Banks will "need to operate more like Amazon" as they fight technology-driven loss of intimacy with services tailor-made to prevent customer churn, the CIO of one of the Asia-Pacific region's largest banks has advised.
"While mobile banking may improve [customer interaction] channels, they also carry the risk of allowing the customer relationship to become more remote if the transactions are purely transactional," ANZ Bank CIO Anne Weatherston told FST Media's recent Future of Banking and Financial Services Technology conference in Melbourne, Australia.
"This happens if the relationship is purely based on the provision of products," she continued. "A product-based strategy will not create customer loyalty; building and retaining customer loyalty will depend on exciting and enlightening our customers through a combination of great insight and superior customer service. Banks will need to operate more like Amazon."
That goal may seem counterintuitive for many banking institutions, which rely on large-scale volume transactions rather than the individually customised products that have made Amazon a global retail giant.
However, banks are being pushed toward change by a new breed of payments providers that are at once more nimble and effective at meeting customer needs than their larger counterparts. Those banks that cannot leverage technology to meet this challenge will simply fail to keep up, said Weatherston — who recently took a delegation of ANZ executives to Silicon Valley and found it "terrifying" to see how online-payments startups are redefining the banking space by disintermediating traditional banking institutions.
Seizing that bull by the horns, in recent years, ANZ and its traditional rivals — the Commonwealth Bank of Australia (CBA), Westpac Banking Corporation, and National Australia Bank (NAB) — have each embarked on massive reform programs that seek to rearchitect rusted-on IT infrastructures around lean, private cloud-based delivery, mobile banking, and the like.
A long-term strategic effort in 2011 laid down the strategy that would position ANZ as "the most connected and best respected bank in the Asia-Pacific region", Weatherston said, noting that ANZ had expanded from its Australasian base to now operate in 32 countries.
"Building and retaining customer loyalty will depend on exciting and enlightening our customers through a combination of great insight and superior customer service. Banks will need to operate more like Amazon."
"We are well advanced in the deployment of private cloud, and this has allowed us to add scale and reduce cost while providing scalability, speed, and resilience."
Weatherston pointed out several key behavioural traits that can focus banks' efforts to modernise their outlook. These include the adoption of a product portfolio perspective, which standardises and simplifies product offerings and "has enabled maximum opportunity for the scale that's critical to driving year-on-year efficiency and effectiveness", she said.
Another key target is to embrace a global supply-chain process that is modularised to be deconstructed into discrete components. "Each component can then be built where the cost is most favourable," Weatherston said.
The third main pillar of customer value lies in banks' ability to enhance the customer experience: "Successful organisations realise that staying in the game requires more than price," she said, comparing the challenge facing banks to what has faced automotive manufacturers for decades.
"They seek to offer customers the capability to personalise their cars, while also maintaining value," she said. "This is challenging, given the need to also maintain efficiency, but it is only possible after many years of designing platforms and building models to meet the parameters of process and customers."
Meeting these challenges requires much more than simply adding new contact channels, which "may buy you some time", she said, adding that a formal strategy for customer relevancy will guide banks' efforts around "total customer engagement. Banks will need to operationalise their strategies through very different models — specifically ones that enable the execution of these customer objectives of customer delight."