digital Bank points out that today non-bank providers handle over 15% of all payments worldwide, up from almost zero 10 years ago.
Deloitte observes that both sides of banks’ balance sheets are threatened by the security markets. This includes the new peer-to-peer lending services. Start-ups with experienced bank management are entering the traditional banking markets to capitalize on an expected cyclical upswing in profitability and are able to secure funding on this premise.
Customers are becoming more open-minded about branch-less banking. See the 2014 North America Consumer Digital Banking Survey study by Accenture.
But most still do use the branch and call center. In fact, the more they use digital channels, the more they use the physical channels. See McKinsey: The Future of U.S. Retail Banking Distribution.
Studying customers is of concern whether you are formulating a business strategy or designing a mobile app. It helps to have a clear understanding of profiles, personas and archetypes.
Archetype is hands-down the most interesting word. So let’s start there! Archetype analysis studies customers at the edges instead of looking for averages within clusters as in market segment analysis.
I enjoyed a paper by Dr. Paul Riedesel at Action Marketing Research. which contrasts archetype analysis with market segmentation.
I also found the The Future Priority Report by www.scorpiopartnership.com useful. They comment: “An archetype embodies a particular kind of behavior that is distinct and unique in some kind of way” and identify the following archetypes:
The advantage of market segment analysis is that it finds segments based upon the data. They plot customers as dots on a chart based upon attributes, find clusters of dots, and draw circles around them. You guessed it, each circle becomes a segment.
As far as I can tell, people just make up archetypes. Customer attributes are then matched to the archetypes based upon data. The more the customers match an archetype, the more useful the archetype framework is. If the customer set falls well into the archetype framework then the individual archetypes can be studied and the results applied to the customers.
My own interest in archetypes stems from my own behavior which I have observed semi-consciously. I get in the middle of something and I get caught up with it. I become a different person for a time. It becomes a temporary obsession until “the job” is more-less completed. These extreme behaviors map to archetypes which are associated with key jobs that customers need to get done. By “key jobs” I mean any activity that is important enough and complex enough to become obsessed with and need help with. I am interested in the archetypes as well as the jobs that are important in the banking industry. These would include: new worker, new career holder, family oriented, investor, traveler, expat, homeowner, business owner, retiree, shopper (home, auto, other), and hobbyist. If you can think of some more, then please comment on this post!
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