Customer centricity why it matters? CUSTOMER CENTRICITY WHY IT MATTERS? WHITE PAPER NOVABASE 2017 © Strictly Confidential Information. All Rights Reserved.
Customer centricity why it matters?
CUSTOMER CENTRICITYWHY IT MATTERS?
WHITE PAPER
NOVABASE 2017 ©Strictly Confidential Information.All Rights Reserved.
Customer centricity why it matters?
KEY TAKEAWAYS
• Why it is so important to design business strategiesaround customers
• Understand the main obstacles for customer centric relationships
• What are the options to become customer centric
CUSTOMER CENTRICITY
WHY IT MATTERS?
WHITE PAPER
• CIOs
• CTOs
• CEO
• Heads of digital transformation
• IT Architects
WHO SHOULD READ THIS DOCUMENT
2
Customer centricity why it matters?
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PROPRIETARYNOTE
3
Customer centricity why it matters?
01 What does “customer centric” mean? 05
02 Obstacles 072.1 The way organisations are structured 07
2.2. Business strategy 08
2.3. IT Legacy systems and architecture 10
03 How to get there 123.1. Design principles 12
3.2. Architecture 15
CONTENTS
4
Customer centricity why it matters?
01WHAT DOES “CUSTOMER CENTRIC” MEAN?
Being “customer centric” will mean
different things to different organisations.
For some, it will be enough having a
consolidated dashboard with customer
information, others will focus everything
they do around customers, placing
ultimate value on customer experience.
If we take the customer’s perspective and
focus “customer centric” around the
customer’s expectations, we have:
Aspects of customer experience
consistent
insightful
timeliness
reliable
wow
engaging
• Customers expect to be consistently
treated in every interaction with your
services & products. Consistency is much
more than knowing the customer’s name
and having the same information available
on all channels (although this helps a lot). It
is fundamental that you design the
experience you would like your customers
to have, whenever and however he/she
contacts you or uses your services.
• People expect their bank to know a lot
about them – banks are handling their
money after all - they have a perception
of their value to their bank, and expect to
be treated accordingly. Additionally, they
expect banks to offer them products and
services that are tailored for them, based on
the information available about them, from
every possible source (including social).
5
Customer centricity why it matters?
Banking should become a lifestyle
choice and be present when needed,
not some place where you keep your
money..
• In the age of internet everything needs
to happen NOW. The timing for an
offer is as important as the offer itself –
sometimes more. Thus, customer
experience is strongly connected on
your ability to propose to customers
what they need when they need it AND
immediately making it available to them.
• Customers also expect a reliable
experience. They expect zero system
outages, 24/7 service, every time,
everywhere. It is very difficult to
achieve this with the legacy IT
infrastructure since when it was
designed, 40+ years ago, there were no
such challenges.
• Wow! is intimately related with
insightful. People want to have positive
surprises and if you can consistently
provide customers with new features,
capabilities and insightful offers this will
go a long way in building brand loyalty.
This is a very strong point for most
Fintech’s.
• Finally, customers want to have an
engaging experience. They expect their
mobile app to be easy to use, that you
don’t ask for information that you
already have, that the design keeps
them interested in using the app, that
their relationship manager, call-center
operator or bank’s partner are also part
of this engaging experience. This is
again related with the design of the
customer experience.
Banks need to decide what “customer
centric” means to them, and design a
strategy to get there. In fact, the
aforementioned “customer centric”
requirements are very much aligned with
the “digital transformation” requirements.
There is no point in doing a digital
transformation if, in the end, you are not
providing your customers a better
experience.
6
Customer centricity why it matters?
02 OBSTACLES
One of the most challenging aspects of
creating software to support customer
experience and digital transformation, is to
know who you should be talking to within
an organisation. Is it the CTO, the COO,
the head of digital transformation, the
head of marketing, the CIO, maybe all of
them?
Most banks are structured around
business units – departments for credit,
cards, collections, collateral, risk, etc. For a
bank, it makes sense to organize it this
way since:
• These are almost self-contained units
that handle specific businesses within
your business.
• There is specialized business knowledge
required for the operation of these
units.
• There are specialized IT systems
required to operate these units. These
systems are built on top of the
prevalent organisation and therefore are
both a cause and effect of the
underlying business structure.
This structure is just fine when looking
inwards into your organisation. However,
it becomes a severe obstacle when looking
outwards. If these aspects of your
organisation are perceived from the
outside (your customers) the results are:
THE WAY ORGANISATIONS ARE STRUCTURED2.1
There are three main obstacle areas on the way of becoming a customer centric
organisation:
1. The way your organisation is structured
2. Business strategy
3. IT Legacy systems and architecture
7
Customer centricity why it matters?
• Lack of consistency: each business unit
can, and will, have different rules,
requirements, compliance, timelines and
communication skills resulting in differ-
ent experiences for your customers
depending on the product, offer, or
service being sought.
• Lack of insight: each business unit “sees”
a slice of the customer and no one
“knows” the person that is dealing with
the bank. This is also a reason why the
Wow! factor will be very difficult to
achieve.
• It will be difficult and expensive to build
engaging, well designed, customer
experiences since multiple parties, with
sometimes conflicting requirements, will
have to work together and agree on the
digital experience that the bank wants
customers to perceive, for complex
(multiple business units) business
processes.
You may argue that it is up to the
relationship manager, your home banking or
your mobile app to know, and assemble one
reality for your customers. This is however
much more difficult than it seems:
• Relationship managers are not for
everyone and, as part of your cost
cutting strategy, you want to close
branches and have less of them. Not
more.
• The training and know-how required to
understand and operate with all the
different areas within a bank are
significant (and costly) making it difficult
to replace, outsource or acquire new
talent.
• Mobile apps and home banking systems
are built on top of your legacy systems.
Legacy systems are themselves built in
silos, and therefore you won’t be able to
easily build fluid, well designed, customer
focused experiences on top of legacy.
2.2 BUSINESS STRATEGYBusiness strategy can be summarized by
the answers an organisation can provide
to these questions:
Where are you placing customer
experience within your business strategy?
Is it core, or an afterthought?
Have you considered how your business
would look like if you closed 90% of your
branches within 10 years? Would it be the
same business? Can you do it without
losing your valuable customers and
revenue?
8
Customer centricity why it matters?
What is the purpose of a branch? Is it a
place where customers go for
“transactions” or where you do “sales”.
Are you planning to change the way your
organisation is structured for digital
transformation?
Do you have a “Customer experience” or
“Digital Transformation” officer that is
empowered to lead and has a corre-
sponding budget?
These, and other similar questions,
determine if you have a business strategy
that focuses on customer experience and
digital transformation, or if your
organisation is in business-as-usual mode
with an afterthought on digital transfor-
mation and customer experience.
2.3IT LEGACY SYSTEMS
AND ARCHITECTURE
Banking IT is usually the target of “choice”
when looking for a department to blame
for lack of progress on digital
transformation and customer experience.
It is easy to blame legacy systems, their
poorly documented complexity or the cost
and risk of massive IT transformation for
lack of progress in these areas. Banking, is
by nature risk averse, especially if the
venture ahead has huge risk of ending
badly, and is unlikely to provide the
promised returns.
In fact, most banks have been doing a very
decent job in providing access to their 40+
years, COBOL based systems thru multiple
channels, with decent reliability, security
and performance levels. What they cannot
do, is change the nature of the business
these systems were designed to perform,
when dealing with complex, multichannel,
customer journeys. The following diagram
depicts this scenario:
9
Customer centricity why it matters?
This diagram depicts a reality that most
banks will be able to recognize:
1. Multiple channels consuming simple
transactions (query customer, query
balance, transfer from A to B, …)
provided by a corporate Enterprise
Service Bus.
2. Some simple transactions are widely
re-used, while others are tailored to
specific channels resulting in multiple
versions of the same SOA service for
different clients.
3. Legacy application screens are used
directly by end-users, forcing them to
use multiple applications for complex
tasks (i.e. mortgage, ...). This also
creates an obstacle for sharing with
customers since these systems are not
ready for sharing.
4. Social is an afterthought. There may be
a department within marketing looking
at people’s opinions about the bank,
but social is not considered a “proper”
banking channel.
5. There are multiple channel systems
(internal and external), developed in
different technologies and platforms
that (may) share design and re-use
some of the existing services. These
channels will have duplicated parts of
the business logic and product rules to
allow for faster response times, but
create a huge maintenance bottleneck.
6. There is an Enterprise Service Bus (and
maybe a BPM), that is used to build
SOA services over the legacy systems,
a gateway to the core, a
security/authentication framework,
and a few more core components that
allow transactions to be exposed to
channels. There may be the occasional
“composite” service that accesses
information in more than one legacy
system, or even rarer, a service that
updates more than one system in real-
time. For complex processes with,
sometimes one of the core systems is
primed to be the master for this
transaction and point-to-point
interfaces are created between legacy
systems.
7. Core legacy systems are built using
technology from the 70s/80s,
sometimes with specific gateways and
modules allowing their integration in
the current context. Business logic is all
over the place, mixing business
validations, product validations and
rules, with compliance, product pricing
and data input controls. They are
seriously difficult and expensive to
change, maintain and upgrade and
there is a large set of customisations
built around them to compensate for
this. 24/7 availability for customer use
or real-time capabilities are non-
existent or have stringent limitations.
10
Customer centricity why it matters?
In this architecture, there is little room for
“customer centric” or complex customer
journeys designed to meet customer’s
expectations. This is an architecture built
for data processing, with nightly jobs and
off-line periods related with branch
working hours:
• There is no end-to-end representation
of a customer entity. Customers can
have a score, but their information is
scattered between different systems
and different accounts, depending on
their product portfolio.
• There is no end-to-end representation
of a customer journey with all
associated data. Once the customer
uses one channel, information about
what he has done there is not
automatically available in all channels.
You cannot pickup from where you left,
you lose all input data.
• Your internal branch systems are a
window to the legacy systems. Branch
systems are not considered part of the
customer experience, and relationship
managers are unaware of what
customers are doing with the bank for
the 99% of the time they are using the
on-line channels.
• There is little or no re-use of business
logic and validations across channels.
• There is no concept of public “Open
APIs” required for PSD2, and later on
for possible extensions, including
scenarios where Banking and customer
ownership are decoupled. In this
scenario Fintech’s “own” the customer
and shop around different entities for
the best banking products in each area
(deposits, cards, loans, …) fully
deconstructing the banking business. In
some financial services areas, this trend
has already started.
11
Customer centricity why it matters?
03 HOW TO GET THERE
There is no single path that leads to
customer centricity. Different combinations
of business and IT strategy leading to
different results.
Additionally, not many Banks will drastically
change their current strategy to become
overnight digital banks. This is doable but
not for the faint-hearted. It is however,
fundamental that Banks define a medium
and preferably long-term strategy with
committed funds and staffing, or risk being
caught off-guard by Fintech’s, their current
competitors with better plans, or even
something new that no one anticipated.
Novabase’s top-down-transformation paper
presents possible roadmap options for
digital transformation that can be focused
around customer centricity requirements
and strategy.
Additionally, it is fundamental to consider
the limitations imposed by the current IT
Legacy systems and architecture, and find
ways to, without going through a major big-
bang transformation project, create the
required end-to-end customer journeys,
DESIGN PRINCIPLES3.1
12
Customer centricity why it matters?
Going back to the “Customer Centric”
diagram (above), let’s look at the
requirements from two different
perspectives, the customer’s and the
bank’s internal organisation:
consistent
insightful
timeliness
reliable
wow
engaging
Consistent “Looking Out”
• Consistent means that all channels
(non-assisted and assisted) share
customer information, customer
journeys, business logic and
products. Today’s “standard”
banking architecture is not able to
seamlessly provide these capa-
bilities. This implies that a new
transversal architecture layer is
required, that is dedicated to
providing the best customer
experience, and allows for
consistent behaviour and infor-
mation, journey start/stop, API
openness, shared business logic,
ability to support swift changes
and quickly deploy them live, AND
is able to integrate with and
abstract as much as possible the
underlying complexity of the
legacy architecture.
reusable business logic, open APIs, and
transversal customer representation that
will, with time, allow the organisation to
focus on individual customer value,
tailored offers, openness, interoperability,
and seamless journeys that are tailored for
each individual customer.
13
Customer centricity why it matters?
Consistent “Looking In”
• Consistent means that your
organisation is able to cooperate in the
design of customer centric journeys,
allows for the progressive
implementation of a business focused
digital transformation and enables low
maintenance and development costs.
Insightful “Looking Out”
• Insightful means that you are able to
tailor customer experience, products
and offers using customer insights from
Big Data, Analytics and Artificial
Intelligence to understand, tailor and
deliver personalized products, offers
and journeys. The mechanisms required
for consistency and Insightfulness are
also fundamental for timeliness. If you
know your customer and have
processes to handle his/her requests
you can also design those processes to
have the right timing to deliver an
insightful customer experience.
Insightful “Looking In”
• Data gathered from customer journeys,
machine learning, social networks and
analytics can be used to drive business
and investment decisions. “Let the data
guide you” is the motto. Additionally,
the new data generated by the end-to-
end customer perspective can be used
to improve the way the organisation
reacts to customers and markets,
resulting in a more agile and versatile
organisation.
Reliable
• There are two main sources for lack of
reliability: inadequate design & bad
operation. Expecting a system to be
consistently reliable (as measured by
the availability expected by your
customers) outside its design window
by tweaking a design done 40+ years
ago with completely different
objectives, will often result in
compromised reliability or availability.
The introduction of a new architecture
layer abstracting many of the customer
facing roles, will enable new
perspectives on how to design and
operate focusing on today’s customer
reliability and availability needs.
Wow! and Engaging
• If we combine the ability to design the
customer experience with insightfulness
about the customer’s lifestyle and
expectations, and the ability to change
this experience at will with a creative
marketing team and a customer focused
business strategy we have all the
ingredients required to surprise and
engage customers.
14Customer centricity why it matters?
Customer centricity why it matters?
3.2 ARCHITECTURE
15
The focus of the proposed architecture is to
decouple customer experience from data
processing. A new architecture “layer” is
introduced that abstracts existing
integrations and data, and combines them
with workflow capabilities and rules engines
to create a new set of business focused
APIs that are then made available to ALL
channels (regardless of being internal or
external).
From this, a new incremental architecture
paradigm is created with the following main
benefits:
• Decoupling of the customer experience
from legacy systems, allowing for better
flow, and new capabilities.
• Decoupling the customer experience
from front-end channels, allowing for
design-once deploy-everywhere, enhanc-
ing reusability and end-to-end customer
experience design.
• Smart, integrated data caching allows for
better performance and response times.
Changing, upgrading or enhancing the
customer experience can be done by
changing customer journey definitions.
• End-to-end customer experience design
becomes a common language for
business and IT to interact and
cooperate. By exposing APIs and not
channels, re-use, consistency, security
and performance are easier to control
AND the organisation is not forced into a
major redesign of the existing channels.
• Can be progressively introduced one
business process at a time, creating new
avenues for the Bank’s digital transfor-
mation strategy.
• Since customer experience is now
controlled from a single place, it easier to
visualize, control, analyse and enhance.
• Removes complexity from legacy systems
by avoiding the need for the introduction
of customisations to cater for channel
needs.
Customer centricity why it matters?
ABOUT NOVABASEWith almost 30 years of experience,
supporting business transformation and
implementing complex projects around the
world, Novabase’s team has been assisting
the Financial Services sector and
delivering results with specialized finance
solutions.
Novabase has become Portugal´s leader in
IT. It is listed on Euronext Lisbon stock
exchange since 2000 and is part of the PSI
20 and Euronext Tech 40 indices.
Novabase Services and Products cover
Financial Services, Telecommunications,
Government, Transport & Energy
industries. With three business lines,
namely Business Solutions, Neotalent and
Venture Capital, we cover 40 countries in
4 continents.
novabase.pt
wizzio.novabase.pt
04 CONCLUSIONThis paper justifies the need for banks to
focus on customer centricity and digital
transformation, providing an overview of
the different perspectives on why this is
so important for their future. It also
highlights obstacle areas and provides the
overview of the principles and solution
design to enable customer experience to
become a central part of a Bank’s day-to-
day business without incurring in the huge
risk and cost of a full big-bang digital
transformation.
16Customer centricity why it matters?