Offer management systems for banks
Like every other industry banks are trying to differentiate themselves from other competitors in terms of products and services offered. They are evolving from a transaction model to a more fluid customer centric model fulfilling newer customer requirements and needs as they go. The number of touchpoints banks have with customers which were earlier restricted to physical branches has now expanded exponentially with new age digital banking and other internet and technology enabled developments. Each customer expects to be treated with priority and the same quality of service.
Banks will have to go beyond cross border banking, with capital, best practices, innovation and knowledge transfer happening through third-party partnerships and fintech solution companies. It will help banks close in on the intellectual property gap. Holistically engaging customers with targeted offerings and solutions will help keep the margins high. It requires investments in customer analytics and compliance data, restructure the cost base so as to target high-value customers more profitably. Customer data is the most precious resource for banks which can be used to benefit both the customers and the banks, directly affecting the bottom line. More and more data analytics companies are working on using AI and Big data tools to create software products that help improve personalization in retail banking. Managing offer portfolios for customers is one area of such developments.
There is enormous amounts of valuable customer data with banks. They need to learn to translate this data to real time offers and personalized deals. Simple things like providing location specific offers by integrating with location sharing technology and other offers real time can help utilize this customer data. The open banking movement and the unbundling of financial services can intensify competition and level the playing field for incumbent and newer players and trigger innovation. According to the 2019 Mckinsey report on retail banking, digitization is about creating cutting edge online experience and customer satisfaction is shaped by customer experience across channels.
Offers provided by banks:
Banks provide discount offers on online purchases done using their debit/credit cards. Banks like SBI and HDFC have tie ups with Flipkart and Amazon where discounts can be availed by customers by completing online transactions. Online banking and transactions helps banks cut back extremely on customer handling expenditure and cash handling expenses which is why more and more banks are coming forward with net banking and mobile banking facilities with user friendly application platforms. It will also help increase demand for the bank’s debit/credit cards, which inturn would help reduce marketing costs for the product. Hence it is a win-win for the banks and the merchants.
Cash back offers on credit cards are also very common. The bank will share some of the merchants fees with the customer, which will otherwise have to be paid by the merchant to the bank on credit card payments. It helps to incentivize credit card usage which is a highly profitable product. To banks, cash backs are less costlier than direct discounts. Apart from these banks have seasonal and festive offers, loan offers to eligible customers and other special deposit schemes. Banks tie up with merchants in retail, restaurant, travel and hospitality, pharma and other businesses where customer purchase rates are high.
Offer management in banking:
According to the 2020 PwC report on retail banking, the first in priority for banks for this decade is to become more customer centric, and fewer than 20% of the executives feel prepared for the future. To increase customer spending, it is important that the offers given by banks are useful for the customer. Personalizing and creating a portfolio of offers to suit the needs of an individual customer will help in this. Banks rely on fintech companies for technological assistance and several financial solutions companies have developed systems for offer management in retail and corporate banking. Zafin, SunTec, Crayon data being a few of them. There are clear benefits to the technical ecosystem created for banks by these firms.
Offer management systems are built to empower relationship managers to price deals by testing using what-if pricing models and real time strategies and doesn’t require any technical knowledge. In corporate banking, client specific deals are complex and difficult to manage since they are highly customized. Companies like Zafin have developed platforms that help to link pricing to required performance metrics, ensuring profitability. All these are deployed by cloud technology thereby increasing time to value for clients.
Singapore based company Crayon data has created maya.ai, the world’s first AI engine dedicated to understanding human tastes. They have created a platform for enterprises to explore and understand the dynamics of customer tastes and every tool needed to help make the most of it. Employees can observe customer spending trends and push campaigns targeted to specific customers. Each customer gets a portfolio of offers available by the banks, which suits his/her spending behavior. They have also developed the tool so as to make it easier for identifying newer merchants that the banks can partner with to bring new offers to their customers.
