The 2011 Decisioning for Financial Services Crystal Ball

Now that I’m back for the New Year, I’m reviewing a slew of “predictions for 2011” and offering some of my own insight on the same topic.  Two in particular caught my eye.

The first is from Mark Riddle at BAI Banking Strategies entitled “This is the Year of the Customer (No, Really, I Mean It!)”.   As someone who has been saying even before the “meltdown” that the focus needed to be on the customer, I loved the title.  I was used to getting a fair amount of “lip service” from institutions about being customer focused which clearly weren’t, although that began to change in 2010.

Like your personal resolutions, Mark says there should be resolutions for banks in the New Year.   He also points out that this has been a recurring theme, but it never happens because there isn’t a crisis big (i.e. painful) enough to force people to undertake difficult change.  Mark believes that the regulatory changes, with radical changes to the income model, will be the thing that tips the scales this year.  I couldn’t agree more.

The good news for institutions that are (finally) serious about this is that Pega’s decisioning capabilities address 7 of his 10 suggestions (in bold):

 

1.            ‘End my over-reliance on fee income’

2.            Understand my customers’ needs

3.            Deepen the relationships with customers

4.            Cross-sell more products and services

5.            Improve customer share of wallet (balances)

6.            Establish a sales culture throughout the organization

7.            Have clear and easy to understand sales incentives

8.            Work to break down the “product” silos and become “customer-centric”

9.            Grow new customers

10.         Improve profitability by focusing on the above factors’

 

In Bank Technology News Executive Editor John Adams’ article “Spend Now to Save Later?” he says that IT spending may finally be rebounding.  John contends that maintenance and all those new regulations will take the majority of the budget, but will have to be balanced against “a post-crisis need to get back to customer acquisition and product development”.

He continues, “…banks this year will turn to quick-to-deploy "customer experience" technology that leverages customers' data and self-reliance to expand share of wallet. Institutions will also turn to solutions that allow banks to re-imagine how tech resources are assigned across the enterprise, a move that can lower overall cost of ownership.”  They will also eye more efforts with cross-selling which is vital because banks need to do a better job at not only understanding their customer needs, but also predicting what they might be during specific interactions. Institutions that have this ability will find themselves ahead of the pack as they move someone into a (still) profitable (but potentially less fee-laden) banking account.

Banks can’t afford to wait years to get this technology up and running – so taking a traditional, rip and replace approach is not possible. Pega can enhance existing investments (e.g. analytics, CRM) with targeted projects that demonstrate ROI in short periods of time.  That means if your bank has finally gotten serious about this in 2011, you don’t have to wait until 2012, 2013 or even 2014 to have an impact.  You can implement a solution in 2011 and reap benefits this year.  But you need to start soon.