Banking
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on 14th December 2018 / by webmaster
The banking sector is one of the industries where the acquisition cost of a customer is significantly high. Acquiring new customers on an average can cost five times more than retaining existing customers. Retention of customers in the banking sector has taken a passive approach. Many banks try retention strategies when customers come to the bank branch with the intent to close their account. By this time, the relationship has been spoiled and a competing bank has already won their heart. Many banks don’t realize that many of their existing customers are being silently wooed away by competitor offers and have reduced or stopped using a product, even when their account is in the open status. They are in the ‘silent attrition’ phase where they may not openly raise a complaint but is not actively pursuing the banking services. Examples include credit card accounts with little or no spending, that once used to very active. Unnoticed customer churn often proves very costly. It’s not just lost in terms of revenue but also the added marketing expenses to acquire another customer that could substitute for the same revenue. Different phases in the customer journey before a full attrition must be identified in order to devise strategies that favor a timely intervention towards customer retention. A proactive strategy involves identifying different causes for churn and classifying high-value customers who are in the highest risk of cancelling their services immediately is what ‘churn modelling’ is all about. By converting structured and unstructured data collected while using the banking products could help derive into meaningful insights – typical customer transaction history, demographic data, and usage pattern shifts are some of the key inputs that could predict customers who are likely to churn. Once the cluster of customers who are likely to churn is identified they could be saved using reactivation methodologies such as providing new usage stimulation offers, product activation offers, free upgrade of product benefits based on tenure of usage, periodically reminding them of pre-approved products, and even extending tailor-made partnership offers, leveraging their transactions history – through affinity marketing. Other retention methodologies would include giving the option to the customer to move up from a low-value relationship program to high-value relationship programs and vice versa, incrementally - without incurring switching charges and without the burdens of long lock periods. Additional References Goran Klepac and Robert Kopal, Developing Churn Models Using Data Mining Techniques and Social Network Analysis (Research Essentials Collection), 2014, pp 41-58 Gainsight, a churn management software provider, headquartered in San Francisco Bay Area, in the United States - https://www.gainsight.com/ Totango, a churn management software provider, headquartered in San Francisco Bay Area, in the United States - https://www.totango.com/ Natero, a churn management software provider, headquartered in San Francisco Bay Area, in the United States - https://www.natero.com/ Banking Leave a reply Your email address will not be published. Required fields are marker *
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on 14th December 2018 / by webmaster
Over the past few years, the growth of the digital wallet apps has been phenomenal. Driven by the adoption rate of mobile apps to check last minute deals on travel, buy movie tickets, or to order food – the digital wallet companies have grown along. Early adopters of these digital wallets were often digitally-savvy millennials that swayed for features that offered lower transaction time and convenience. The growing digital wallets market has also invited the large technology companies into the financial services market either by building custom apps or by integrating them into their existing digital platforms. With more and more nations adopting the open banking framework, traditional nationalised banks are forced to open their customer data to third party vendors who offer superior features, through their apps. Having started with payments, large technology companies in many global markets have eventually expanded into the provision of credit and insurance, either directly or in partnership with an existing financial institution. In India, Google is pushing the adoption of Google Pay - its digital wallet into not just mobile apps but also through physical brick and mortar stores. Google Pay has already seen a huge rise in adoption with over 55 million users downloading the app and having clocked up more than 750 million transactions over the year. Digital wallet apps in its constant drive to improve its value proposition and differentiation are out to build partnerships with key merchants in each market they operate in, offering discounts and loyalty points. In the United States, Apple is positioning itself as the premium digital wallet. Banks supporting Apple Pay has grown over 4,900 in number. Amazon Pay – the digital wallet offered by Amazon is now pushing its way into brick-and-mortar stores. Amazon is also focusing on gas stations, restaurants and other merchants that wouldn't see Amazon as a business rival, offering them lower payment-processing fees. Large technology companies, driving these digital wallet apps are now able to gain more insight into customer purchase habits. Using their existing competence in big data analysis, they are in a perfect position to collect, analyze and segment users into smaller clusters – with lower credit risk scores for effective credit offerings and into clusters which are of potential interest to merchants, due to their transaction habits for advertising needs. Traditional banks are waking up to the impact of growth in digital wallet adoption, where large technology companies are well poised to lead. To retain the mindshare and brand relevance, traditional nationalized banks will have to establish new partnerships, that offer more value and stay relevant to their customer habits. Additional References David W. Schropfer, The SmartPhone Wallet: Understanding the Disruption Ahead, pp 17-60 Wikipedia, the free encyclopaedia, Digital wallet - https://en.wikipedia.org/wiki/Digital_wallet Google Pay stylized G Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or watches https://pay.google.com/about/ Amazon Pay is an online payments processing service that is owned by Amazon. Launched in 2007, Amazon Pay uses the consumer base of Amazon.com and focuses on giving users the option to pay with their Amazon accounts on external merchant websites https://www.amazon.in/gp/sva/dashboard Apple Pay is a mobile payment and digital wallet service by Apple Inc. that allows users to make payments in person, in iOS apps, and on the web. It is supported on the iPhone, Apple Watch, iPad and Mac https://www.apple.com/apple-pay/ Samsung Pay is a mobile payment and digital wallet service by Samsung Electronics that lets users make payments using compatible phones and other Samsung-produced devices - https://www.samsung.com/in/samsung-pay/ Microsoft Pay is a mobile payment and digital wallet service by Microsoft that lets users make payments and store loyalty cards on certain devices. Making payments is currently supported on the Microsoft Edge browser. - https://www.microsoft.com/en-us/payments Banking Leave a reply Your email address will not be published. Required fields are marker *
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on 14th December 2018 / by webmaster
Most banking operations involve time-consuming, repetitive processes. Many of these processes, which do not require human intervention can be automated. With robotic process automation, bank operations can be done at a greater scale, speed, and accuracy that is not possible with humans. This has a direct impact on accuracy, efficiency to staffing issues and its related expenses. With robotic process automation, the need for data reconciliation is also significantly reduced. Robotic process automation puts to work robots that work on the processes round the clock, without being fatigued. It improves the operational SLAs, speeds up work outcomes, removes opportunities for errors, and make banks perfectly suited to scale up with very less staff. Either by increasing computational power or by increasing the number of robots, banks can adjust itself for peak hours. Robotic process automation also eliminates a significant number of backlogs, which translates into significant savings. In India, ICICI Bank using robotic process automation for processing one million transactions daily, with higher accuracy. The bank has identified two hundred such processes across various functions, where it could be further applied. The customized version of Pega’s OpenSpan, a robotic process automation tool is used for this purpose. Additional References Srikanth Merianda, Robotic Process Automation Tools, Process Automation and Their Benefits: Understanding Rpa and Intelligent Automation, pp 8-30 Pegasystems Inc. is a robotic process automation software provider, headquartered in Cambridge, Massachusetts in the United States. https://www1.pega.com/products/pega-platform/robotic-automation Blue Prism is a robotic process automation software provider, headquartered in Newton-le-Willows, United Kingdom. www.blueprism.com/ Automation Anywhere is a robotic process automation software provider, headquartered in San Jose, California, in the United States. https://www.automationanywhere.com/ ICICI Bank deploys software robotics to automate business processes - The Economic Times - https://cio.economictimes.indiatimes.com/news/strategy-and-management/icici-bank-deploys-software-robotics-to-automate-business-processes/54179316 Banking Leave a reply Your email address will not be published. Required fields are marker *