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Using Code Halos to Transform Traditional Segmentation Philosophies

By applying Code Halo thinking to anticipate customer preferences, banks can create personalized interactions to increase cross-selling and reduce customer churn.

The banking and financial services industry is experiencing a period of accelerating change driven by increasing customer expectations, technological advances, regulatory requirements, evolving demographics, and dynamic economics. Financial institutions must drive the dual agenda of cost reduction and revenue growth by leveraging innovation and radically transforming for the future.

The influx of millennials who are coming of age is creating a shift in the industry. Analysts predict by 2025 their combined income is expected to account for 46% of all US income, and they will also drive changes in customer expectation. The threat from the "unseen" should be core to any long-term customer segmentation strategies. A pattern is emerging where a new operating model is the basis for strategic competition -- from interacting with customers to creating meaningful products and building an environment of relevant customer interaction.

Financial institutions are responding to these rapidly evolving dynamics by promoting multi-channel access, enhancing the branch experience, and leveraging new technologies such as fully automated kiosks, seamless mobility, and virtual advisors. Successful implementation requires marrying new capabilities with existing environments -- often in tandem with human, technological, and operational transformation.

[Presenters at the recent Citi Mobile Challenge demo day demonstrated how mobile is changing financial services: 4 Key Trends From the Citi Mobile Challenge]

Competing on code
In this new industry landscape, banks can more effectively make meaning from the digital fields of information, or Code Halos, that surround people, organizations, processes, and devices. By decoding Code Halos, leaders can create productive client segmentation and customized, actionable engagement campaigns while enhancing customer experience. By applying Code Halo thinking to anticipate customer preferences, banks can create personalized interactions to increase cross-selling and reduce customer churn.

As customers shift to online and mobile channels and automated interactions such as direct deposits and online bill payment, there is an increasing expectation of omnipresent interaction that is influenced by consumer experiences in other sectors, including retail, media and entertainment. The evolving idea of convenience is based on ubiquity rather than mere proximity, number of branches, or even longest hours. The growing importance of ubiquity combined with the moving of transactions from physical bank tellers to self-service channels presents an opportunity for banks to redesign approaches to customer engagement.

Much of this transformation is made possible by the rapid evolution of key emerging technologies such as social, mobile, analytics and cloud (SMAC). Forming a technical foundation, SMAC is increasingly embedded throughout the enterprise and influences many key knowledge processes and business models. SMAC enables an intelligent, enterprise-wide approach to increasing customer satisfaction and loyalty, which in turn drive long-term relationships and profitability. This is achieved by:

  • Using cross-functional, rapid prototyping capabilities with a big data and analytics approach and a design-to-value economic tool that will help institutions create customized experiences.There is considerable opportunity here -- a survey of executives in the industry found 10% of both revenue and costs are directly affected by how well they make meaning from the business information available to them.
  • Leveraging mobility to innovate. The explosion of wireless infrastructure and smart mobile devices is enabling businesses to use mobility in new ways. Spurred by workforce virtualization, early adopters have significantly boosted efficiency by enabling wireless operations.
  • Embracing social media. With approximately two billion people using social media globally, financial institutions must seriously consider how to appropriately engage with customers via social channels. Customers today expect the institutions they do business with to listen, respond, and offer services through social media.

Avoiding market irrelevance
Survival and extinction are differentiated by an enterprise's ability to stay relevant in the rapidly transforming financial services industry. Financial institutions are realizing that success requires a laser focus on building, distilling and applying meaning from Code Halos. Decoding these insights can inform thoughtful and actionable client segmentation that drives competitive advantage. Financial institutions will need to embrace a new business/technology model that prioritizes digits over widgets. By applying Code Halo thinking, banks can not only intuit customer preferences, they can also create customized digital banking experiences and anticipate customer interactions that generate revenue and loyalty. The return on investment of leveraging Code Halos is clear: It will supercharge digital banking by enabling banks to attain a combination of lower channel costs, increased revenue and more meaningful customer interaction.

Prasad Chintamaneni is President of Banking and Financial Services at Cognizant. As the head of the company's largest industry practice, he is responsible for sales, business development, consulting, and client relationship management. An industry veteran, Prasad brings more ... View Full Bio

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