Networking & Social Media: Foundations of Customer-Centric Banking

Editor's Note: For part one of this article, click here.

A key component of becoming fully customer-centric bank is understanding and using networks. Social networking has established a powerful new model, identifying who is connected to whom and who is influencing whom. Networking goes way beyond social media, however, and extends to family relationships, business relationships, circles of friends, and networks of people who share interests or characteristics.

The vast trove of information about networks can be used in unconventional ways. For instance, bank may have an insurance division. Investigating a claim, once accomplished mostly through shoe leather and basic technological capabilities, could be augmented with digital tools. This could lead to surprising results.

Let’s say there’s an auto accident and the two parties claim not to know one another. A search of social media networks, however, tells a different story. In fact, the two parties are friends on Facebook and one follows the other on Twitter. Suddenly, the claim becomes not a run-of-the-mill accident involving two strangers but a possible fraud.

Finally, a customer-centric bank would also recognize the power of social media and networking to build brand and reputation and, conversely, to lose standing among existing and prospective customers.

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How can banks become customer-centric?

Once they define what capabilities they need, such as real-time monitoring and responsiveness and predictive analytics to stay a step ahead of customers, what do banks need to do now to become tomorrow’s customer-centric winners?

Overall, they need to dramatically improve the customer experience. Technology is at the heart of this effort and banks need to commit to improving their current and future IT systems. One essential technology is in-memory computing. From a common database, in-memory computing helps banks rapidly process massive amounts of customer-centric and transactional banking data. With in-memory computing, banks get the information they need to make real-time or near-real-time business decisions and communicate with customers.

In-memory computing is also essential as part of the evolving technology infrastructure. Specifically, the next generation of applications is being built on in-memory platforms. This compares to many current apps, which are built on relational databases. While relational databases are good at storing data, they fall short when it comes to high-speed reporting and analytics. An app built on an in-memory platform can query billions of records in a second.

The new generation of apps will also differ significantly in that the information won’t have to be transferred from its origination point, such as a loan or deposit system. Relational platforms require that data be transferred to a reporting system in order to be analyzed.

Not only do integrated in-memory systems make it exponentially faster to access and analyze data, the data is also much higher quality because it doesn’t need to be transferred, which could affect its accuracy and completeness.

Next-generation applications also have another significant benefit – they can be used for predictive analytics, which is one of the most important and fast-growing trends for banks and other businesses.

Stand out with innovative products and services

Equally important, banks need to stay relevant and cement customer relationships by developing innovative products and services that drive growth. They might develop a product, for example, that helps customers save for the care of aging parents or addresses other common issues shared by tens of millions of people. If banks can position themselves as problem-solvers, they can create an emotional connection, drive loyalty and reduce churn.

Customers appear to be willing to relinquish control over some of their information if it means a better customer experience. A recent survey by Ernst & Young found that 70 percent of consumers would provide more data about themselves if it helped the bank recommend a more appropriate account or deliver a better service.

Lead the industry into the future

While progress has been incremental, banks have no choice but to focus on real-time customer centricity. At bottom, that means building capacity to understand individual customers’ behavior and preferences; anticipate their needs; and create the right strategies to provide them with the customized service and products. Banks need to act now to be sure they’re at the forefront of the new standards in banking.

Eric Stine is SVP and general manager of financial services for SAP