IND Group Seminar presentation Nov 24, 2011. The next wave in digital services for the banking industry customers: From products & transaction-focus towardsend-user-need –orientation

1. INSIGHT
THE NEXT WAVE IN DIGITAL SERVICES
FOR THE BANKING INDUSTRY CUSTOMERS:
From products & transaction-focus towards
end-user-need –orientation
IND Seminar in Helsinki
Tommi Pelkonen
Strategist
November 24, 2011
© Frantic 2011

2. Frantic = Digital Creations
35 people, Helsinki-based, 15 years of experience in digital solutions
WHAT DO WE WANT TO DO?
To make services for our customers
Strategy that:
1) Generate business opportunities
Research & analytics
and additional revenues
2) Make services that people enjoy
to use and benefit of
Design
Technology
© Frantic 2011

3. TOMMI IN BRIEF
Born 1971, married, daughter
M.Sc. (Econ.): 1999, Helsinki School of
Economics, HSE, International Business,
Finance & Accounting, Information Technology
2010->: Strategist at Frantic
2008-2010: Business Consultant at Finpro
Budapest in ICT/software business
2005-2008: Strategist at Satama Amsterdam
1999-2005: Business Consultant at Satama
Helsinki
1996-1999: Research at the HSE Electronic
Commerce Institute, focus: digital media service
companies
Lecturer and author of several publications &
articles in the fields digital media,
internationalisation of SMEs and service
business
© Frantic 2011 3

4. BACKGROUND:
THE DIGITAL REVOLUTION HAS REALISED,
BUT IT STILL CONTINUES
The Internet has changed consumer and industrial buyer behavior permanently.
All business operations are influenced by the online channels and e-business..
Customers and consumers have more power than ever in economic history
Digital channel functions as transformation agent within organisations.
Competences to run digital channel-drive business increase gradually.
Change process takes time – many business processes are not yet digitised nor
utilise the online channel to the its potential. Solid success metrics are emerging.
Innovation and society fragmentation continues – globally.
© Frantic 2011
eBusiness = Business!

5. INSIGHT
The next wave in digital services
for banking industry customers
• BACKGROUND: From modem noises towards real time,
pan-European & always-on digital banking for all
• SOME TRENDS: Innovation happening in and outside the
traditional banking/financial sector
• CHALLENGE: How to keep the trust and compete in the
turbulent times?
• SO WHAT: Why should you care?
© Frantic 2011

6. DIGITAL BANKING HISTORY IN BRIEF
• Videotext – Minitel –
Telesampo & Infotel
• Modem dial-up banking
• Telephone banking
• Internet-banking
• Mobile banking
• …
• Security major leaps –
password / security tokens
& lists
• Constant fraud and
phishing efforts
• … LONG-WAY BEHIND
© Frantic 2011 US ALREADY !

7. EVOLUTION STEPS IN BRIEF LEARN TO LISTEN &
BE PERSONAL
OFFER
THEMES EVERYTHING Need-based
Customer empowerment
Microbanking
Product offering explosion
BREAK TO THE Financial “supermarkets”
MASS MARKETS
Mobile banking era
1999->
New
Internet banking era
1995->
innovation
TEST & TRY and service
Internet- models for
EARLY DAYS boosted banking
1980-early 1990s efficiency and
self-service JOY OF USE
explosion (still GUIDANCE
Early trials going on)
with pioneers LOYALTY
and leading New sources of
companies EASE OF USE
banking
EFFICIENCY innovations are
emerging from
© Frantic 2011 TEST OPPORTUNITY DRIVERS user-orientation

8. KEY MOTIVES FOR BANKING AUTOMATION
• Cost savings, cost savings, cost savings…
• Freedom of time, place & location
• Ease of use
• Plethora of new & innovative financial products,
also for consumers
• Explosive growth of the financial instruments and electronic
commerce in professional, but also in private sectors
• Increased global hyper-competition and massive
investments into self-service platforms
• Reduction of churn = loyalty programs
BUT NOW:
Joy of use? Relevance?
Guidance of the consumers to better benefits?
© Frantic 2011 8

9. INSIGHT
The next wave in digital services
for banking industry customers
• BACKGROUND: From modem noises towards real time,
pan-European & always-on digital banking for all
• SOME TRENDS: Innovation happening in and outside the
traditional banking/financial sector
• CHALLENGE: How to keep the trust and compete in the
turbulent times?
• SO WHAT: Why should you care?
© Frantic 2011

10. BANKING IS A KEY APPLICATION AREA
FOR ONLINE USERS
476 M Internet users in Europe (2011), 58% of the European population
WE LOVE OUR SELF-
SERVICE BANKS – OR
DO WE?
http://www.internetworldstats.com/stats4.htm
© Frantic 2011
http://www.iabeurope.eu/media/43499/mcdc%20european%20overview.pdf

11. TRANSPARENCY IN BANKING IS
INCREASING – BOOSTED BY BROKERS &
PRICE COMPARISON ENGINES
OUTCOME:
WALLED GARDENS OR
OPEN SPACES?
© Frantic 2011

12. THE COMPARISON POWER IS REACHING
EVEN SMALLER DOMESTIC MARKETS
© Frantic 2011 14

13. PERSONAL FINANCE MANAGEMENT TOOLS ARE
EMERGING INSIDE & OUTSIDE THE BANKS
Aggregate to an outside service
to get better and more relevan
information…
© Frantic 2011 16

14. SIMPLICITY IN BANKING & BUDGET BANKING
Simple, easy to use, no-thrill, bare bones banking.
© Frantic 2011
Is the the dawn EasyJet era of banking?

15. GREAT NEW INNOVATIONS DOING
GLOBAL GOOD
Online & mobility-empoweredbanking, microfinancing and risk sharing
© Frantic 2011 19

16. ALSO NOT-THAT-POSITIVE INNOVATIONS
EMERVE (FOR THE CONSUMERS !)
Case: Very short-term loans in Finland
Aggressive marketing +
User interface & process
innovations!
Leading to consumer interest
rates up 1100 % p.a.!
© Frantic 2011 20

17. INSIGHT
The next wave in digital services
for banking industry customers
• BACKGROUND: From modem noises towards real time,
pan-European & always-on digital banking for all
• SOME TRENDS: Innovation happening in and outside the
traditional banking/financial sector
• CHALLENGE: How to keep the trust and compete in the
turbulent times?
• SO WHAT: Why should you care?
© Frantic 2011

18. IT IS ALL ABOUT TRUST!
© Frantic 2011 Below the media & beverage industries!

19. FINANCIAL CRISIS IS DETORIATING TRUST
TOWARDS FINANCIAL INSTITUTIONS!
© Frantic 2011 Freefall of trust!

20. ONLINE IS THE KEY SOURCE FOR
COMPANY INFORMATION
And online – news, but also rumours travel fast…
© Frantic 2011

21. RE-ESTABLISMENT OF TRUST IS DIFFICULT
TASK
© Frantic 2011 Think about Nokia and Symbian…

22. HUMANS: SOCIAL ANIMALS BY LEGACY
• Regardless how FUTURELAB
Darwinist we want to
be, our DNAs and
socio-cultural legacy
guides us to continue
good-old-proven
models and habits
• How will the digital
conversation change/
enable/boost our old 4000 years of media-revolution
habits to change – cannot undo 2,000,000 of
programming
flourish – suffer?
SO WHAT FOR ONLINE BANKING?
=> PEOPLE WANT TO TALK TO PEOPLE AND
© Frantic 2011
HEAR OTHERS’ EXPERIENCES!
26

23. HOW ABOUT BRINGING THE HINTS AND
DISCUSSION TO YOUR OWN SITE?
© Frantic 2011

24. …OR HOW ABOUT BRINGING THE RATINGS EVEN
FURTHER – INTO YOUR PRODUCT OFFERINGS?
Hmm… – Haven’t we seen this happening
in the travel sector already…
© Frantic 2011

25. BACK TO TRUST: HOW ABOUT DESIGNING
SERVICES FROM A “USERS FIRST -ANGLE”?
Starting point:
• Who are they?
• What do they want?
• What do we want them to do?
• How do they behave now and will
behave soon
• What makes them succeed (with us or
without?
• How can we help them in their needs?
© Frantic 2011

26. USER-ORIENTATION TO THE CORE OF
(DIGITAL) PLANNING & THINKING
1. RESEARCH THE ACTUAL NEEDS & BEHAVIOUR OF THE USERS
Surveys and especially with qualitative interviews
2. FIND AND DESIGN SERVICES TO MATCH THESE NEEDS
Try to find the need that your organisation can service and excel in
within the time, budget, technology and resourcing availabel
3. HAPPY CUSTOMERS + GOOD BUSINESS !
SIMPLE IDEA – BUT SO RARELY EXECUTED
© Frantic 2011

27. HOW ABOUT TRYING TO ANSWER THESE
QUESTIONS IN THE ONLINE BANK?
• STATUS: What do I own?
• Give a great overview to the situation
• PERFORMANCE: How am I doing?
• What is happening – am I loosing / winning? Am I
reaching my goals?
• ADVICE: What should I do?
• If this is so, what are my options?
• ACTIONS: How can I take action?
• What to do now – how to improve this? Let’s do it…
© Frantic 2011 33

28. INSIGHT
The next wave in digital services
for banking industry customers
• BACKGROUND: From modem noises towards real time,
pan-European & always-on digital banking for all
• SOME TRENDS: Innovation happening in and outside the
traditional banking/financial sector
• CHALLENGE: How to keep the trust and compete in the
turbulent times?
• SO WHAT: Why should you care?
© Frantic 2011

29. GOOD SERVICE SELLS ITSELF;
BAD SERVICE SELLS ITSELF EVEN FASTER…
Fitting the user needs
(utility)
"
Useful
! Bad experience
= I will tell it 20 of my
Good experience
Tells really closest friends and
= I will share it with good
Designed
for people publish a bitter update
four people stories on FB for my 223
“friends”…
Desirable Stimulates the Usable
senses
Pleasurable Easy to use
experience (usability)
(satisfaction &
feelings)
© Frantic 2011

30. BETTER SERVICE EXPERIENCE AIMS FOR A
POSITIVE BUSINESS CASE - TOO!
• To existing or new clients
MORE SALES • Via enhanced marketing and conversion improvements
• Via improved retention of clientele
= more ! • Via measured and monitored online operations
MORE LEADS • Information clarity and lead process development
• Campaigning and analytical development
= more !
COST SAVINGS • Decreases in customer service costs
• Decreases in sales costs
= less - !
BUSINESS CASE IS A KEY FACTOR FOR GREAT DIGITAL
© Frantic 2011 SERVICE PROGRAMS – AND SO OFTEN NEGLECTED!

31. OUR TARGET: BEST-IN-CLASS USER EXPERIENCE
WOW!
I find things where
I expect them to be
I like the brand and
its visual design I got exactly what I needed know
Fitting the user needs
(utility)
It is nice to do
things online
BEST I feel the site
USER understands me
I saved a lot of time EXPERIENCE
doing things online I am impressed
Pleasurable experience Easy to use by the service
(satisfaction) (usability)
I get things done more
efficiently than offline I want to recommend this to
my friends
The banking sector has already made many of these things
© Frantic 2011
right . Yet, there is plenty of room for improvment
37

32. OUTCOME:
HOW DOES A
LEADING ONLINE
BANKING SERVICE
BEHAVE & FEEL IN 2014?
© Frantic 2011

33. IN 2014, THE LEADING ONLINE
BANKING SERVICE …
… offers a well-packaged multi-
channel customer access to reach
one’s financial service provider via
the preferred method of contact…
© Frantic 2011

34. IN 2014, THE LEADING ONLINE
BANKING SERVICE …
… create a trusted environment into
which customers want to come and
share their views and plans of the
their financial situation and the
provider. They feel treated as
respected customers…
© Frantic 2011

35. IN 2014, THE LEADING ONLINE
BANKING SERVICE …
…remembers and recognizes its
users and offers personally
customised advices and services and
is present then when needed…
© Frantic 2011

36. IN 2014, THE LEADING ONLINE
BANKING SERVICE …
……aggregates the consumer
opinions & reviews to its offerings,
advices and content dynamically…
© Frantic 2011

37. IN 2014, THE LEADING ONLINE
BANKING SERVICE …
…increases dramatically the
customer satisfaction and boost
revenues with lower churn and
clever cross-selling.
Outcome: Marketing budgets
start shifting from acquisition
to retention and loyalty programs!
Quality service sells itself!
© Frantic 2011

38. LET’S GO AND CREATE
GREAT DIGITAL SERVICES!
Tommi Pelkonen
Tommi.pelkonen@frantic.com
+358-40-50 50 821
http://www.slideshare.net/TommiP
© Frantic 2011
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