Leveraging the internet of everything for customers

In today’s hyper-connected digital age, consumers expect their banks to deliver highly-personalized, high-tech services coupled with the convenience of anytime, anywhere banking. Yet, a widening gap is developing between consumer expectations and the services their banks actually deliver.

A global survey of 7,200 retail banking consumers conducted by Cisco Consulting Services found that U.S. consumers overwhelmingly feel their banks are lagging in their ability to deliver convenient, personalized services with a high level of security. A full 65% of respondents indicated they would move their money to a different financial institution for more convenient and personalized services including video conferencing, automated financial advice derived from analytics about their behavior and financial goals, mobile payments, branch recognition, and augmented reality.

And it’s not just the millennials; 36% of Baby Boomers said their bank does not understand their needs and 43% of all respondents believe their bank does not know them and consequently cannot deliver personalized service. Nearly one-third of respondents reported they would look into alternative banking relationships because they do not believe their bank is helping them reach their financial goals.

Fortunately, banks can close the growing divide and deliver the convenience and personalization consumers expect by becoming as connected and digitally-immersed as their customers. Many banks have already made important strides in supporting omnichannel transactions. The next step is to embrace Internet of Everything (IoE)-enabled service models to deliver personalization and convenience, independent of delivery channel. We project that leveraging such service models can result in a bottom-line increase of 5.6% for a typical financial services firm. For an institution with $10 billion in revenue, this represents a $392 million annual profit increase opportunity. Here are the specific areas of opportunity:

Virtual Video Interaction. Fifty-four percent of respondents to our survey expressed an interest in interacting with virtual advisors via video to get advice for financial planning and other complex services. More than a quarter of those interested would move their money to a different institution that offers such a service. Yet, to fulfill its potential, this service must involve more than a basic video chat function.

First, let the customer choose where and how they access remote experts. Many will use their PCs or mobile devices for video conferencing, but banks should not neglect to make the service available from branch locations as well. The branch is the preferred channel for bank customers to open accounts and receive complex service from bank employees. Video conferencing services can help banks maximize the impact of these visits and allow employees to bring additional, third-party experts into the meeting if necessary.

Second, virtual video interaction should leverage data from Customer Relationship Management (CRM) and Customer Information File (CIF) systems to provide the remote expert a complete understanding of the customer and tailor their recommendations to the customer’s specific circumstances, including their financial goals, risk profile and net worth.

Third, enable customers to fully complete transactions digitally, including signing and submitting all their paperwork digitally from any setting. IoE enables banks to connect video conferencing with banking peripherals in the branch such as card readers, printers, scanners, document cameras and signature capture pads.

Automated investment advice. Another IoE-enabled service that consumers want from their banks is automated investment advice, that is, a service in which customers may access analytics specific to their lifestyle and objectives and obtain suggestions on how to maximize their investment portfolios. For investors who do not have a large amount of assets, an automated service provides a low-cost alternative for managing such a portfolio. And for banks, such a service is a great way to reach market segments that were previously cost-prohibitive.

Nearly half (48%) of respondents to our survey indicated interest in receiving automated financial advice and the percentage is even higher in younger demographics. Among those interested, 77% would move at least some assets to use an automated adviser. Another 73% of respondents were interested in analytics-based banking tools such as a retirement calculator (22%), automatic savings tool (20%) and automated budgeting (20%).

Mobile payments. A full 72% of respondents to the survey would use a mobile payment system if it had the capabilities they want, and 15% said they would definitely start an account at an institution to get mobile payment capabilities. The top features banking customers want is the ability to redeem, consolidate and receive discounts and special offers. They want to use their mobile payment system to pay less for the things they purchase, not simply to make a purchase.

In order to help customers find bargains, banks must either orchestrate a network of retailers and mobile marketers or partner with those who already have such a system, such as Apple Pay. Sixty-four percent of our respondents were interested in using Apple Pay specifically. No matter whether banks develop their own networks or partner with others, their mobile payment offerings must facilitate the “thrill of the hunt” for discounts.

Additionally, banks providing mobile payment systems should make sure the service helps customers manage their spending and avoid fees while shopping. It should include automated budgeting, spending classification and overdraft alerts. Banks should look to integrate their existing mobile banking applications with mobile payments and personal financial management (PFM) services to provide the convenient and valuable mobile interactions customers want.

Branch recognition. The ability to recognize customers as they enter the branch has been tested by banks for several years, starting with RFID cards. With the proliferation of mobile banking apps, banks today can identify customers as they enter a branch via the app on their smartphone. Our research shows that bank customers want to be recognized when they enter, but in return they want “VIP treatment,” including free Wi-Fi, priority service and special offers by the bank and at nearby merchants that partner with the bank. Given that nearly 50% of bank customers globally are willing to open an account at a competing bank to enjoy the benefits of branch recognition, this constitutes a significant opportunity to attract and retain customers.

Augmented reality. Cutting-edge banks may also want to consider offering augmented reality capabilities in their mobile applications. An overwhelming 76% of consumers in our survey are interested in augmented reality experiences that, when viewed through a smartphone, superimpose discount offers over local retailers. Other potential avenues for augmented reality include virtual locators (as seen through the camera of a mobile device) to identify nearby ATM and branch locations and real estate applications that allow customers to view property details and mortgage information by pointing the mobile device at a property for sale.

By delivering IoE-enabled services that leverage video, data, behavioral analytics and mobility, banks can make transactions so convenient, personalized and automated that they appear virtually invisible to the customer. A simple payment with a mobile phone is transformed into a service that helps the customer receive and redeem offers from a favorite retailer. A visit to the bank website is transformed into a video meeting with a financial planner about the customer’s retirement strategy. Mobile services can provide tailored advice, even without an advisor, through analytics. In short, IoE can help financial institutions attract and keep customers, and increase profits by enabling the types of personalized, convenient services their customers are clamoring for.

Mr. Jameson is global director of the financial services industry vertical at San Jose, Calif.-based Cisco Systems. He can be reached at [email protected].