The winners in the financial services world will not be those banks that offer all the products their competitors do, but those who can anticipate clients’ needs and see their moments of vulnerability, and address them appropriately.
Every now and again something big happens in a person’s life, says Jacques Celliers, CEO of FNB. Someone buys a house. Or sells it. A hailstorm hits a farm. Someone gets married, or divorced, or has a child.
Being there for clients during these events and offering appropriate solutions during ‘moments of truth’ – whether good or bad – is what banks will have to package better going forward.
“The winners of the future are going to be people [banks] who get those moments right and help with solutions much broader than just financial services.”
Using customer data to sell to them
His comments come as competition in the banking space heats up and amid expectations that the focus on digital banking will put pressure on banks to carve out a competitive advantage using customer data to gain insight into clients’ lives in the hope of selling more products to them, something the industry refers to as cross-selling.
Addressing investors at FirstRand’s half-year results presentation on Tuesday, CEO Alan Pullinger said that although there is some hype around new entrants being the first to offer “behavioural banking”, the group has probably used behavioural analytics for two decades and continues to refine it.
During the six months to December, FNB’s banking app transaction volumes grew 52% year-on-year and surpassed online banking volumes for the first time.
“This migration is important because it allows us to give much better, more timeous and considered offerings to our customers,” Pullinger said.
In the past, a customer may have been in a bank branch without the bank having a record of it, but even if it did, these visits were usually infrequent. With the growing use of digital channels, there is significantly more scope for banks to interact with the client in a personalised way.
“In our world, you come see your bank accounts and that gives us a reason to talk to you and to cross-sell you … and to build more data and understanding about you,” Celliers says.
Bank … or Big Brother?
The bank will not only know where a client works and lives but will see which places they have visited.
“We build lots of data around you and then we try and use the moments of activity to understand your context better and then we offer you more contextual solutions for the moments.”
A decision to offer licence disk renewals at FNB not only allows the bank to assist a customer during a moment of anxiety but provides it with another opportunity to interact with the customer and predict when they will buy or sell a car in future. It could potentially also warn the client about entering an unreliable dealership previously removed from the bank’s client base.
While the move to data or behavioural-based banking could offer benefits for banks as well as their clients, it may also come with added risks, particularly around privacy.
FirstRand, which comprises FNB, RMB, WesBank, Aldermore and Ashburton Investments, reported normalised earnings growth of 7% to R13.3 billion in the six months to December 2018. Normalised return on equity was 22.3%.
The group’s share price closed 2.04% higher at R63.39 on Tuesday.