Products and Services Innovation-led Transformation
The basic premise of risk-managed
transformation is that the bank approaches this
journey from a holistic perspective, taking into
account stakeholder requirements, the bank's
vision, mission, competition and resources. It
entails a re-alignment of its entities and
departments, products and services, and staff
and management, while ensuring they work
coherently and seamlessly.
Before addressing the task of offerings
innovation, a bank must standardize its products
and services in accordance with this re-aligned
strategy. This consolidation across the enterprise,
promotes competitiveness and efficiency, better
equipping the bank to satisfy customers and
cross-sell products.
This standardization must be driven by an
objective analysis of the offering’s performance
track record, its potential for growth and the
bank’s own core competence and strength areas.
When thus addressed the products and servicesled
approach to transformation delivers on the
following agenda:
Offering Design
Every bank needs to have a suite of products and
services, targeted at different segments or
geographies. That being said, the offerings menu
must be of a size and diversity that can be
managed within the bank’s infrastructure and
resources. Transformation that enables the design
of a product as a sum of its components reconciles
these two important objectives and provides the
bank the flexibility to customise its offerings easily.
This allows the bank to serve a vast set of
differentiated customer needs by making minor
changes in product features.
The availability of banking 24x7 is now the
expected norm rather than the exception – a
customer who would have his passbook updated
at a branch during working hours now prefers to
download his account statement during the
weekend. Hence, transformation must enable the
uninterrupted availability of offerings across
multiple channels to suit individual banking needs.
The current turmoil has underscored the need for
banks to understand and manage their risk
exposure with even greater diligence than before.
While designing a product, a bank needs to factor
in the risk posed to potential customers.
Increasingly, regulatory commissions are reiterating
that banks must conduct thorough risk assessment
prior to selling financial products and also map the
risk profile of the product with the risk appetite of
the customer prior to doing so.
Appropriate communication to customers is a vital
part of the offering design process. Having redesigned
or launched a new basket of products,
the bank must ensure that the right message is
carried through to its clientele. While emphasising
the benefits of the offering, the bank must
reassure its customers with regard to the safety
and security of the same. Therefore,
communication must aim to not only generate
interest but also inspire confidence in the target
segment. Similarly, providing customers with
insights into products that help them make the
right decision is another confidence building
measure.
And most importantly, the offering is not
completely designed unless it is compliant with
all the relevant regulations in the country where
it is launched. Products and services-led
transformation must therefore be approached
bearing in mind not only existing regulations,
but also those anticipated in the foreseeable
future.
Offering Development
Not all customers are the same, and neither are
their financial needs. Thus, a bank must look to
further develop its products and services to best
serve these differentiated requirements.
Custom bundling products for different
segments is one way of doing this. It is a fact
that it is easier to sell more products to an
existing customer than go about acquiring a
new one. Banks must identify their most
valuable customers and continuously innovate to
deepen their ties with them. Recognising a
customer for the relationship that he or she
brings to the bank, by way of preferential
pricing or other rewards must be considered.
Whichever route the bank may choose for
developing the offering, it must not lose sight of
its goals of ensuring value for the customer and
viability for itself.
Offering Delivery
A product or service is only as good as its
delivery. Customers expect a consistent level in
service delivery, across all the channels they use.
While transforming offering delivery, a bank
must be able to specify delivery parameters for
different segments, and go on to meet those at
all times.
In addition, transformation must strengthen the
bank’s endeavour to continuously innovate and
provide value added services to its customers. Be
it advisory services to High Net Worth clients, or
a simple alert when a transaction is executed,
the solution must be able to maximise value for
the customer at every level.If the bank is to If
the bank is to achieve delivery excellence, its
employees and partners must be enabled with
adequate and timely information to fulfil their
respective roles in the process. A knowledge
repository that can be leveraged to provide a
dashboard with customer information can help
bank staff engage with him or her proactively.
Likewise, the availability of pre-packaged
documentation support designed to help address
customer queries, can go far in supporting the
bank's objective of providing best of breed service.
The utility of toolkits, such as those described, is
not restricted to employees alone. Participants in
the supply chain, for example vendors of credit
cards or cheque books, also play a vital role in
service delivery. Empowering partners with
information that facilitates their interaction with
the bank is one more step towards ensuring
timely, consistent and uninterrupted flow of
offerings to customers.
Offering Distribution
Finally, transformation must leverage all available
channels appropriately, to widen product and
service distribution. The bank's distribution
strategy must seek to optimise various channels
available to it – for example, it may need to
promote structured products to High Net Worth
Individuals through personalised selling, but could
make a simple deposit product available through
Net Banking. It is essential that the transformation
journey supports these objectives.
Transformation of products and services
distribution that seeks empowerment of the
partner eco-system as well as customers will go
that much further in enhancing customer
experience. For example, a bank that relies heavily
on agents must ensure their network has access to
timely information on prospects. Likewise, the
advent of self-service channels has created a new
breed of informed and confident customers whose
service experience does not need to be micromanaged
by the bank at every stage.
Against this backdrop, a bank must plan to
implement the transformation of its products and
services innovation in accordance with its business
priorities, value and segments.
This prioritization is essentially at the heart of riskmitigated
transformation.
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