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Reinventing Banks as Lifestyle Advisers

Our Chitranjan Sood, Senior Manager, shares a three-pronged strategy to help banks get closer to consumers via Moneycontrol.

Banks do have the wherewithal to take on new competition and win back consumers; however, they need to enhance digital capabilities and understanding of ever-evolving consumer behaviour.

Banks are facing increasing pressure for growing their business in the face of the emergence of new competition across all their service areas.

The profound changes in consumer behaviour, technological innovations, the availability of a massive amount of data and the connected lifestyle of customers has led to a blurring of industry boundaries.

Now we have a situation where a bank is competing with not only other banks but also the e-commerce players, digital wallets, postal services, retailers and technology players.

The level of consumer engagement with the brand will be the foremost gauge for the most important criterion of success — scale and frequency of business transactions.

One way to better engage with consumers is by playing at the center of a lifestyle ecosystem. Banks need to identify opportunities to enhance consumer experience across not only the staple financial products but also anything that touches financial lives of the consumers.

State Bank of India, India’s largest bank has caught this trend early with its YONO app offering that enables consumers to avail lifestyle-based services across non-traditional banking touchpoints such as medical, travel, dining, entertainment and mobility.

How can banks become a better lifestyle brand?

Banks do have the wherewithal to take on new competition and win back consumers; however, they need to enhance digital capabilities and understanding of ever-evolving consumer behaviour.

In the interim, banks will do well to put in place three-pronged strategy to get closer to the consumers:

Develop cognitive marketing capabilities: Currently, we have a situation with an excess of data across social media, IoT devices, cloud, and disparate data silos across the organization.

However, the success in making it work in a beneficial manner is still elusive. Cognitive marketing involves delivering the right experience to the right people at the right time and place using advances in machine learning, analytics and smart machines.

It has become vital to know consumers’ social behaviour, the pattern of regular activities and life events for its effective engagement strategy. The online banner ads used it for personalization on basis of the new life stage of consumers.

The idea behind data capturing and resultant outreach initiatives should be to make positive changes to the consumers’ lifestyle.

The transaction oriented strategy needs to make way for a proactive one that anticipates consumers’ emerging scenario and to meet the foremost goal of increasing customer lifetime value.

Russia based Sberbank uses machine learning for providing tips for future events such as a reminder to submit tax returns on time, buy gifts for special occasions and suitable vacation destination.

Expand the service areas: Banks need to look beyond their core offerings to engage with consumers in an effective manner.

In order to become a lifestyle brand, it is vital for banks to get into other service areas in some capacity to serve the specific needs of various target segments.

One set of consumers might be looking at best, possible higher education opportunities for their kids or family holiday destination within budgets while another segment might have a latent or emerging need to get specialized business advice.

Banks can leverage their expanded business network to serve even the non-banking needs of their consumers.

The trust that consumers repose in banks can be strengthened by preempting their needs and have a solution ready to serve such need.

Deniz, a Turkish bank has launched an agricultural banking app with an aim to be at the center of a lifestyle ecosystem.

The app goes beyond traditional banking offerings, provides insights on crop planting, watering, rotations, fertilizing, and even assists in the purchase of farm equipment.

Deniz bank has also collaborated with agricultural experts who are available on a need basis for the personalized digital interactions with farmers.

Imbibing best practices from other industries: Banks for all practical purposes, have drawn closer to any consumer product or retail brand. It needs to keep an eye on the latest trends in adjacent industries and replicate all the practicable ones in a contextually relevant manner.

Buy anything from Amazon or similar marketplaces, one will invariably find easy to spot offers for complementary or related products.

Likewise, banks also need to identify innovative opportunities to offer better and broader choices to consumers.

London based fintech JaJa Finance has come up with a mobile controlled credit card that provides the option to share their credit card limit with trusted friends and family.

The co-working space trend, driven by the ever-popular sharing economy,  is customized by the banks to make good use of select branch locations to build communities of people with related needs.

US-based Citizens Bank has already latched onto this trend by carving out an open space in one of its branches for business consumers where they can have meetings with bankers, their customers and partners.

Most banks definitely have made efforts to be a one-stop shop for financial products.

However, the ever-evolving consumer behaviour has upped the ante for banks and they need to focus on innovative offerings leveraging behavioural data to add more value to consumers’ lives.

As per a salesforce survey, the majority of the consumers will switch brands if communications were not personalized.

To succeed in the personalization strategy, banks need to become an ecosystem player catering to all possible situations facing consumers.

Banks already have the enviable advantage of a big consumer base, wide-

ranging data, deep relationships and a fair amount of customer trust. However, to succeed in the goal of becoming a lifestyle brand, banks must devise a contemporary strategy to engage consumers.

The meaning of being customer-centric needs to broaden to include value-added products and services that go beyond financial products for a sticky customer relationship.

Emotional connections built with the consumers across life events will help banks shed the image of a transactional partner and build the elusive loyalty, enabling prolonged relevance.


Money Control

Publish Date

November 1, 2018


Chitranjan Sood


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