Online Banking Sector Trends : Users to the core of innovation

© Frantic 2011

THE NEXT WAVE IN DIGITAL SERVICES FOR THE BANKING INDUSTRY CUSTOMERS: From products & transaction-focus towards end-user-need –orientation IND Seminar in Helsinki Tommi Pelkonen Strategist November 24, 2011

INSIGHT

© Frantic 2011 © Frantic 2011

35 people, Helsinki-based, 15 years of experience in digital solutions

Frantic = Digital Creations

WHAT DO WE WANT TO DO? To make services for our customers that: 1)  Generate business opportunities

and additional revenues 2)  Make services that people enjoy

to use and benefit of

Strategy

Design

Technology

Res

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© Frantic 2011 © Frantic 2011

TOMMI IN BRIEF

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Born 1971, married, daughter M.Sc. (Econ.): 1999, Helsinki School of Economics, HSE, International Business, Finance & Accounting, Information Technology 2010->: Strategist at Frantic 2008-2010: Business Consultant at Finpro Budapest in ICT/software business 2005-2008: Strategist at Satama Amsterdam 1999-2005: Business Consultant at Satama Helsinki 1996-1999: Research at the HSE Electronic Commerce Institute, focus: digital media service companies Lecturer and author of several publications & articles in the fields digital media, internationalisation of SMEs and service business

© Frantic 2011 © Frantic 2011

BACKGROUND: THE DIGITAL REVOLUTION HAS REALISED, BUT IT STILL CONTINUES

The Internet has changed consumer and industrial buyer behavior permanently.

All business operations are influenced by the online channels and e-business..

Customers and consumers have more power than ever in economic history

Digital channel functions as transformation agent within organisations. Competences to run digital channel-drive business increase gradually.

Change process takes time – many business processes are not yet digitised nor utilise the online channel to the its potential. Solid success metrics are emerging.

Innovation and society fragmentation continues – globally.

eBusiness = Business!

© Frantic 2011 © Frantic 2011

INSIGHT The next wave in digital services for banking industry customers

•  BACKGROUND: From modem noises towards real time, pan-European & always-on digital banking for all

•  SOME TRENDS: Innovation happening in and outside the traditional banking/financial sector

•  CHALLENGE: How to keep the trust and compete in the turbulent times?

•  SO WHAT: Why should you care?

© Frantic 2011 © Frantic 2011

DIGITAL BANKING HISTORY IN BRIEF

•  Videotext – Minitel – Telesampo & Infotel

•  Modem dial-up banking •  Telephone banking •  Internet-banking •  Mobile banking •  … •  Security major leaps –

password / security tokens & lists

•  Constant fraud and phishing efforts

•  … LONG-WAY BEHIND US ALREADY !

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EVOLUTION STEPS IN BRIEF

Early trials with pioneers and leading companies

Internet-boosted efficiency and self-service explosion (still going on)

New innovation and service models for banking EARLY DAYS

1980-early 1990s

Internet banking era 1995->

Mobile banking era 1999->

Product offering explosion Financial “supermarkets”

Need-based Customer empowerment Microbanking

TEST & TRY

BREAK TO THE MASS MARKETS

OFFER EVERYTHING

LEARN TO LISTEN & BE PERSONAL

EASE OF USE

EFFICIENCY

LOYALTY

JOY OF USE GUIDANCE

TEST OPPORTUNITY DRIVERS

THEMES

New sources of banking innovations are emerging from user-orientation

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KEY MOTIVES FOR BANKING AUTOMATION

•  Cost savings, cost savings, cost savings… •  Freedom of time, place & location •  Ease of use •  Plethora of new & innovative financial products,

also for consumers •  Explosive growth of the financial instruments and electronic

commerce in professional, but also in private sectors

•  Increased global hyper-competition and massive investments into self-service platforms

•  Reduction of churn = loyalty programs

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BUT NOW: Joy of use? Relevance? Guidance of the consumers to better benefits?

© Frantic 2011 © Frantic 2011

INSIGHT The next wave in digital services for banking industry customers

•  BACKGROUND: From modem noises towards real time, pan-European & always-on digital banking for all

•  SOME TRENDS: Innovation happening in and outside the traditional banking/financial sector

•  CHALLENGE: How to keep the trust and compete in the turbulent times?

•  SO WHAT: Why should you care?

© Frantic 2011 © Frantic 2011

BANKING IS A KEY APPLICATION AREA FOR ONLINE USERS

http://www.internetworldstats.com/stats4.htm http://www.iabeurope.eu/media/43499/mcdc%20european%20overview.pdf

476 M Internet users in Europe (2011), 58% of the European population

WE LOVE OUR SELF-SERVICE BANKS – OR

DO WE?

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TRANSPARENCY IN BANKING IS INCREASING – BOOSTED BY BROKERS & PRICE COMPARISON ENGINES

OUTCOME: WALLED GARDENS OR

OPEN SPACES?

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THE COMPARISON POWER IS REACHING EVEN SMALLER DOMESTIC MARKETS

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PERSONAL FINANCE MANAGEMENT TOOLS ARE EMERGING INSIDE & OUTSIDE THE BANKS

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Aggregate to an outside service to get better and more relevan information…

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SIMPLICITY IN BANKING & BUDGET BANKING

Simple, easy to use, no-thrill, bare bones banking. Is the the dawn EasyJet era of banking?

© Frantic 2011 © Frantic 2011

GREAT NEW INNOVATIONS DOING GLOBAL GOOD

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Online & mobility-empoweredbanking, microfinancing and risk sharing

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ALSO NOT-THAT-POSITIVE INNOVATIONS EMERVE (FOR THE CONSUMERS !)

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Aggressive marketing + User interface & process innovations!

Leading to consumer interest rates up 1100 % p.a.!

Case: Very short-term loans in Finland

© Frantic 2011 © Frantic 2011

INSIGHT The next wave in digital services for banking industry customers

•  BACKGROUND: From modem noises towards real time, pan-European & always-on digital banking for all

•  SOME TRENDS: Innovation happening in and outside the traditional banking/financial sector

•  CHALLENGE: How to keep the trust and compete in the turbulent times?

•  SO WHAT: Why should you care?

© Frantic 2011 © Frantic 2011

IT IS ALL ABOUT TRUST!

Below the media & beverage industries!

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FINANCIAL CRISIS IS DETORIATING TRUST TOWARDS FINANCIAL INSTITUTIONS!

Freefall of trust!

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ONLINE IS THE KEY SOURCE FOR COMPANY INFORMATION

And online – news, but also rumours travel fast…

© Frantic 2011 © Frantic 2011

RE-ESTABLISMENT OF TRUST IS DIFFICULT TASK

Think about Nokia and Symbian…

© Frantic 2011 © Frantic 2011

HUMANS: SOCIAL ANIMALS BY LEGACY

•  Regardless how Darwinist we want to be, our DNAs and socio-cultural legacy guides us to continue good-old-proven models and habits

•  How will the digital conversation change/enable/boost our old habits to change – flourish – suffer?

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4000 years of media-revolution cannot undo 2,000,000 of

programming

FUTURELAB

SO WHAT FOR ONLINE BANKING? => PEOPLE WANT TO TALK TO PEOPLE AND HEAR OTHERS’ EXPERIENCES!

© Frantic 2011 © Frantic 2011

HOW ABOUT BRINGING THE HINTS AND DISCUSSION TO YOUR OWN SITE?

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…OR HOW ABOUT BRINGING THE RATINGS EVEN FURTHER – INTO YOUR PRODUCT OFFERINGS?

Hmm… – Haven’t we seen this happening in the travel sector already…

© Frantic 2011 © Frantic 2011

BACK TO TRUST: HOW ABOUT DESIGNING SERVICES FROM A “USERS FIRST -ANGLE”?

•  Who are they? •  What do they want? •  What do we want them to do? •  How do they behave now and will

behave soon •  What makes them succeed (with us or

without? •  How can we help them in their needs?

Starting point:

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USER-ORIENTATION TO THE CORE OF (DIGITAL) PLANNING & THINKING

3. HAPPY CUSTOMERS + GOOD BUSINESS !

2. FIND AND DESIGN SERVICES TO MATCH THESE NEEDS

Try to find the need that your organisation can service and excel in within the time, budget, technology and resourcing availabel

1. RESEARCH THE ACTUAL NEEDS & BEHAVIOUR OF THE USERS

Surveys and especially with qualitative interviews

SIMPLE IDEA – BUT SO RARELY EXECUTED

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HOW ABOUT TRYING TO ANSWER THESE QUESTIONS IN THE ONLINE BANK?

•  STATUS: What do I own? •  Give a great overview to the situation

•  PERFORMANCE: How am I doing? •  What is happening – am I loosing / winning? Am I

reaching my goals?

•  ADVICE: What should I do? •  If this is so, what are my options?

•  ACTIONS: How can I take action? •  What to do now – how to improve this? Let’s do it…

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© Frantic 2011 © Frantic 2011

INSIGHT The next wave in digital services for banking industry customers

•  BACKGROUND: From modem noises towards real time, pan-European & always-on digital banking for all

•  SOME TRENDS: Innovation happening in and outside the traditional banking/financial sector

•  CHALLENGE: How to keep the trust and compete in the turbulent times?

•  SO WHAT: Why should you care?

© Frantic 2011 © Frantic 2011

GOOD SERVICE SELLS ITSELF; BAD SERVICE SELLS ITSELF EVEN FASTER…

Good experience = I will share it with four people

! Bad experience = I will tell it 20 of my closest friends and publish a bitter update on FB for my 223 “friends”…

"

Designed for people

Stimulates the senses

Tells really good

stories

Useful

Desirable Usable

Fitting the user needs (utility)

Easy to use (usability)

Pleasurable experience

(satisfaction & feelings)

© Frantic 2011 © Frantic 2011

BETTER SERVICE EXPERIENCE AIMS FOR A POSITIVE BUSINESS CASE - TOO!

• To existing or new clients • Via enhanced marketing and conversion improvements • Via improved retention of clientele • Via measured and monitored online operations

MORE SALES = more !

•  Information clarity and lead process development • Campaigning and analytical development

MORE LEADS = more !

• Decreases in customer service costs • Decreases in sales costs

COST SAVINGS = less - !

BUSINESS CASE IS A KEY FACTOR FOR GREAT DIGITAL SERVICE PROGRAMS – AND SO OFTEN NEGLECTED!

© Frantic 2011 © Frantic 2011

OUR TARGET: BEST-IN-CLASS USER EXPERIENCE

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BEST USER

EXPERIENCE

I find things where I expect them to be

I like the brand and its visual design

It is nice to do things online

I saved a lot of time doing things online

I feel the site understands me

I get things done more efficiently than offline

I got exactly what I needed know

I am impressed by the service

I want to recommend this to my friends

Fitting the user needs (utility)

Easy to use (usability)

Pleasurable experience (satisfaction)

The banking sector has already made many of these things right . Yet, there is plenty of room for improvment

WOW!

© Frantic 2011 © Frantic 2011

OUTCOME: HOW DOES A LEADING ONLINE BANKING SERVICE BEHAVE & FEEL IN 2014?

© Frantic 2011 © Frantic 2011

IN 2014, THE LEADING ONLINE BANKING SERVICE …

… offers a well-packaged multi-channel customer access to reach one’s financial service provider via the preferred method of contact…

© Frantic 2011 © Frantic 2011

IN 2014, THE LEADING ONLINE BANKING SERVICE …

… create a trusted environment into which customers want to come and share their views and plans of the their financial situation and the provider. They feel treated as respected customers…

© Frantic 2011 © Frantic 2011

IN 2014, THE LEADING ONLINE BANKING SERVICE …

…remembers and recognizes its users and offers personally customised advices and services and is present then when needed…

© Frantic 2011 © Frantic 2011

IN 2014, THE LEADING ONLINE BANKING SERVICE …

……aggregates the consumer opinions & reviews to its offerings, advices and content dynamically…

© Frantic 2011 © Frantic 2011

IN 2014, THE LEADING ONLINE BANKING SERVICE …

…increases dramatically the customer satisfaction and boost revenues with lower churn and clever cross-selling.

Outcome: Marketing budgets start shifting from acquisition to retention and loyalty programs! Quality service sells itself!

© Frantic 2011

LET’S GO AND CREATE GREAT DIGITAL SERVICES!

Tommi Pelkonen [email protected] +358-40-50 50 821 http://www.slideshare.net/TommiP

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