Peter Sieyes, Associate VP of Digital Integration Services at Infosys, looks at how today’s banks should be inspired by the mainstream retail world
There’s a lot about how Nordstrom, the US-based luxury retailer, operates that is impressive and which can be applied globally. In particular, how the company set out to transform itself for a digital age a decade ago. An astute business might have scrutinised its closest competitors before trying to improve upon the business models that made them so successful.
Nordstrom wanted more than that.
The company studied best-in-class enterprises from other industries and sectors. The end result: a company that implements its strategies so they’re aligned with the modern, digital consumer. Nordstrom did more than just build a good website. Nordstrom made sure its staff were armed with mobile devices, allowing them to leverage the mobility and resourcefulness of customers passing through bricks-and-mortar stores. Gone are the days of searching the stock room for a different size or colour — now they have all the answers to customer queries in the palm of their hands.
Nordstrom needed to tackle some complex technological hurdles — online, on mobile and in store — to make its modern customer experience possible. Platforms needed streamlining, apps needed perfecting and software needed developing. But all of the apps and the platforms and the channels in the world would amount to nothing for Nordstrom if it didn’t focus on one thing: its customers.
The same holds true for those in the banking sector: new products and features mean little to consumers if banks refuse to be agile and responsive to their customers needs and the way they want to interact with the bank.
The banking industry tends to be inward looking, where the culture of change is initially looked upon with some suspicion. For many organisations, it took a while to introduce trading hours outside the established banking norm. The idea of branches being open at weekends or late into the evening is still a relatively new one. Doing anything outside your industry’s established comfort zone is both brave and unnerving.However, customer-centric decisions are no-brainers for the retail sector. They have to be responsive to their customers to maintain their competitive advantage. If they’re unsure of making any change, they’ll analyse mountains of consumer data they’ve gathered to make a more informed decision.
Banks, too, are blessed by similarly rich consumer data. Yet, strangely enough, banks — even large ones — aren’t using that data as well as they could. Banks, it appears, are paralysed by the thought of changing course and becoming more responsive to the needs of a digital marketplace. This cannot continue. Banks need to look to the retail goods sector for inspiration, particularly as the world’s most stellar retailers – like grocery giants Tesco and Sainsbury’s – are now competing with the retail banking sector head-on.
Retailers know that customers are more in control than ever, and they will do whatever it takes to make the customer happy.There are clear differences between banks and retailers. Banks must secure payments in ways that don’t even come into view by customers. Although core baking systems aren’t as agile or flexible to synchronize online or mobile systems, they still need to change.
Banks stand to lose credibility if they continue to force out-dated transactional options on newly empowered customers. They need to enable transactions whenever and wherever the customer chooses to be. The in-house banks at Tesco and Sainsbury’s allow you to bank while at the grocery store – leveraging the longer times the store is open – or at home on your tablet. Their grocery chains are better at anticipating the banking needs of customers than banks themselves. And that’s not because banks aren’t capable of doing so: while financial services have many complex regulations and operational challenges to deal with, so do retailers. And they thrive because they’re more customer-centric than other industries.
In truth, all sales can be a journey. Retailers understand this incredibly well. Journeys can begin at a store or a website and finish somewhere else. That’s because customers looking for the right product expect that anything they put in their online trolley is also available in a regular store, should they decide to take a shopping trip. That’s the power of agility in today’s digital markets: constant availability. And that’s the agility that banks need to adapt to.
Precisely how banks adapt their business models and processes to be more agile is a further discussion, but one that the industry needs to undertake quickly if it is to successfully adapt to a changing clientele and defend its position from a growing number of new, challenger banks not encumbered by the legacy practices of the industry.