Enhancing the customer experience

Convenience is increasingly recognised as the most crucial factor defining customer satisfaction. But how can you ensure a satisfactory customer experience across integrated financial products? Technology can help, writes Hewlett-Packard’s Geoff Johnson.

‘I get out of bed and get pretty excited about buying a new car, TV or outfit. Even going to the supermarket can be enjoyable. But people don’t jump out of bed saying, “I’m going to have fun buying a mortgage today”’ Marketing Director, Major Bank

Primarily, bankers want to make a profit for their institution and shareholders. They do this by attracting the best customers, selling them multiple financial products, and servicing these customers at minimum cost.

To attract customers, bankers need to know what customers want. So what makes a good product from the customer’s viewpoint? There are multiple factors, of which convenience, simplicity, relevance, timeliness and cost head the list. Cost is always important, of course, but experience shows that customers will pay a premium for genuinely superior products and service.

But convenience is the really crucial factor. It is clearly much more convenient for the customer to have most of his financial products and services in one place and ‘integrated’ together – hence the success of ‘offset’ accounts that link loans, savings and debit accounts – and with the right pricing and service quality most customers are happier dealing with one institution rather than many. Interestingly, this coincides neatly with the banker’s desire to sell a single customer multiple products: the Holy Grail of a high product:customer ratio.

But the winning and retaining of customers is not simply about the product portfolio. Increasingly, it is about the ‘total customer experience’ – however cliché that phrase may sound. Not only do you need attractive products, but you also have to be able to provide them to your customers through an ever-growing array of delivery channels, at a time and in a manner that suits them (and not the bank), which in a consumer banking market means 24/7 operation.

The architecture challenge

Wouldn’t it be nice to make the best possible decision every time you interact with your customer? Doing that needs information, and the more the better. In fact, most of that data is already present in various forms, but it is fragmented and hidden from view thanks to historical and organisational reasons.

Credit card applications sometimes get declined and debit transactions rejected, even if the customer has several accounts with the bank and is in good standing. Because the systems are not linked, the critical information is buried in separate files and the credit officer or ATM system cannot make that ‘best decision’. This is not really surprising: most systems were never built to work this way in the first place. This ‘spaghetti model’ of system design generally wasn’t designed at all – it just grew up that way.

Modernisation difficulties

Modernising this architecture is akin to changing the engine your car while you are still driving along, so attempts to resolve the problem have faltered. The efforts of the past five years have focused on the interconnect problem: if you could replace all the separate connections with one standard one, then suddenly everything would access everything else. This leads to the ‘message-bus’ approach, and greatly improves upon the former muddle.

Sadly, message bus architectures have proved harder to implement and delivered fewer benefits than expected. Essentially a message-bus is ‘context-free’: it is simply a (dumb) transport mechanism, much like an Ethernet LAN. Crucially, the message-bus does not introduce any ‘intelligence’ to the traffic or allow you to do anything new. Instead it allows you to do what you did before more efficiently and, hopefully, at a lower cost.

How to improve on this? The answer is a ‘hub architecture’, but this does not simply replace a bus with a hub. The hub has three secret weapons:

• The ability to store and use data
• The ability to hold context and provide workflow management into the transaction
• The ability to do this in ‘real-time’ – in the precious few seconds during which you have your customer’s undivided attention

A hub can thus greatly add value over and above providing better interconnect.

Powerful architecture

The hub architecture proves to be a very powerful one. No replacement or re-engineering of existing applications is required; rather an additional system is sited between the multiplicity of systems. The hub provides not only a control point but also a base to host totally new applications that have previously not been possible.

This makes a quantum difference in what you can achieve with something like a simple payment authorisation message. Not only can we make a better decision using all the knowledge we have about the customer (not just the single account in question), but we can also take the opportunity to tag a value-added service offer to the basic transaction. One-to-one marketing may be effective, but relevant one-to-one marketing, where we know not only who is doing the transaction but also the context in which it is happening, is even better.

Further information

Hewlett-Packard
Tel: +44 1189 868711
Email: geoff.johnson@hp.com
Webiste: www.hp.com

Profile

HP’s real-time financial services (RTFS) hub approach is proving very successful and versatile. The company has now implemented many hub-based systems, and the banks concerned are benefiting from lower costs as well as being able to get right to the heart of improving the customer experience. Moreover, this is an incremental and non-invasive approach, which does not require major surgery or replacement of old systems but helps ‘liberate value’ from them.

Customers will continue to demand more from their bank, but for most banks major replacement of their consumer systems is not an option. With the RTFS hub it ceases to be a necessity either.