Location
– Somewhere on Planet Earth
Date –
January 08, 2015
Jack,
Ramesh and Sally are waiting at bus stand for bus to arrive. While waiting they
glance through the advertisement display at the bus stop, showing marketing
material for a store nearby.
Jack and
Sally write down store address and takes photograph of item they want to
purchase.
Ramesh
takes out his mobile phone and takes a picture of QR tag show at the bottom of
the advertisement.
Later all
three visits the store to purchase the item they wanted to purchase. At the
store Jack & Sally shows the picture of item they want to the store agent.
Store agent guides them to the section where the item is on display. They both
pick up the article and proceed toward payment counter.
Ramesh goes
through similar route with a difference that he shows the QR code to agent who
reads it on QR reader to guide Ramesh to the isle where item is on display.
All 3 go to
payment counter and are bombarded with display of credit card offer, one
promoting 5% cash back, another bank offering 1 mile per dollar amount, yet
another offering free delivery service and so on. Like all credit card lover
Jack, Ramesh and Sally have at least 10 credit cards in their arsenal, so now
they have to decide which credit card is fit for this purchase. Which card will
give them the most benefit from this purchase; standing at payment counter they
are not thinking about what benefits they will get out of the purchase made but
are applying all mathematical calculations and statistical analysis to decide
how can they save the most on their purchase today.
Finally
based on some logic they decide which card to use, makes payment and go home
happily thinking they made the best deal. But what is not clear is why all of
them used different bank card credit card.
Now let us
go to future…..
Location –
Still on Planet Earth
Date -
January 08, 2x15
Jack and
Sally are waiting at supersonic mass rapid transport station waiting for a high
speed magnetic propelled bus. While waiting, they glance at the 3D holographic
advertisement display for a store at undisclosed location on planet earth.
Ramesh is
wearing strange glasses, on closer look they are the latest release of Google
Glasses running on Cadbury operating system. He focuses his glass on the
holographic advertisement and blinks two times activating his glass payment
application. Payment application will perform a retina scan to authenticate
Ramesh. Once authenticated, he is given list of various credit card offers
which he can avail to make purchase of the item. He selects one of them and
confirms the purchase just by few gestures which are recorded by his GOOGLE
Glass. Items are delivered to his house in few hours.
Sally likes
the necklace shown on one of the advertisement and uses her NFC enabled phone
to tap, which initiates her mobile payment application. Using finger print
authentication her mobile payment application verifies her identity and
presents her top 3 card offers available to make the purchase. She selects one
of the offers and confirms purchase. That evening she wears the necklace to her
friend’s house. Her friend likes the necklace and wants to buy same for
herself. Her friend taps the necklace with her NFC enabled ring and instantly
gets a message on her phone to confirm her purchase by entering her password.
However story does not end here, merchant gives Sally a $2 cash back to thank
her for getting one more customer.
……End of
story J
Intention
of this paper is not to tell a story or to foresee the future but is to
highlight that the journey to buy something will not remain same. There are 3
main areas or challenges that will force all the banks to rethink and revamp how
they interact with customers.
Brand Management will be the biggest challenge all banks are going to face. If you will
read the future payment process it is very clear that none of the instruments
customers will use to make payment are owned by a bank, usage of credit card
plastic will be reduced. What we will see are products like GOOGLE glasses,
wearable device and mobile devices being used for making purchases.
Brand image plays a significant role in deciding which credit card
should one select from a pack of cards. But in future people will use products
owned by companies who are absurdly do not have financial transaction as main
line of business, however will own the touch points on how customers will make
a financial transactions. These touch points won’t be affiliated to any banks
hence will not be inclined to promote any bank.
In new customer journey the brand value gets diluted, it does not matter
if you are a premier customer holding a high value card or holding a very basic
card. What people will be fascinated about and see is making a purchase using a
GOOGLE glass or an Apple phone or an NFC enabled ring. For a customer it is no
longer making payment using Barclays, HSBC or Citibank credit card instead they
are making payment using GOOGLE, Apple, Tiffany etc. I am very sure that nobody
will be interested in showing off a Tiffany ring branded with some bank name or
logo. So using these products to promote the brand image is out of the door.
It is not just banks but even merchants will face similar challenges.
Instead of marketing and advertisement driving customer decision it will be
products themselves selling itself. As mentioned in the possible future
purchase process, a chip within a necklace will be used to make the purchase.
So the customer will also be a salesperson and it will be these customers who
will be instrumental in building an image or a brand.
In future brand management will be replacement with a much bigger and
complex process “Trust Management”. It will be almost impossible to
differentiate banks based on service offerings as all banks will be in a
position to offer more or less same set of services. So key to success will be
to act as a financial partner for customer and able to support all financial
needs of customer and not just one or two.
· Customer Authentication is one area that will entirely change; some of these changes are already
in prototype stage. Signature and PIN will be things of past replaced with more
secure ways of authentication. However these new ways of authentication will not
be so simple and will require huge investment to be made by financial
institutions. Instead of each bank making these changes, I think customer
authentication will become a service offered by a central authority probably a
government agency or even card schemes.
We will soon have terms like KMC (Know My Customer) replacing or adding
a new flavour to KYC (Know Your Customer). With authentication being managed by
central agency it will relive all financial institutions of investing millions
of dollars in capturing and verifying finger prints, iris data etc. Other
potential use of such a central authentication process is that it can be used
by every service which requires authentication of an individual e.g. health
industry, government services etc.
· Rewards and Offers are used by most of the financial institutes as a DANGLE to attract new
customers and to retain existing customers. Majority of these are around reward
loyalty of customer by giving cash back or bonus points if customer makes more
than x amount in a month or quarter etc. This area will change to being more “TRANSACTIONAL” in nature. What that
means is that every transaction customer makes will be an individual
independent decision. Offers and rewards for each transaction made by customer
will be individual and dynamic and not like now which are based on simple rules
and same for all customers. With support of new technologies we will have
capabilities to use both internal and external data and give a unique and
customized offer to the customer.
As mentioned in one of the customer journey when customer decides to
make a purchase he will be presented with multiple offers being offered by
credit cards he hold and he will be able to decide on the fly what he wants to
do. In simple terms it will be like bidding process where banks will try to win
the customer by giving best offer.
We will also see rewards around “Customer Get Customer”, where customer
will be rewarded if another customer makes a purchase because of him or her
e.g. Sally driving purchase for her friend.
Other
trends which we are already seeing are wearable becoming common payment
instrument probably we will have to stop calling Credit Card as Credit Card instead start referring them as
Credit Anything.
Author – Saket Mathur
(Vice President @ Barclays)
Dated 09.01.15
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