Bridging The Gap: How To Turn Potential Customers Into Brand Advocates

Michele Hackshall

It’s a great time to be a customer. There are so many ways purchase—whether it’s a researching new smartphone or planning a big vacation, the process of making a decision offers a huge variety of options to consumers.

Usually, the customer journey starts with online research. This is where customers brush up on information about the product or service they wish to buy: Is that smartphone’s camera high-grade? Does the hotel offer free wi-fi?

From there, they can narrow down their search. Reviews are read on social media and on forums, simple questions can be answered by chatbots. Purchasing can be done easily online. For more tactile retail goods, visits to bricks-and-mortar stores come into play as well.

But while it’s simple to describe in these terms, the customer experience is rarely simple and straightforward throughout the journey. Of course, as a business you want it be easy at every stage. You want to support and help customers choose your product or service as much as possible.

Johann Wrede, global vice president of audience, brand, and content marketing for SAP Hybris, explains that the most common pitfalls companies make are in the customer experience. Many people think the buying journey stops once the customer has made a purchase, but the reality is the longer part of the customer journey is what happens after the purchase.

Studying and recognizing the gaps between the various stages of a customer journey shouldn’t be overlooked. “The most fragile moment is when the customer transitions,” he says. “If that gap isn’t seamless — if the experiences before and after the gap aren’t the same — you break the customer’s journey.”

Here are four examples of where to bridge the gap:

1. “I want to buy it before I hold it.”

Does the retail experience match the online one? Will a customer walk into a store after checking online for stock, only to be disappointed that it’s not available? Will the staff be as helpful as the online experience?

To achieve a frictionless experience for your customer, departments must work together. E-commerce needs to talk to retail, and vice versa, to ensure that both are meeting customers’ expectations.

2. “I’d like to get more information.”

This is about making sure leads get to your salespeople so they can provide a quick response. If leads are getting lost in the process, or are taking too long to get a response, you will lose that customer.

Provide salespeople with context for the callback as well. Which offer is the customer responding to? What product page were they on? By transferring the intelligence, the responding salesperson can have a conversation that will add value to the caller.

3. “I need help.”

Does your customer’s experience match the experience of their purchase?

The longest phase of the customer journey is the use phase. A good example is buying a car. The purchase will most likely last for years, so they’ll be interacting regularly with you. When they service the car, make it seamless and easy. Does post-sales service match the great sales service they received when they test-drove the car, or when they purchased it?

It’s important for information captured from the marketing process and the sales process to feed into customer service. That way, when a customer calls for help, customer service will know what they bought and why they’re calling. This saves time and frustration, while also adding value.

“Marketing should care as much about what customer service is saying to your customers as you do about what’s going into an outbound email,” Wrede says. “If that experience is different and disconnected from what you say across marketing and sales, it will break that customer journey. You will never bring that customer to the final phase of advocacy.”

4. “Help me share my experience.”

You want your customers to become your advocates, and to share their fantastic, seamless, and positive experience with everyone they know.

“If you don’t bridge that gap to go from use to advocacy, you’re damaging your business,” Wrede says. “How does your organisation work to cross that big divide from saying  ‘I bought it’ to ‘I love it.’?”

Respond quickly to customer feedback and reviews. Have systems in place that flag both positive and negative feedback. Train your customer service to recognise and foster potential advocates.

Overall, it’s about minding the gaps and looking into your business—not just in your department, but across the whole organisation. Go beyond marketing, sales, and customer service. Understand what the gap looks like from the customer’s perspective, and base your solution around that.

For more brand advocate strategies that get results, see In 2017, Customer Experience Management Should Be Your First Priority.

Comments

Michele Hackshall

About Michele Hackshall

Michele Hackshall is a writer who helps global brands hone their marketing communications. Over the past two decades she’s managed product launches, strategized campaigns and written everything from scripts and adverts through to annual reports and press releases. Since becoming a freelancer in 2013, she’s focused on project managing the case studies program for Twitter’s emerging markets, through digital marketing agency Wings4U.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Konstanze Werle

About Konstanze Werle

Konstanze Werle is a Director of Industries Marketing at SAP. She is a content marketing specialist with a particular focus on the travel and transportation, engineering and construction and real estate industries worldwide. Her goal is to help companies in these industries to simplify their business by sharing latest trends and innovation in their industry.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Angelica Valentine

About Angelica Valentine

Angelica is the Marketing Manager at Wiser. Wiser collects and analyzes online and in-store data with unmatched speed, scale and accuracy. She is experienced in strategy and creation for cross-channel content. Angelica is passionate about growing engagement and conversion rates through excellent content. Her work has also appeared on VentureBeat, Bigcommerce, Retail Touchpoints, and more. She holds a Bachelor’s degree in Sociology from Barnard College of Columbia University in New York City.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Uli Muench

About Uli Muench

Uli Muench is Global Vice President of the Automotive Industry Business Unit at SAP.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Shawn Slack

About Shawn Slack

Shawn Slack is the Director of Information Technology and Chief Information Officer for the City of Mississauga.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

4 Reasons Why The B2B Payment Process Is Going To Change

Ruud Willemsen

online-payments-aribapay-315x214Let’s be honest: B2B payment is complicated, much more complicated than payments made by consumers. You’re often dealing with timing issues caused by a changing payment term, while a payment run often includes multiple invoices. That processing takes hours, because information about the wire transfer is difficult to find. Yet business financial transactions no longer have to be complicated. The power of contemporary business networks plays a large part in this.

Transactions in the course of business are often done the traditional way. Party A will make out an invoice for Party B and then send it. Party B receives the invoice and on that basis will book a payment with the bank. The transaction then takes place between two bank accounts, in the best case about 30 days after the service was supplied. In this digital economy this is hopelessly old-fashioned, unnecessarily slow, and high risk. Luckily it can be done differently.

Problems with today’s process

The traditional invoicing process has four focus points:

  1. Slow – In the business world there is still a big gaping hole between the supplied service and the moment of payment. The usual payment term of 30 days is actually a strange phenomenon. In the consumer world it is unthinkable that someone goes grocery shopping and happily tells the cashier that they will most likely come back next month to pay for the full shopping cart. This phenomenon remains mainly for cash flow reasons: because every company compensates a delay in income by postponing payments x amount of days.
  2. Labor intensive and error sensitive – It goes hand in hand with work done manually and is (therefore) sensitive to errors. Think of double payments, “lost” invoices, or incorrect bank account numbers.
  3. Not transparent – The status of the invoice is not immediately insightful. The only thing Party A can do to gather information is make a phone call to the administration department of Party B.
  4. Fraud sensitive – Especially for larger organizations that process dozens of invoices per day, oversight is just not there. Invoices are sometimes gratuitously agreed upon, and that promotes fraud. Ghost invoices can cost companies a lot of money.

The most important reason why paper invoices are so popular is the large amount of information that you can literally staple to them. And companies need that information, especially because there is a large time difference between the payment and the actual service.

E-invoicing: a first step

In the last few years, large steps have been made regarding digitalization of this lengthy invoicing process. But all those loose e-invoicing services are missing a last link: a provision for making the actual financial transactions. A halfhearted link with the bank is often the only option. Moreover, these platforms are often difficult to use for external parties and a proliferation of services only adds to the confusion.

Digital network

The solution is the integration of e-invoicing within a digital company network, including a digital payment system. With a digital payment system, incoming invoices can be processed and paid immediately, without human intervention. A connected bank company will process the payments in the background.

This is an enormous efficiency battle in the field of labor intensity and error sensitivity. Names and account numbers are always correct because they come directly from the profiles of the companies that are members. Work done manually is reduced to a minimum. Information and status of transactions are retrievable, always and everywhere, and in real-time. The payment orders are furthermore linked automatically to the accompanying invoices that are also linked to the supplied service. Therefore, complete “procure-to-pay.” And because of this transparency, ghost invoices have become irrelevant.

In this digital, hyperconnected economy, paper invoices are really a thing of the past. Discover how AribaPay integrates digital payment systems into business networks to bring the ease of services such as Paypal.

Comments

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Konstanze Werle

About Konstanze Werle

Konstanze Werle is a Director of Industries Marketing at SAP. She is a content marketing specialist with a particular focus on the travel and transportation, engineering and construction and real estate industries worldwide. Her goal is to help companies in these industries to simplify their business by sharing latest trends and innovation in their industry.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Angelica Valentine

About Angelica Valentine

Angelica is the Marketing Manager at Wiser. Wiser collects and analyzes online and in-store data with unmatched speed, scale and accuracy. She is experienced in strategy and creation for cross-channel content. Angelica is passionate about growing engagement and conversion rates through excellent content. Her work has also appeared on VentureBeat, Bigcommerce, Retail Touchpoints, and more. She holds a Bachelor’s degree in Sociology from Barnard College of Columbia University in New York City.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Uli Muench

About Uli Muench

Uli Muench is Global Vice President of the Automotive Industry Business Unit at SAP.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Shawn Slack

About Shawn Slack

Shawn Slack is the Director of Information Technology and Chief Information Officer for the City of Mississauga.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

Talking Sensibly To Mobile Banking Clients Who Check In Daily

Tom Groenfeldt

Bankers have learned that many of their mobile customers check their accounts 30 times a monthPhoto: Tom Groenfeldt, or so. Besides straining online banking technology, which has become accustomed to customers’ checking their accounts only a few times a month, the near-daily mobile visits offer a great opportunity to communicate to customers.

But what to say? How many times can a bank offer a new credit card or a home equity loan, especially to millennials who may be living with parents or sharing an apartment?

Mark Schwanhausser, director of omnichannel financial services  at Javelin Strategy, thinks banks should send them a message every time they log in, and the communications should help them with their financial lives. That does not mean pushing credit cards that will trap them in debt — it means helping them save. By becoming a savings advocate early in a customer’s life, banks have an opportunity to build a relationship and earn future business such as auto loans, mortgages and investments.

Mostly though, banks are blowing the opportunity. Despite all the customer-centric bally-hoo, they aren’t organized around the customer, but around products, their people are paid by product they sell, and their technology is clumsy. Otherwise all is just peachy.

Start with coaching

Schwanhausser thinks bank’s relationship with a Gen Y, or perhaps any new customer, should start with coaching and education.

“Personal finance is something they will deal with for their entire life but banks have not made clear the kinds of decisions they could or should be making on a  daily basis. There are ways through daily banking to raise their awareness, to show the decisions they are making, the way they spend and the ways they don’t save. Those are all decisions that are happening because they want them to or because they aren’t aware.”

Gen Y consumers need cost-effective coaching because they face life-altering financial decisions, he said. Moven and Simple have shown how a banking app can be on the customer’s side — my story about Simple includes Twitter comments from users who have eliminated credit card debt and saved significant amounts with the app and are delighted with the company. Both companies have well-designed apps that users enjoy; a customer switching to Simple from Bank of America said  Simple  was far superior to BoA’s mobile app.

Schwanhausser wouldn’t be surprised.

“It has been eight years since the iPhone launched the “there’s an app for that” mobile movement. Yet financial institutions all rely on a single chore-based digital banking approach to serve the needs of segments of consumers as diverse as Gen Y, micro-business owners, and the wealthy,” he wrote in a recent report.

Banks should use gamification to pique interest and stimulate engagement, provide insight that can act as a catalyst for changing financial habits, invite action by enabling customers to visualize future rewards, such as showing pictures of houses or cars to encourage savings. They can coach and recommend action with every log-in, point to the power of compounding for those who start saving early and keep their advice simple, but never simplistic or condescending.

“What you do not see here is any mention of “budgeting” or traditional PFM (personal financial management) tools segregated away in a tab within online banking…tools that require a consumer to view money in the context of budgeting. Javelin demonstrated long ago — and will underscore it again — that this approach disappoints consumers and bankers alike, “ the Javelin report says.

The key thing a bank can tell young clients is to pay yourself first, or save automatically, Schwanhausser added.

“If we can do that from the first paycheck where someone saves 10 to 15 percent and learns to live on the remains, that is a person who will be attractive to the financial institution because they will be setting aside 10 to15 percent and they have all that time to let those savings compound.”

Doesn’t that require patience on the side of the bank?

“Yes, we are talking about a life long relationship. Does the bank want to be a partner for a couple of years, or for the rest of a customer’s life? A young client won’t start with an investment account. We re-envisioning digital banking as a lifelong journey, banks and credit unions can evolve beyond executing transactional needs.”

Banks can use their technology to forecast clients’ cash flows, notify them of bills, place pictures next to savings goals, help them save for bi-annual bills. All that requires the banks to have a a purpose in their client relationships, and to maintain that purpose across the entire bank enterprise.

“That sense of purpose is so often missing in banking, a sense of purpose that it is about the consumer’s money. That should be a guide, making sure banking is simple.”

It’s a way for banks to differentiate themselves from other banks and create a relationship that can compete with Google searches when a customer wants a car loan, mortgage, credit card or investment account.

“What the banks face today is they are in a transactional sort of relationship. They are arming customers with the kinds of technology which gives them the ability to do their banking chores in their pajamas any time of day at their convenience. And as a result, they do not need to talk to a banker to conduct ordinary financial matters. The technology we pump out distances us from our customers. If we continue down that path banks lose because all they are is a way to execute.”

Banks that encourage customers to save become advisors.

“Now it is a relationship, and if we mine the data as we can give consumers the oversight they need — the ability to see their savings, checking and credit all in the same place and see it as they grow their net worth. This is a way for banks to know more about their customers and have the most intimate portrait of a consumer they have ever had. They can be talking with them and guiding them and be there with the kind of financial help that turns into more business.”
If the banks can avoid screwing it up through antiquated organizations designed around silo channels and accompanying incentive programs. Changing that will require top-down effort, he said.

“One big challenge for omni-channel is you started with branch-centric and added other channels which were designed to feed or augment the branch system. Now you have siloed issues and people who are thinking about a victory in terms of what their channel accomplishes rather than the financial institution accomplishes.”

The resolution requires a top-down approach, he said, because it is about the institution, not a single channel.

“We know customers will use multiple channels. They may mix and match laptop and mobile, or pick up a phone and call somebody. We are going to see those situations all the time, so we have to make the experience as smooth as possible. If you live in a world where one channel has the upper hand or is seen as different, you haven’t achieved the omni-channel experience for customers.”

Holding onto customers for investments will be a challenge, he added, because the online investment firms have developed strong brands backed by excellent technology.

A bank that is seen as a place for checking transactions and a credit card won’t have much of a chance.

“By establishing the idea of setting money aside you are establishing a reason to delay gratification. If the bank can make a connection from that to investing then it starts to tie back and the bank can win.” That means the account management has to fend of parts of the bank pushing credit cards and other anti-savings products.

“When banks are seen in one bucket and Schwab in another, you are still in a world where consumer is Googling for individual products. A consumer needs one central place to see these accounts together.”

Unfortunately for banks, tools like Mint mean that a customer can see all those accounts from a variety of providers without depending on a bank.

“But imagine if you helped groom them and had first dibs on products they needed. The advice we are talking about here is done through technology such as data mining and delivering insight in the context of online banking. You are creating a better online and digital experience with a focus which opens a door to video conferencing or phone calls with an advisor.”

Banks may not be doing a great job now, but Schwanhausser thinks they are in a good position, if they act soon. “It is clear to me there are numerous opportunities for banks to take the technology they have, such as aggregation, categorization and alerting, and make progress toward helping people understand their money better,” he said.

“When you start collecting their bills and have foresight on when bills are due, you can help them on longer term budgeting for things like biannual bills,” Schwanhausser continued. “By promoting them to start setting aside a little money for that every month you are reinforcing a savings mindset. There’s an incredible amount banks can do even today, but they need to organize their existing tools with a senses of purpose.

“Investing is the end game, but I would start with a customer who doesn’t know what he doesn’t know. Banks and credit unions can help immensely by pointing people toward a smarter path.”

Want more future-focused customer strategies that get results? See How to Adapt Your Products to Emerging Markets.

Comments

Hack the CIO

By Thomas Saueressig, Timo Elliott, Sam Yen, and Bennett Voyles

For nerds, the weeks right before finals are a Cinderella moment. Suddenly they’re stars. Pocket protectors are fashionable; people find their jokes a whole lot funnier; Dungeons & Dragons sounds cool.

Many CIOs are enjoying this kind of moment now, as companies everywhere face the business equivalent of a final exam for a vital class they have managed to mostly avoid so far: digital transformation.

But as always, there is a limit to nerdy magic. No matter how helpful CIOs try to be, their classmates still won’t pass if they don’t learn the material. With IT increasingly central to every business—from the customer experience to the offering to the business model itself—we all need to start thinking like CIOs.

Pass the digital transformation exam, and you probably have a bright future ahead. A recent SAP-Oxford Economics study of 3,100 organizations in a variety of industries across 17 countries found that the companies that have taken the lead in digital transformation earn higher profits and revenues and have more competitive differentiation than their peers. They also expect 23% more revenue growth from their digital initiatives over the next two years—an estimate 2.5 to 4 times larger than the average company’s.

But the market is grading on a steep curve: this same SAP-Oxford study found that only 3% have completed some degree of digital transformation across their organization. Other surveys also suggest that most companies won’t be graduating anytime soon: in one recent survey of 450 heads of digital transformation for enterprises in the United States, United Kingdom, France, and Germany by technology company Couchbase, 90% agreed that most digital projects fail to meet expectations and deliver only incremental improvements. Worse: over half (54%) believe that organizations that don’t succeed with their transformation project will fail or be absorbed by a savvier competitor within four years.

Companies that are making the grade understand that unlike earlier technical advances, digital transformation doesn’t just support the business, it’s the future of the business. That’s why 60% of digital leading companies have entrusted the leadership of their transformation to their CIO, and that’s why experts say businesspeople must do more than have a vague understanding of the technology. They must also master a way of thinking and looking at business challenges that is unfamiliar to most people outside the IT department.

In other words, if you don’t think like a CIO yet, now is a very good time to learn.

However, given that you probably don’t have a spare 15 years to learn what your CIO knows, we asked the experts what makes CIO thinking distinctive. Here are the top eight mind hacks.

1. Think in Systems

A lot of businesspeople are used to seeing their organization as a series of loosely joined silos. But in the world of digital business, everything is part of a larger system.

CIOs have known for a long time that smart processes win. Whether they were installing enterprise resource planning systems or working with the business to imagine the customer’s journey, they always had to think in holistic ways that crossed traditional departmental, functional, and operational boundaries.

Unlike other business leaders, CIOs spend their careers looking across systems. Why did our supply chain go down? How can we support this new business initiative beyond a single department or function? Now supported by end-to-end process methodologies such as design thinking, good CIOs have developed a way of looking at the company that can lead to radical simplifications that can reduce cost and improve performance at the same time.

They are also used to thinking beyond temporal boundaries. “This idea that the power of technology doubles every two years means that as you’re planning ahead you can’t think in terms of a linear process, you have to think in terms of huge jumps,” says Jay Ferro, CIO of TransPerfect, a New York–based global translation firm.

No wonder the SAP-Oxford transformation study found that one of the values transformational leaders shared was a tendency to look beyond silos and view the digital transformation as a company-wide initiative.

This will come in handy because in digital transformation, not only do business processes evolve but the company’s entire value proposition changes, says Jeanne Ross, principal research scientist at the Center for Information Systems Research at the Massachusetts Institute of Technology (MIT). “It either already has or it’s going to, because digital technologies make things possible that weren’t possible before,” she explains.

2. Work in Diverse Teams

When it comes to large projects, CIOs have always needed input from a diverse collection of businesspeople to be successful. The best have developed ways to convince and cajole reluctant participants to come to the table. They seek out technology enthusiasts in the business and those who are respected by their peers to help build passion and commitment among the halfhearted.

Digital transformation amps up the urgency for building diverse teams even further. “A small, focused group simply won’t have the same breadth of perspective as a team that includes a salesperson and a service person and a development person, as well as an IT person,” says Ross.

At Lenovo, the global technology giant, many of these cross-functional teams become so used to working together that it’s hard to tell where each member originally belonged: “You can’t tell who is business or IT; you can’t tell who is product, IT, or design,” says the company’s CIO, Arthur Hu.

One interesting corollary of this trend toward broader teamwork is that talent is a priority among digital leaders: they spend more on training their employees and partners than ordinary companies, as well as on hiring the people they need, according to the SAP-Oxford Economics survey. They’re also already being rewarded for their faith in their teams: 71% of leaders say that their successful digital transformation has made it easier for them to attract and retain talent, and 64% say that their employees are now more engaged than they were before the transformation.

3. Become a Consultant

Good CIOs have long needed to be internal consultants to the business. Ever since technology moved out of the glasshouse and onto employees’ desks, CIOs have not only needed a deep understanding of the goals of a given project but also to make sure that the project didn’t stray from those goals, even after the businesspeople who had ordered the project went back to their day jobs. “Businesspeople didn’t really need to get into the details of what IT was really doing,” recalls Ferro. “They just had a set of demands and said, ‘Hey, IT, go do that.’”

Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants.

But that was then. Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants. “If you’re building a house, you don’t just disappear for six months and come back and go, ‘Oh, it looks pretty good,’” says Ferro. “You’re on that work site constantly and all of a sudden you’re looking at something, going, ‘Well, that looked really good on the blueprint, not sure it makes sense in reality. Let’s move that over six feet.’ Or, ‘I don’t know if I like that anymore.’ It’s really not much different in application development or for IT or technical projects, where on paper it looked really good and three weeks in, in that second sprint, you’re going, ‘Oh, now that I look at it, that’s really stupid.’”

4. Learn Horizontal Leadership

CIOs have always needed the ability to educate and influence other leaders that they don’t directly control. For major IT projects to be successful, they need other leaders to contribute budget, time, and resources from multiple areas of the business.

It’s a kind of horizontal leadership that will become critical for businesspeople to acquire in digital transformation. “The leadership role becomes one much more of coaching others across the organization—encouraging people to be creative, making sure everybody knows how to use data well,” Ross says.

In this team-based environment, having all the answers becomes less important. “It used to be that the best business executives and leaders had the best answers. Today that is no longer the case,” observes Gary Cokins, a technology consultant who focuses on analytics-based performance management. “Increasingly, it’s the executives and leaders who ask the best questions. There is too much volatility and uncertainty for them to rely on their intuition or past experiences.”

Many experts expect this trend to continue as the confluence of automation and data keeps chipping away at the organizational pyramid. “Hierarchical, command-and-control leadership will become obsolete,” says Edward Hess, professor of business administration and Batten executive-in-residence at the Darden School of Business at the University of Virginia. “Flatter, distributive leadership via teams will become the dominant structure.”

5. Understand Process Design

When business processes were simpler, IT could analyze the process and improve it without input from the business. But today many processes are triggered on the fly by the customer, making a seamless customer experience more difficult to build without the benefit of a larger, multifunctional team. In a highly digitalized organization like Amazon, which releases thousands of new software programs each year, IT can no longer do it all.

While businesspeople aren’t expected to start coding, their involvement in process design is crucial. One of the techniques that many organizations have adopted to help IT and businesspeople visualize business processes together is design thinking (for more on design thinking techniques, see “A Cult of Creation“).

Customers aren’t the only ones who benefit from better processes. Among the 100 companies the SAP-Oxford Economics researchers have identified as digital leaders, two-thirds say that they are making their employees’ lives easier by eliminating process roadblocks that interfere with their ability to do their jobs. Ninety percent of leaders surveyed expect to see value from these projects in the next two years alone.

6. Learn to Keep Learning

The ability to learn and keep learning has been a part of IT from the start. Since the first mainframes in the 1950s, technologists have understood that they need to keep reinventing themselves and their skills to adapt to the changes around them.

Now that’s starting to become part of other job descriptions too. Many companies are investing in teaching their employees new digital skills. One South American auto products company, for example, has created a custom-education institute that trained 20,000 employees and partner-employees in 2016. In addition to training current staff, many leading digital companies are also hiring new employees and creating new roles, such as a chief robotics officer, to support their digital transformation efforts.

Nicolas van Zeebroeck, professor of information systems and digital business innovation at the Solvay Brussels School of Economics and Management at the Free University of Brussels, says that he expects the ability to learn quickly will remain crucial. “If I had to think of one critical skill,” he explains, “I would have to say it’s the ability to learn and keep learning—the ability to challenge the status quo and question what you take for granted.”

7. Fail Smarter

Traditionally, CIOs tended to be good at thinking through tests that would allow the company to experiment with new technology without risking the entire network.

This is another unfamiliar skill that smart managers are trying to pick up. “There’s a lot of trial and error in the best companies right now,” notes MIT’s Ross. But there’s a catch, she adds. “Most companies aren’t designed for trial and error—they’re trying to avoid an error,” she says.

To learn how to do it better, take your lead from IT, where many people have already learned to work in small, innovative teams that use agile development principles, advises Ross.

For example, business managers must learn how to think in terms of a minimum viable product: build a simple version of what you have in mind, test it, and if it works start building. You don’t build the whole thing at once anymore.… It’s really important to build things incrementally,” Ross says.

Flexibility and the ability to capitalize on accidental discoveries during experimentation are more important than having a concrete project plan, says Ross. At Spotify, the music service, and CarMax, the used-car retailer, change is driven not from the center but from small teams that have developed something new. “The thing you have to get comfortable with is not having the formalized plan that we would have traditionally relied on, because as soon as you insist on that, you limit your ability to keep learning,” Ross warns.

8. Understand the True Cost—and Speed—of Data

Gut instincts have never had much to do with being a CIO; now they should have less to do with being an ordinary manager as well, as data becomes more important.

As part of that calculation, businesspeople must have the ability to analyze the value of the data that they seek. “You’ll need to apply a pinch of knowledge salt to your data,” advises Solvay’s van Zeebroeck. “What really matters is the ability not just to tap into data but to see what is behind the data. Is it a fair representation? Is it impartial?”

Increasingly, businesspeople will need to do their analysis in real time, just as CIOs have always had to manage live systems and processes. Moving toward real-time reports and away from paper-based decisions increases accuracy and effectiveness—and leaves less time for long meetings and PowerPoint presentations (let us all rejoice).

Not Every CIO Is Ready

Of course, not all CIOs are ready for these changes. Just as high school has a lot of false positives—genius nerds who turn out to be merely nearsighted—so there are many CIOs who aren’t good role models for transformation.

Success as a CIO these days requires more than delivering near-perfect uptime, says Lenovo’s Hu. You need to be able to understand the business as well. Some CIOs simply don’t have all the business skills that are needed to succeed in the transformation. Others lack the internal clout: a 2016 KPMG study found that only 34% of CIOs report directly to the CEO.

This lack of a strategic perspective is holding back digital transformation at many organizations. They approach digital transformation as a cool, one-off project: we’re going to put this new mobile app in place and we’re done. But that’s not a systematic approach; it’s an island of innovation that doesn’t join up with the other islands of innovation. In the longer term, this kind of development creates more problems than it fixes.

Such organizations are not building in the capacity for change; they’re trying to get away with just doing it once rather than thinking about how they’re going to use digitalization as a means to constantly experiment and become a better company over the long term.

As a result, in some companies, the most interesting tech developments are happening despite IT, not because of it. “There’s an alarming digital divide within many companies. Marketers are developing nimble software to give customers an engaging, personalized experience, while IT departments remain focused on the legacy infrastructure. The front and back ends aren’t working together, resulting in appealing web sites and apps that don’t quite deliver,” writes George Colony, founder, chairman, and CEO of Forrester Research, in the MIT Sloan Management Review.

Thanks to cloud computing and easier development tools, many departments are developing on their own, without IT’s support. These days, anybody with a credit card can do it.

Traditionally, IT departments looked askance at these kinds of do-it-yourself shadow IT programs, but that’s changing. Ferro, for one, says that it’s better to look at those teams not as rogue groups but as people who are trying to help. “It’s less about ‘Hey, something’s escaped,’ and more about ‘No, we just actually grew our capacity and grew our ability to innovate,’” he explains.

“I don’t like the term ‘shadow IT,’” agrees Lenovo’s Hu. “I think it’s an artifact of a very traditional CIO team. If you think of it as shadow IT, you’re out of step with reality,” he says.

The reality today is that a company needs both a strong IT department and strong digital capacities outside its IT department. If the relationship is good, the CIO and IT become valuable allies in helping businesspeople add digital capabilities without disrupting or duplicating existing IT infrastructure.

If a company already has strong digital capacities, it should be able to move forward quickly, according to Ross. But many companies are still playing catch-up and aren’t even ready to begin transforming, as the SAP-Oxford Economics survey shows.

For enterprises where business and IT are unable to get their collective act together, Ross predicts that the next few years will be rough. “I think these companies ought to panic,” she says. D!


About the Authors

Thomas Saueressig is Chief Information Officer at SAP.

Timo Elliott is an Innovation Evangelist at SAP.

Sam Yen is Chief Design Officer at SAP and Managing Director of SAP Labs.

Bennett Voyles is a Berlin-based business writer.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.
Comments

Tags:

CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

Comments

Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter