Management Strategies

10:28 AM
Arjun Sethi, A.T. Kearney
Arjun Sethi, A.T. Kearney

The Need for Customer-Centric Digital Innovation

Emerging technologies and trends like geo-location and the Internet of Things are creating new opportunities for banks to satisfy customers’ needs.

If a centralized structure such as a Chief Digital Officer (CDO) is the wrong path for banks, and if investing millions of dollars in internally-driven upgrades in technology or products is also not the most optimal path, then what should banks be doing to address the massive coming digital disruption? Amid a quickly-changing landscape, any organization needs a guiding light. And for financial institutions today, the light they need to (re)discover is the customer.

Too often in the past, banks have developed products and services, based on the business’ goals, and then pushed them to customers, regardless of the customers’ expressed needs. But banks are close to customers, banks are trusted by customers—and banks need to start taking advantage of that position by making customer needs central to their digital strategies.

Arjun Sethi, A.T. Kearney
Arjun Sethi, A.T. Kearney

Several companies are making productive explorations. For example, Isracard, an Israeli provider of credit cards to more than three million consumers, has implemented a predictive virtual assistant that customers can use to help analyze their bills. Don’t recognize a transaction? The tool presents a map of the merchant’s location. Electric or cable TV bill seem high? The tool can analyze past bills and also factor in seasonality or changes in services such as additional cable channels.

[For More from A.T. Kearney's Arjun Sethi, See: Banking on the Death of Cash]

Media reports sometimes characterize this technology in terms of cost savings for the bank’s call center, but there’s something more fundamentally useful going on here: customers like it. They feel empowered by additional options to understand and act on their credit-card bills. The technology of a virtual assistant is not new; the notion of linking that technology with data analytics is more compelling. But what gives this direction potentially game-changing implications is the notion that Isracard could be implementing it not to save money but because it understands how changing technology can address its customers’ needs.

In another example, Capital One is using technology it acquired with San Francisco-based startup PushPoint to create OfferHub, a platform for location-based marketing services that could prove useful to CapitalOne’s customers, merchants and consumers both. If I’m walking past a Fourth Avenue donut shop, my phone can alert me to a free coffee the shop is offering with dessert. I walk into the shop and scan a QR code to get my reward. The shop gets a new customer, plus data from my QR code on marketing effectiveness.

Technology-wise, the location-based push has been around since Tonchidot’s Sekai Camera, a 2009 craze in Japan. The Sekai Camera, an augmented reality app, allowed you to create and read geo-tagged messages; it was thus a social platform resembling a location-based Twitter. Although Tonchidot recently shuttered Sekai Camera, the effort inspired many other geo-location and augmented reality innovations, and Tonchidot’s CEO has moved on to a company that seeks to challenge Google Glass in wearable technology.

As that move suggests, the intersection of geo-location and commerce has interesting implications for the Internet of Things (IoT). Although its buzz often centers around domestic appliances such as thermostats or security cameras, the IoT could also offer banks and merchants opportunities to communicate with a variety of consumer devices.

Would such communication be worthwhile? Banks do need to beware of investing merely for the gee-whiz factor of any technology—after all, despite its coolness, the Sekai Camera did not revolutionize commerce. But that doesn’t mean that banks should ignore technological innovations. Rather, it means that they must approach innovation from a customer-centric perspective, asking: does this new product or service offer value to our customers? If OfferHub thrives, CapitalOne should be commended not for the technology but for its ability to meet customer needs. And even if OfferHub falters, CapitalOne may be able to use the experience to better understand those needs and how technology can meet them.

In other words, it’s all about the customer. I’ve had recent conversations with one top leader at a financial organization, describing how that company intends to focus its attention on its customers’ journeys. What life events are bringing customers into contact with the company, and how can the company improve the way customers experience those interactions? This philosophy, the leader says, is shaping initiatives across all of the company’s many lines of business.

In other words, in the face of digital disruption, this company is less focused on its organization (“do we need a CDO?”) or its investments (“how much do we pay for new hardware?” “which startup do we buy?”), instead focusing on its customers. That customer centricity should be a useful path for any organization to negotiate the confusing environment of digital disruption.

Arjun Sethi is a partner with A.T. Kearney, where he leads the Strategic IT Practice for the Americas. He can be reached at

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User Rank: Apprentice
7/23/2014 | 2:31:55 AM
re: The Need for Customer-Centric Digital Innovation
Nice Post. Yes I agree with Patty here. The whole banking system has become custome centric. Here is a link which describes this process in detail. It also explains how Banks meet the expectations of their audience?
User Rank: Apprentice
6/6/2014 | 11:26:56 AM
re: The Need for Customer-Centric Digital Innovation
Not only are they relaxed about sharing the data across all and sundry, they are also less sticky (less loyal) than the old world banking customers. It is more important for a bank to address issues first in the newer channels than say at a branch!!

Customer centricity, very simply put, is the
ability of a bank to sell the right product at the right time at the right
price through the right channel. This may sound clich+Źd but the challenges that
a bank faces in implementing it are many & complicated. The approach to
customer centricity can be broken down into a number of sub-segments, each of
which constitutes a different challenge. From my point of view, for a bank to
be more customer-centric it should focus on four key areas namely Customer
Information Management, Multi-Channel Integration, Operational Excellence &
Intelligent, Real-Time Cross-Selling.
User Rank: Apprentice
6/5/2014 | 8:01:54 AM
re: The Need for Customer-Centric Digital Innovation
I think what PayPal is tryinig to with the PayPal Beacon (BLE Technology) is a very good example. Also, they are trying to address a real problem, remove friction from payments.
User Rank: Author
5/27/2014 | 8:48:09 PM
re: The Need for Customer-Centric Digital Innovation
Yes there has to be a tangible reward. And I think OfferHub's a pretty good example.
User Rank: Author
5/27/2014 | 6:34:47 PM
re: The Need for Customer-Centric Digital Innovation
I'm not sure I'd say that younger consumers don't care, but they are more relaxed about sharing their data in exchange for improved service or rewards. A service like OfferHub may seem invasive to some customers because of the tracking technology, but it would appeal to younger users who see it as a means of getting discounts simply by having their phone with them.
Patty Hines
Patty Hines,
User Rank: Apprentice
5/27/2014 | 5:22:29 PM
re: The Need for Customer-Centric Digital Innovation
Everything old is new again? Customer-centricity has been a buzz word in banking for years. Wondering how banks will allay consumer privacy concerns about having their "journeys" tracked--or do younger consumers not care?
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