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So what does competition mean for the banking customers

In a sense, customers never had it so good. Companies are fighting hard over the same consumers, adding to their considerable power. The going’s got tougher for banks which were already striving to defend their turf against both established rivals offering similar services and new upstarts with innovative ideas. In parallel, they are trying to reclaim the trust of their customers. What does this intense competition hold for financial institutions and those using their services?

For starters, consumers can now hold their own against the might of the banking industry. The democratisation of information and communication has turned the average banking customer into an aware and confident individual who is not shy of voicing an opinion in public. This evolution has brought about greater diversity in consumer need, along with the expectation of fulfilment.   Hence, every customer demands that his bank pay close attention to his unique requirements and customise its products, services and experience to his liking. Under severe competitive threat, the bank has no choice but to comply, else it risks losing business to a rival that will. Fortunately, the emergence of online technology, self-service mechanisms and social media has made it feasible for banks to gather customer information in granular detail and use that insight to restructure a defined basket of offerings into an almost unlimited set of personalised variants.  It goes without saying that a flexible, agile and integrated core banking platform is absolutely necessary for realising this goal.

Also, since consumer expectations are not just confined to products, but extend to price and delivery as well, there is a need to take appropriate action on that front. The pricing perspective implies the following – one, banks must set fair and transparent prices and two, they can attract customers with good deals. And by exercising a preference for a certain delivery channel, the customer signals new opportunities – a chance to improve satisfaction by reaching him on the channel of choice and; an opportunity to ‘reward’ his channel behaviour with more loyalty points or preferential tariffs.  What’s more, the rising popularity of non-traditional channels like mobile phones and in-store kiosks enable banking institutions to connect with their customers at many more touch points. On the flip side, the competitive battleground just got bigger!



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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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