Defining the New Paradigm of Banking
As 2011 draws to a close, most bankers would agree that the financial services industry is sorely in need of a New Paradigm; the old business models look increasingly strained in the wake of the financial crisis of 2008-2009, the subsequent regulatory overkill and now the accelerating Eurozone crisis.
But what should that new paradigm encompass? According to Michelle Peluso, global chief consumer marketing and Internet officer at New York City-based Citigroup Inc., financial institutions need to refocus on the needs of customers and “simplify and increase the customer’s sense of ease around doing banking.” As the former CEO of Travelocity.com, she naturally places a lot of emphasis on improving the bank’s digital interface with customers.
“Instead of benchmarking ourselves against other banks, we think about what it means to be fantastic in the digital world,” she says. “We spend a lot more time thinking about the stuff that Google is doing, or Facebook is doing or Apple.”
Peluso will present her thoughts in detail during a presentation at this year’s BAI Retail Delivery. In the following interview with BAI Banking Strategies, she shares a few highlights:
Q: Why do we need a new paradigm in banking?
Peluso: There is fundamental change occurring – obviously from an economic and regulatory perspective, but it’s more than that. It’s also happening from a consumer preference perspective, it’s happening from a digital perspective, and it’s happening from a data volume perspective. Any time you go through such fundamental change, the most important thing to do is to ground yourself somewhere.
For us at Citi, that grounding is in consumers. What do consumers want, as all these shifts are occurring, and what do they need? How can they have healthier, more secure financial lives? What can we do to ensure that the next generation of consumers really feels that Citi – or really, any bank – is profoundly looking out for what matters most to them?
Q: How do you ascertain what consumers need?
Peluso: First, there’s the traditional research that we do. More and more, we rely on our own proprietary work – online paneling and studies. Second, we’re spending a lot more time mining behavioral data. In the digital world, it’s much easier to really understand your customers as they interact with you online, at the call center and in the branch.
We’re really aiming to simplify and increase the customer’s sense of ease around doing banking. With all the changes occurring right now and the insecurity that people feel, simplifying the small tasks and streamlining the bigger tasks are really important. We’re overhauling a lot of our underlying operating systems in the bank to streamline the everyday experience for consumers; to make sure that when they come to us we know all their history and they don’t have to repeat themselves or be routed to different call center agents.
The second thing we think is really important is the proper recognition of customers, to make sure that they feel valued and understood, that they’re being listened to. We try to make customers feel recognized for what they bring to the bank, partly by knowing their name and personal situation when they walk into a branch.
The last thing I would identify as a big part of this new paradigm is being savvy and fresh in our digital channels. We don’t think that the digital channels will ever replace the physical infrastructure, but rather complement it very nicely if we can take some of the tasks out of consumers’ lives, for example, by being able to deposit a check while they’re sitting on a train as opposed to having to stop at the branch.
We ground a lot of our work in Net Promoter Scores (NPS) as the central benchmark for how clients feel about us and what they want us to do.
Q: If understanding that the consumer is a key pillar of a new paradigm, how do you then respond to the customer’s needs? How do you improve communication and collaboration across the bank to deliver what they need?
Peluso: I think it can happen on multiple fronts. It can happen across businesses but it can also happen across geography and frankly, that’s where Citi has a really unique competitive advantage in having such a tremendous footprint. We have so many talented people that you can learn from around the world. I’ll give you an example on both fronts.
Going back to our Internet and mobile capabilities a year-and-a-half ago, we actually had a different Website for the bank, a different site for mortgage, a different site for cards, a different site for loans, etc., about nine sites in all. From a consumer perspective, that’s challenging because you’re trying to look at the nine different sites to understand your relationship with Citi. That’s also really challenging from an efficiency perspective because you have nine technology teams often working on very similar functionalities. And it’s challenging from a marketing perspective because you’ve got nine teams bidding on key words and search words and trying to drive traffic to their own sites.
So, as we brought all our Internet then mobile capabilities together, we started to see improved NPS, people who say they would recommend Citi. That’s an example of how we’re trying to think about collaborating across businesses not only to improve efficiency but also, perhaps more importantly, to improve the customer experience.
Now, let’s look at geography. We currently operate in 40 countries across the globe and rolled out mobile banking, at the end of 2010, to 12 of those countries. Those 12 countries now have very good offerings but the real question is: if it took us that long to get to 12 and we have 28 left, can’t we improve the pace? Shouldn’t we have an advantage because we’re global, versus any other mobile bank or regional bank? But we weren’t really operating like that. We had 40 countries thinking about their own mobile banking platforms.
So, we moved to a model where we have a team that works together on mobile execution across the world, in regions. It’s not like some big centralized group but they collaborate very closely together and I’m happy to say we’re going to have mobile capabilities in all 40 countries by the end of this year. We’re already up to about 30. That’s good for our efficiency but it’s also good for the consumer.
The last thing we’ve been thinking a lot about lately is the way we work. In the digital space, there’s a fundamental aspect to the way we work that really has to change. Instead of benchmarking ourselves against other banks, we think about what it means to be fantastic in the digital world. We spend a lot more time thinking about the stuff that Google is doing, or Facebook is doing or Apple.
We changed our development methodology in the Internet and mobile space to move to market more quickly. We have small, empowered teams that produce code every month as opposed to quarterly or semi-annually. They’re constantly iterating. We do a lot of testing for ease-of-use so that we can move nimbly and put different things in front of consumers to see what resonates. We’ve been aggressive in our rollout of Web analytics to understand the behavior of consumers when they’re online or on their mobile device.
We’ve also done a lot of terrific work in the social media space and certainly around listening and servicing. I think we’re probably the most aggressive bank, and the most customer-friendly bank, in terms of being able to jump in if you complain, or if you’re having an issue. We move quickly to make sure your problem is resolved.
We’re doing some interesting things around marketing and engaging in the social space as well. We’ve moved away from this idea of having a team of 30 or 40 people to write requirements, push those through all the right approvals and take a year to development. That’s certainly not what leading companies do. As an industry, I think we bankers have a tremendous opportunity to look outside our own industry and learn a lot from digital leaders and transform the way we go to market.
That’s important because to be the best, and that’s certainly our intention, requires not comparing ourselves to other banks but rather to the companies that consumers love the most such as Apple and Starbucks. We’ve got to be as good as they are about being fresh and agile and have a real sense of design and purpose with consumers.
Mr. Cline is managing editor of BAI Banking Strategies. He can be reached at [email protected].