Understanding the ‘Digital Native’
The key to unlocking banks’ potential in the digital age is a customer centric strategy and business model that responds to the ever-increasing demands of a new breed of customer, writes Eoin Daly.
2014 has seen a return to profitability for some banks in Ireland. While previous years provided a challenging backdrop, via a continued focus on cost cutting and increasing regulatory requirements, some ‘normality’ has returned. Now, leaner internal banking processes seek to capitalise on an external economic uplift. So, while banks must remain focused on keeping a low cost base, can they also dare to whisper the words ‘revenue growth’? We believe they can. However, to do so, they should ensure they have a customer centric strategy that is fit for the digital age. This strategy must be supported by an agile customer centric business model that can respond to the ever-increasing demands of a new type of customer. We call this customer the ‘digital native’.
Eoin Daly
Eoin Daly

As the digital generation grows over the next decade, we will see “digital natives” becoming the norm. Let’s meet one. Emily:
1. Has high expectations of financial service providers as set by market leading brands.
2. Is better informed than ever on what the market can offer her.
3. Trusts the opinion of her peers more than any advertisement.
4. Has a myriad of choices when it comes to financial assistance or advice.
5. Has a voice via social media and she’s not afraid to use it.

To achieve customer-centricity, banks need a deep understanding of clients such as Emily and her changing expectations, as well as a seamless integration of products and services across every touch point. Before banks can innovate to ensure that she receives the ultimate customer experience every time she interacts with her bank, they must first walk in Emily’s shoes. Banks need to focus less on product offerings and more on customer outcomes. They must look inside and out. Internally, banks need to dig deep, and thoroughly segment their existing customer data to understand customer behaviours and trends. Externally, banks need to do less telling and more asking their customers about what works for them. Existing digital channels such as mobile banking applications and social media provide the ideal platform to engage customers and ask the right questions.
 

Despite this, the recent PwC Global Digital Banking Survey highlighted that the most frequently cited primary objective when interacting with customers using digital channels is to quote products and services. Only 9% of respondents indicated that their primary objective is to capture ideas. Many banks are missing the opportunity to co-create in an environment where customers help develop the personalised products and services they want and for which they are willing to pay a premium.

Digital will continue to represent a significant disruption in the banking sector internationally. In Ireland we have already witnessed some banks stealing a lead on their competitors, albeit some still seem more focused on pushing products than listening to customers. Some non-bank payment providers are also marching ahead. Banks need to focus on how they can capitalise on digital to their advantage. The ambitious banks will consider whether, in an era of increased transparency and fragile customer confidence, they can become the trusted financial advisors of the digital age.
Eoin Daly is senior manager at PwC Advisory.
eoin.daly@ie.pwc.com
This article appeared in the October 2014 edition.