The future of banking; a lethal phenomena

Banking was different a decade ago. Service Excellence through face-to-face customer sales acquisitions was considered the standard while FOS-feet on street determined first-mover advantage for market share tactics.

Banking

In a world of COVID 19, we are facing challenging times as we realign our strategies to ensure smooth transition-from stagnancy to re-growth. Most corporations have decreased manpower, consolidated, revamped or merged into smaller more effective revenue-generating units, chopping off high costs. In the age of right-sizing, business continuity plans have to be revisited for longer-term change management.

The future of banking is high-tech and tedious as tech-replaces minds. The changing sales dynamics is a lethal phenomenon and something that will transform our lives- for better or for worse.  

The 4 Elements

Globalization –The globalization of the economy caused partly by new technology has stimulated faster strategic change. Border barriers to entry and geography today less affect the services sector today as the world becomes a pocket universe controlled by the Internet. Social media is a new cool tool and information is power and currency. Days of low-tech industries are gone as the Internet connects buyers and sellers through a digital interface.

Buyers Market –Post COVID, market dynamics have shifted from seller to buyer’s advantage. Today, the buyer determines the pricing policy and ease of distribution due to the open-ended digital platform offering multiple brands of choice, choking the monopolistic advantage previously with the MNCs. Today, buyer endorsement matters more than the product itself.  The customers are playing ‘leap-frog ‘and the customer is ‘king’. Companies investing in buyer behavior analysis, callbacks, price options, spend strategies are building a higher customer base than others.

Technology-Collectively, we are all becoming reliant on machines and conduct most of our buying transactions using plastic currency – credit and debit cards.  The cycle continues as firms introduce new and better product features only to find out that the competitive advantage lasts just as long as it takes rivals to figure out how to do it better and faster. Despite the branding, technology is now accessible to everyone, lowering barriers to entry and re-creating a huge pool of likely competitors or start-ups. Being Hi-tech ensures that companies are able to easily adapt their product to fit in individual customer needs- transforming marketing to ‘mass customization’.

Revolution –Different challenges require different solutions.  Driven by human ingenuity and creative excellence, the effective use of technology enables us to reduce costs of doing business while engaging a wider breed of clients, serving multiple needs and requirements. Many companies investing in tech solutions have actually ended up discovering new ways of doing business. In the age of evolution, ‘customer experience’ is the new revolution.  

Sales Dynamics     

The Sales Process has evolved dramatically over the last 3 decades.  For example, if we evaluate the banking industry over the last 30 years, credit card sales were the primary revenue generator for most consumer banks.  Banks figured out a way to accelerate acquisitions while reducing the cost per account. The Direct person to person sales was the key driver of the success at that time as customer preferences included ‘personalized and privileged banking’. Walk-in customers were given the first privilege and the higher the status of the customer – the higher the service levels.

It was a seller’s market with companies in control of customers and the pricing strategy due to lack of internet access space with the customer. Branch Banking controlled ‘customer knowledge’ with sales consultants defining the buying choice for the customer. Product choices were given to the customers to choose and the price was predetermined.  Negotiation was limited to the bank’s product suite as banks also controlled the money supply and the Business profitability Model was devised to enable Sales Managers to view their units cost versus revenue profitability on a monthly basis.

Read more: Indian economy enters recession for first time since independence

Past VS Present  

Banking was different a decade ago. Service Excellence through face-to-face customer sales acquisitions was considered the standard while FOS-feet on street determined first-mover advantage for market share tactics. Companies not customers drove product knowledge while sales focus was entirely on the number of new customer bookings. In the absence of a digital interface, they were fewer risk checks in view of the ‘comfort zone’ on the physical presence of the customer. It was easy commissions for the sales people and higher bonuses for the business heads.

Today, the process flow is dynamic. The customer has absolute power due to multiple product options.  The physical through digital access where the customer applies for a product via cell phone, laptop or tablet through the banks web portal while applications are processed through evaluating of customer bank account transactions as all information is available digitally.

As information becomes worth-less, knowledge becomes worth-more.  Yesterday’s world relied on physical object analysis but today customer decisions are based on the service delivery capability of the on-line media and the digital landscape. By adding knowledge to your portal, you are actually securing your customer bases- existing ones and building new customer lines of credit.

Sales acquisition is simpler today than before if  the risk levels are optimal .That can only happen if the banks are tech savvy.  This has reduced service down time and increased pressure on operational viability and impacts service standards. Vigilance and know your customer risk checks are done as per central bank regulations as before, yet something has changed permanently- the demand for ‘service excellence’.

In a world of COVID 19, we are facing challenging times as we realign our strategies to ensure smooth transition-from stagnancy to re-growth.

The 5th Element

Service excellence is the 5th Element. In the digital process chain the product delivery turn-around time or TAT has reduced from  9 days to 3 days. Customer confidentiality ensured through paperless transactions and secure online documentation while the customer application submission time frame reduced by 70%.

Customers feel at ease dealing with automation and the pressure is now on phone banking services as a core-extension of direct sales. In the end , the customer has complete decision making power to buy or reject.  The only problem today is that not many organizations possess service excellence.

Why? Because it is ‘ attitude’ – an intangible advantage that is a mindset change.

Customers are ‘information affluent’.  They have less need for the sales consultant and the physical information they provide- with zero face to face interaction as all customer approvals or rejections are system-based. As per the simple rule of demand and supply, banks with powerful social media platforms secure more new business customers and multiply the client base as compared to banks that do not.

Read more: Tax holiday, and import duty concessions announced for Quaid-e-Azam Business Park…

Future World

Customer is your biggest asset and efficient service delivery through digital platforms is the key to increasing sales revenue and customer service excellence. The strategic analysis has determined that the future of sales is not ‘Thinking Inside-Out’ – starting with their own needs to sell and make money, their product, or their company. To be truly successful today, the new strategy is ‘Thinking from the outside-in’– a subtle but very powerful mindset shift that looks at the sales process from the customer-first perspective.

Winners will adapt to the changing technology, reducing manpower, and relying on machine mechanics. The 80/20 rule will truly apply- only 20% of the people will bring 80% of the profits. Rest will become redundant and obscure. Sad but true.

Frankly, the major difference between the sales then and the sales now is the “salespeople do not have enough information today to have intelligent conversations with the customers about their businesses” On the other hand, the customers have universal access to absolute and accurate information through the World-wide-web -www – means everything. If the company does not have access to web-based solutions, packaged with excellent after-sale service, the buyer has the power to switch to any product or service being offered by the competition.

Speed is the new norm and with that comes efficiency. The future of banking is high-tech and tedious as tech-replaces minds. The changing sales dynamics is a lethal phenomenon and something that will transform our lives- for better or for worse.

The author is an environmentalist & change maker, with over 20 years of expertise in Media, Education and Banking sectors. He is the founder and director of Children Nature Network Asia, a leading advocacy and training initiative operating across Asia. The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.


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