Why are Banks the Best Equipped to Understand these Goals?
From time immemorial, people have trusted banks for the following – 1) Storing their money safely; 2) Facilitating monetary transactions for their daily life; 3) Helping grow their wealth, and 4) Providing access to an easy credit system when needed.
Over the last few years, like a trusted friend, banks have also added one more dimension to the relationship it shares with its customers – becoming an advisor who will help them meet their financial needs.
The role of the banks in these five dimensions means that the banks are present across an exceptionally large part of their customers’ lives. This also puts the banks in an enviable position – they are aware of what transactions their customers make, more than any technological giant, telecom operator, or retail institution.
Plotting these transactions over a customer’s lifetime can help the banks create a wonderful insight-propelled view of why a customer makes any transaction.
In addition, the banks also have two more facets which make a strong case for them
- Banks are the proud owners of tonnes of data that was generated by their customers over several years, most of which are present in their legacy cores – something I will come back to, later;
- Banks are a part of the digital payment revolution, which has created a scenario in which banks and other financial institutions can be aware of even the tiniest of transactions.
Hence, banks are better placed than anybody else to understand the true ‘goal’ of each of the transactions that a customer makes.
If banks can leverage this inherent advantage, they will no longer sell products to customers but will participate in their customers’ lives in an invisible, immersive, intuitive, and integrated way to co-create experiences that will facilitate their lives and help them achieve their goals.
Are the Banks Ready to Fully Align themselves to the Goals of an Individual?
Some of the banks around the world are beginning to realize the importance to think beyond transactions and understand the true purpose of each transaction. This can only happen if they are part of their customer’s lives in an invisible, immersive, intuitive, and integrated way.
Let me share two examples to highlight this transformation.
DBS Singapore, a leader in the banking industry, over the last few years, has focused on making sure the banking experience they provide helps their customers focus more on their lives and not on banking.
ICICI, one of the largest banks in India, has understood that owning a home, an aspirational need, especially in a country like India, is the true purpose people buy a home loan.
Most banks have already begun this journey towards goal-based banking. In fact, a simple google search would show you that while banks have really caught up on the world of goal-based banking, the initiatives they are taking are still at a nascent stage.
So, what should the banks do to succeed in this journey? In my next article, I will outline they key actions bank need to take to make sure they are fully aligned to their customers’ goals and aspirations.