03/10/2014

By Elliot Howard, Executive Vice President and UK Managing Director, Sopra Banking Software


My daughter asked me the other day what life was like in 1993 — ‘Before computers.’

It made me reflect on how far we have come with regards to digital life. After all, the first real browser, Netscape, only came out in 1994, so it’s only been 20 years since the WWW was part of our daily and business life.

Look at how Internet connectivity, mobile broadband, smart TVs, apps and so on have changed our lives. At one time, it was considered revolutionary to put a URL on your advertisement; now, if you don’t have an Internet presence you don’t exist as an organisation.

And now we have the Internet of Things (IoT) — where billions of devices are connected, from your fridge to your central heating, your new car to sensors embedded in your own body. The IoT market is expected to grow by more than $5 trillion over the next six years, according to IT research agency, International Data Corporation (IDC) — a staggering figure.

This enormous thirst for information and 24/7 connectivity is also bolstering customer expectations on service. Consumers increasingly use social media and the Internet to stay in contact with friends and family, as well as shop. Young adults who’ve grown up in the Information Age see social media as the number one channel for services with the companies they use their purchasing clout with.

For the first time, that’s put business in the enviable position of being able to interact directly with its customers at a truly personal level, at mass scale, achieving the ‘market of one’ goal dreamt of in the 1990s. A digital revolution is taking place, clearly.

But, revolutions bring casualties. The simplest options for electronic gain have already been grabbed. This means that companies need to look for the next opportunities — which mean a genuine flexibility and thirst for innovation, and an openness to the road less travelled.

Linked to this, shareholder value is increasingly reliant on the revenue side of the income statement as opposed to the cost column. We need simple, new veins of customer revenue and profit to succeed.

I think the only way to get there is for business to get truly curious about their customers and what they really want.

The fine line between intrusive and curious

You need to hit the new digital sweet spot. But, you need to guarantee customers get a genuine, joined-up experience from the start to the finish of any and all transactions with you. To do this, look to build a clear picture of each customer and their requirements.

You can only do that by becoming more curious about how customers tick — what presses their buttons, how can you use this information to help them smoothly through the transaction process.

Be clear: we don’t want Big Brother levels of micro tracking here. Instead, look to build rounded pictures of what they like about working with or buying from you — something we have been trying to do for years with BI, but which can finally be achieved with Big Data and IoT.

First step on that journey is going to be to look through the eyes of your customer. Secondly, there is a real need to develop value through propositions and experiences first, before you can put a price tag on them. After all, customer lifetime value and shareholder value are inextricably linked. This will be a challenge, as seeing the customer as the source of long term profit gain, requires a more nuanced view of shareholder value than business has traditionally given it.

You also need to understand customer behaviour, why they make decisions — the ‘what, where, when and how’ strands of human behaviour. Customer curiosity requires research and development — plus the understanding that some routes will be flawed by financial constraints, but what you will learn will be extremely valuable.

Changing view of data

Data is increasingly an asset, yet there is still a real lack of investment in capturing, maintaining and utilising it effectively. Unfortunately, data is often viewed as the fall-out from IT enabled processes — not as a valuable business asset.

With the arrival of advanced analytics and decision management tools, this data should be the life blood of a business and not seen as a by-product.

Businesses need to become customer curious to make sure the next 20 years is going to be as profitable as the last.


The author is Executive Vice President and UK Managing Director at Sopra Banking Software (http://www.soprabanking.com/), a leading provider of specialist solutions for the European financial services sector