RFC_Programmatic Banking_Final_41716
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The document discusses how banks can leverage emerging technologies and data to personalize customer experiences. It explores three vital themes for banks: digital transformation driven by accelerating technology adoption, operational agility through dynamic business models, and programmatic banking which uses data to optimize customer experiences. Programmatic banking combines principles from agile banking, design thinking, and customer integration to deliver optimal experiences through the right channels. It allows banks to be more nimble and make informed strategic decisions using customer data and signals.
RFC_Programmatic Banking_Final_41716
- 1. Page of1 11 PROGRAMMATIC BANKING Transforming the Customer Experience through Data-Driven Innovation THE PROGRAMMATIC VERTICAL SERIES BY ROCKET FUEL Written & Designed by: Nikos Acuña & Alexander Perrin
- 2. Page of2 11 INTRODUCTION The digital landscape is transforming at a speed in which transactional data can be leveraged to personalize customer experiences in more granular ways. As a result, financial services companies and especially banks—can leverage emerging technologies to drive business outcomes at an unprecedented pace. This is because data is the premise for every significant interaction in terms of maximizing opportunities to engage with audiences, deepening connections with brands. Automation is pushing a new wave of business leaders to produce, analyze, and drive performance like never before, causing seismic shifts within global financial companies innovating their way into the digital age with brute force, while others are retrograde and are clinging to the past. Based on our research and industry observations, we will explore in detail three vital macro- themes that will define the fate of banks and companies within the financial services sector: • Digital Transformation: The Accelerating Pace of Technology Evolution and Utilization • Operational Agility: Dynamic Business Models that Drive Improved Efficiencies • Programmatic Banking: Data-Driven Customer Experience Optimization At the center of this discussion is programmatic marketing—its ability to impact both business outcomes and customer experiences through leveraging signal- rich data. Banks and other financial services companies are becoming more cognizant of capturing audience intelligence through transactional moments—a single authenticated interaction on a website, an instance in which someone opens a new checking account at a retail branch, being exposed to an offer to activate a new credit card with 0% interest, withdrawing a specific amount of cash at 2:30 PM when it’s raining outside, having a fulfilling experience through a call center that solved a pressing problem—all of which, in aggregate, are influential moments that can provide banks with cumulative intelligence to inform how they segment audiences and customize their experiences. This allows banks to evolve their business with agility and optimize at scale to a new audacious standard—one that provides both a seamless experience for customers and also acquires signal-rich data that can be utilized to predict future outcomes. The third macro-theme, and the ultimate focus of this perspective, Programmatic Banking, is not just a trend or another buzzword that will soon be forgotten, but a visionary solution design that is a product of the most advanced innovations afforded to business leaders by the digital age—combining principles from agile banking, design thinking, and functional customer integration. Its purpose is to deliver optimal experiences and services to the right customers through the right channels and platforms of distribution. It illustrates a fluid framework that organizations can use to start scoping and building requirements for architecting the programmatic bank of the future. The front end of the design focuses on the customer at the center. The back end of the design is the data integration, activation, and discovery infrastructure that powers it—enabling banks and financial service companies to not only be more nimble in their ability to grow value based on real-time demand triggers and signals, but also allows them to create a sophisticated asset that leverages data to make informed business, operational, and strategic decisions. In order to understand the power and significance of how Programmatic Banking will transform the financial industry, we will start by illustrating the monumental shift that programmatic marketing has inspired within the digital sphere.
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- 4. Page of4 11 Global Mobile Device Growth by Type By 2019, Smartphones Will Attain Largest Share of Reach Nearly 40% Source: Cisco VNI Global Mobile Data Traffic Forecast 2014-2019 2014 2015 2016 2017 2018 2019 Non-Smartphones (61%, 27%) Smartphones (29%, 40%) M2M (7%, 28%) Tablets (1%, 3%) Other (3.2%,2.2%) DIGITAL TRANSFORMATION THE ACCELERATING PACE OF TECHNOLOGY EVOLUTION AND UTILIZATION Based on our research, the macro-themes are aligned with general trends in the digital space. However, its underpinnings suggest a more significant shift in digital customer interactions—which is why we highlight this microcosm as a precursor for a more significant trend in all of business and technology. As the rate of humanity’s capacity to compute compounds (according to Moore’s Law), along with the number of users coming online for the first time, the number of devices per user, and the number of opportunities to reach them—financial services companies, and especially banks have a tremendous opportunity to leverage big data to better understand their customers, and more importantly—how to influence them across channels and touch points. But this opportunity comes at a high cost in the form of accelerated technological change and cultural evolution. As digital advertising continues to grow, consumer data compounds significantly, which presents a lucrative opportunity for banks. Based on eMarketer’s Digital Ad Spending Forecast and Trends, ad spending on paid digital media by the US financial services industry will reach $7.19 billion in 2015. This is a 14.5% gain over 2014. The financial industry remains consistent in its focus on performance objectives over branding goals when using digital advertising, evidenced by its substantial spending on search ($3.40 billion) and its growing adoption of programmatic buying for display media. Programmatic marketing continues to transform the digital landscape at an unprecedented pace. According to Richard Joyce, in Forrester’s The State of Programmatic Digital Buying 2015, Programmatic media buying continues to take over traditional means of buying. Exchange-based trading will make up 30% of total display impressions by 2019 — nearly double the 2012 levels. The overarching message of this research suggests —“Don’t sit back to see if this trend sticks; it’s taken hold, and advertisers have embraced programmatic buying because it works.” Where the industry shows a significant shift, however, is its adoption of mobile advertising (eMarketer 2015). As consumers spend more time using mobile media and accessing financial accounts via their smartphones and tablets, financial services advertisers are shifting more dollars to mobile ad efforts. Financial services firms will spend $3.49 billion on mobile advertising in 2015, eMarketer projects—a figure just below half of the industry’s expected total digital ad investment for the year. Based on EY’s Global Banking Outlook 2015, many of the changes banks must make to the customer experience will be driven by the growth in mobile and smartphone ownership, which are transforming customer expectations. A Mobile Global Data Traffic Forecast by Cisco suggests that by 2019, smartphones will attain the largest share to reach nearly 40% across all digital devices.
- 5. Source: eMarketer.com (December 2014) Im plem enting a digitalstrategy Im proving custom ersegm entation by product,service levels,ordistribution channel Adapting to changes in the size,structure,and role ofthe branch netw ork Cutting costs orim proving m argins on retailbusiness lines Responding to regulatory requirem ents M anaging nonperform ing loans (NPLs) Ring-fencing operations from otherparts ofthe bank business Considering foreign expansion Sim plifying theirbusiness Considering exiting foreign m arkets 0 12.5 25 37.5 50 Top Priorities for Retail Banks According to Banking Executives Worldwide The EY Global Banking Study also posits that mobile payments have already transformed financial services in some emerging markets. In fact, in some emerging markets, ownership of smartphones is already beginning to exceed bank account adoption rates. It is only six years since apps first appeared on mobile devices, and customers now expect to be able to check their balance and make transfers through their phones, at the minimum. Online banking has evolved too — with some banks even offering banking services through Facebook. It is our view that these transactional touch points—digital breadcrumbs, if you will—provide a wealth of untapped value that comes in the form of customer data. This data can be leveraged in meaningful ways. More than ever before, digital strategy initiatives are a central part of operational innovation. Business leaders are taking notice with a renewed sense of awareness and urgency. When the Economist Intelligence Unit (EIU) and banking software provider Temenos surveyed banking executives worldwide in December 2014, they found that implementing a digital strategy was respondents’ retail banking priority for the year ahead. This push for innovating in the digital space is a strong signal that illustrates a focus on building the right technology infrastructure for bolstering customer engagement efforts, aligned with improving operational efficiencies that impact revenues. Other areas affected by digital’s growing influence include customer segmentation and transforming brick-and-mortar branches. These are the trends that are redefining the architecture of the marketplace in which banks are realizing their potential through more dynamic operating models and iterative processes.
- 6. Consumer Signals Consumer Experience Scoring & Validation According to EW’s Global Banking Outlook 2015, banks will have to reinvent themselves. Those that do are developing new products and leaner, more flexible business models for the future. These banks are poised to deliver the returns their investors are looking for, even against the headwind of low global economic growth. There are many channels— both digital and experiential, through which customers can access information, transact business, and purchase products based on their interests. But operational agility cannot work unless banks have an underlying technology infrastructure that can function as a single source of truth for all of their customers. A holistic platform is necessary to tie interactions back to a single consumer. The agile bank flips the traditional product first model, into a customer-centric ideology that needs to be implemented at scale. This becomes the mission for which all else is done, because it positions banks to solve big problems. For instance, there may be specific geographic segments that influence customers toward specific products based on consumer sentiment levels. For these segments, there are micro-niches of people that will be more receptive to tailored messages in order to become more fully connected. This is the power of brand affinity and audience segmentation. For agile banks, market-driven change happens quickly and frequently. While most global banks with a vast suite of products in their portfolios have not implemented these methodologies yet, many are poised for transformation. According to Accenture (2015), the combination of a digital-physical footprint, trusted customer data access, and an innovative spirit creates a ready platform for success. Once banks develop agile building blocks— customer obsession, unconventional collaboration and an adaptive operational backbone—they can begin their journey. Operational agility requires flexibility across the organization. Banks are faced with the challenge of re- envisioning legacy systems with the digital platforms and advanced technologies of the future. Patience is a virtue when it comes to operationalizing and aligning stakeholder groups, especially when it comes to building a data-driven architecture. But these methodologies have the power to seamlessly connect the right customer with the right desired outcome using predictive intelligence and data on what they wish to do, on what device, channel, context or environment, and should suggest their likelihood for purchasing specific products. This is the foundation for customer-centered, operational agility. Operational Agility consists of five core principles: • Customer-centered Philosophy • Dynamic Offerings • Flexible Business Models • Optimal Experiences • Iterative Channel and Communication Distribution OPERATIONAL AGILITY DYNAMIC BUSINESS MODELS THAT DRIVE EFFICIENCIES
- 7. Top Frequency and Usage Per Channel Channel frequency Paying bills or making transfers Balance inquiries Getting advice Buying and selling investments Making deposits Reporting problems 0 15 30 45 60 Online/Internet ATM Mobile Branch Call Center Source: EY Global Consumer Banking Survey, 2014 The third macro-theme, and the ultimate focus of this perspective, Programmatic Banking, is not just a trend or another buzzword that will soon be forgotten, but a visionary solution design that is a product of the most advanced innovations afforded to business leaders by the digital age—combining principles from design thinking, machine intelligence, and functional customer integration, to drive operational agility. Its purpose is to deliver optimal experiences and services to the right customers through the right channels and platforms of distribution. It illustrates a fluid framework that organizations can use to start scoping and building requirements for architecting the programmatic bank of the future.
- 8. PRINCIPLES OF AGILE BANKING Agile banks must be empathetic to customers and reframe their business with the customer as the center of focus. They must cultivate a disciplined approach and align this perspective across all other areas of their business. Interdisciplinary collaboration is the key to designing a fresh customer experience. Bringing in data across the organization—both from customers and operational elements are critical to success. Agile banks are dynamic and can react quickly to market demand because innovation is de-centralized so that stakeholders can respond quickly and at scale.
- 9. As we’ve explored in previous sections, customers now want to interact with their bank whenever they want, however they want, and wherever they want (EY 2015). Customers want a ubiquitous experience, and to be able to shift seamlessly between channels. Transactional moments are critical for capturing audience intelligence in terms of what mediums are optimal for every interaction and desired experience. Consumers transact very differently across different devices. The key is to score every engagement against exposures and model off of users that have the right eligibility for certain products. Technologies like check and card imaging are becoming the standard. While some newer, more efficient institutions already have the capability to issue checkbooks and cards in-branch, the evolution of technologies such as digital printing may eventually enable customers to issue their own cards at home — if cards have not been usurped by mobile wallets (EY 2015). In fact, with smartphone penetration across a sample of 48 developed and emerging markets at almost 45% (up from around 27% in 2011), mobile wallets may become the primary way customers access their bank accounts. At their most advanced, they could offer a single gateway to access multiple accounts across multiple banks. Increased use of smartphones, combined with contactless technology, will potentially transform remittances — for which combined transaction fees and exchange rate margins can still cost more than 10%. They will also transform cash management in these markets. Should mobile wallets with enhanced biometric security become the norm, the cost of obtaining banking services in emerging markets could be dramatically reduced and penetration rates significantly increased. However, it is not all about a shift to digital channels. While self-service machines are eventually expected to replace cashiers and mobile wallets to become commonplace, branch staff will still have a critical advisory and sales role. EY’s Global Consumer Banking Survey 2014 highlights that while digital channels are the most frequently used, they are principally for transactional banking. Customers still rely heavily on personal branch staff for advice, buying and selling investments. Again, right ex p e r i e n c e , r i g h t i n te r m e d i a r y f o r m o f communication. Let the data make the decision. We conclude this perspective with a compelling snapshot of how Programmatic Banking could impact your organization, with AI-driven solutions that can deliver customer-centric experiences and data-driven tools that will transform banking at an unprecedented pace. Dynamic Customer Journey Modeling – The traditional marketing funnel is antiquated. Retail banking services are vastly different from mortgage products and credit card products, all of which require nuances to communicate and message to audiences. They also require different modeling approaches. With dynamic customer journey modeling, banks can deliver unique experiences at the touch point level. Portfolio Optimization – Banks and financial products can be difficult to bring to market and deliver to the right people. When you find them, it’s extremely valuable and more importantly, there are significant opportunities to utilize data attributes, indexing approaches, and fluid budgets to drive share of household, as well as overarching market share across the product portfolio. Portfolio optimization enables countless cross-sell and upsell opportunities to more refined audiences that matter. Life Stage Marketing – Eligibility rules can be applied to specific audiences, and banks will be able to speak to them with more resonant messages. For instance, getting a new job means activating or utilizing a 401K, a life-changing event may mean the customer has retirement plans in mind. Teller of the Future – The transformation of currency continues to pivot toward digital. Digital transactions today far exceed traditional cash exchange for goods and services. Digital transactions occur everywhere—at stores, retail bank locations, ATMs, online, on mobile devices and iPads. Advanced tools like machine learning and artificial intelligence can potentially emulate the best teller experience and emotionally satisfy the life needs of their customers. 360 Audience Hub – Banks with visibility across fragmented silos, systems, channels, products, and audiences can increase their flexibility in market, which creates more opportunities for innovation, growth, and an increase in operational efficiencies. PROGRAMMATIC BANKING DATA-DRIVEN CUSTOMER EXPERIENCE OPTIMIZATION
- 10. With these capabilities driving growth and innovation, we see a much more audacious vision powered through data activation that will drive personalization and customer satisfaction to the degree in which bespoke models that are highly tailored based on audience archetypes and brand affinity will become commonplace. This is because the data and technology available in this industry will empower banks to create the best experiences possible. Banks will need to explore architecting a solution design that can bolster their focus on attaining customer signals, which they can use to enhance experiences and drive deeper efficiencies for operational agility. A solution design or architecture is an overarching blueprint, roadmap, and executional framework for which to build a system that can ingest, organize, manage, and activate data, powered with machine intelligence to make optimal decisions in real-time. Predictive-modeling and automated calibration play a key role, as top-tier solutions extract hidden meaning from untapped data within an organization to create actionable insights that reveal customer intent against future outcomes. Leveraging this holistic system can inform how to make decisions on product development, supply chain distribution efficiencies, creative testing and research for audience understanding, and aligning fragmented stakeholder groups within holding companies. These are just a few examples of how a cohesive solution design can impact and accelerate business performance and transformation for banking and financial service organizations. SOURCES: Accenture (2015), DNA, Diagnosis, Shoes and Sweet Spots: Four Steps to Agile Distribution and Marketing in Retail Banking EY (2015), Global Banking Outlook 2015: Transforming Banking for the Next Generation Joyce, Richard (2015), Forrester, The State of Programmatic Digital Buying 2015 Yeager, Bryan (2015), The US Financial Services Industry 2015: Digital Ad Spending Forecast and Trends Data Integration Media Activation Predictive Analytics & Insights Segmentation Transactions & Branch Intel Offer Eligibility Cross-Sell Call Center Data Channel Optimization Lifetime Value Journey Optimization Scoring & Validation
- 11. To learn more about how Rocket Fuel Marketing Technology Design services can be leveraged within your organization, please contact: Thomas Zawacki VP Programmatic Marketing Rocket Fuel tzawacki@rocketfuelinc.com About Rocket Fuel Rocket Fuel is a full Programmatic Marketing Platform designed to go beyond 1:1 marketing by learning to predict what marketing actions to take with a particular person in a particular moment of time. Our methodology, which leverages artificial intelligence (AI) and big data, is called Moment Scoring™, and it results in a much more efficient use of marketing dollars. About the Programmatic Vertical Series The Programmatic Vertical series explores the way marketers in respective industry categories can gain a significant competitive advantage with best of breed solutions. The series covers in-depth macro trends that are shaping the global economy, defining the fate of companies and careers, while providing a sweeping perspective on the most advanced tools that are changing the way brands interact with audiences, and the way businesses achieve actionable insights to make more informed decisions in finance, CPG, retail, healthcare, and travel.