Customer Centricity Key as Banks Emerge from Crisis

As banks continue to recover from the financial crisis, the role of the CIO again is shifting. Today's charge is to shape a future in which technology, the business and customer service all are aligned.

"We're in the middle of a long-term shift in technology," says James Van Dyke, president and founder of Javelin Strategy & Research. "Not just three or four years, but decades. The trend is that control is going back to account holders. When we look at new forms of payment and channels - from ATMs to online banking - and how people interact with their finances, we find things are much more complicated for consumers today than they were several years ago."

No longer is information technology in financial services a matter of building systems to support bank operations, insists Jacob Jegher, senior analyst at Boston-based Celent. Rather, the challenge is "understanding where things are going, not just from a technology perspective but from a customer-needs perspective, and being able to prepare for that ahead of time," he says.

The business is changing, and account holders no longer rely simply on the bank branch or a phone call to interact with their financial institutions, Jegher notes. Advances in mobile technology, including native smart phone apps, remote deposit capture and person-to-person payments, are quickly turning the cell phone into something more akin to a virtual wallet. And next-generation online solutions, advanced ATMs, and a slew of new applications and services are becoming widely available, he adds. "Some of these things are very sexy and interesting, and very applicable to financial institutions," he comments.

The Mark of a Modern Leader

But there's more to it than just adopting flashy new technology and systems simply for the sake of doing it. "One of the most important traits [of a modern IT executive] is to find a balance between innovation and understanding that technology is simply a means to an end," Jegher asserts. "We can all get caught up by the technology and the bells and whistles available today. But a leader needs to understand what this technology is - what kinds of things we are trying to solve."

The solution to building a customer focus is not prescriptive, Javelin's Van Dyke says; it varies from institution to institution. And it doesn't necessarily have to be complicated.

"The message that we give to IT executives is, work on simplifying that experience because you are the most trusted provider that the customer is going to work with," Van Dyke relates. "I'm speaking specifically to the parts of the IT system that impact the customer relationship. And really everything should center around how you're servicing the customer-service function."

The implication is to know your customers and adapt the implementation of technology to service their specific needs.

"The technology in the end is just a tool," says Brett King, consultant and author of the recently published "Bank 2.0: How Customer Behavior and Technology Will Change the Future of Financial Services." To make the customer feel at the center of the banking experience, according to King, the technology must be shaped in such a way as to seem almost ubiquitous to the account holder.

"The one concept I talk about is pervasive banking - getting the bank interaction in as many places as you can," King says. "When a customer needs something, you are there with the functionality or the technology to engage. In the future it's going to be about them being everywhere they need to be."

While banks are making advances in technology and deployment of services, they need a better understanding of where the customer's needs lie, insists Celent's Jegher, who says bank technology executives need to improve in this area. "Much of that relates to innovation," he notes. "But it's innovation with a focus on customer needs."

Bridging the Gap

That creates demand for CIOs and technology leaders whose scope of understanding goes beyond IT and into the principles of customer service and business strategy, Jegher points out. "Having a traditional IT background is but the tip of the iceberg," he says. "If that's all you bring to the table, you will fail. It's very important to bring a strong business head and to be able to bridge the gap between business support and IT."

It's not so much a technological background that makes a good IT leader, but rather a background that enables the CIO to build deeper connections among technology, business and customer interaction, agrees King, the consultant. "I'm not so interested in someone who is technically competent as much as someone who understands the utility of technology, what the technology is about," he says.

Further, the CIO should work closely with the executive in charge of product development, harmonizing the strategy between technology and customer delivery, and monitoring competition while maintaining realistic standards, Javelin's Van Dyke adds. "What's crucial here is to have a vision of where it's going, that the CIO and the person who makes product strategy decisions are working closely together," he says. "The right way for those two executives to work together with this long-term vision - first of all, they need to agree on it, then benchmarking where their systems' capabilities stand relative to what they deem to be their competitors'."

In terms of becoming more customer-centric, Celent's Jegher says, there are really three inputs to consider: people, processes and technology. It's a matter of tying the three together before banks can begin to make strides toward an environment where customers feel at the center of their financial services, he contends. "Banks have improved over the last five years or so in regards to customer centricity," Jegher says. But, "We're still a long way off from that."