Consumerization of Commercial Banking: It is way beyond a fad

The world of commercial banking as we have known it is changing… And significantly so!

One of my senior colleagues (and mentor) at Deloitte, always used to tell me – “Bala, just keep watching – the world is going to entirely change based on how the generation of today want to shape it in their image and with their preferences”.

Two years back I was at an intense brainstorming session on what really was shaping up the way banks offer commercial banking services to their clients, when I remember writing on the white board (yes… the good old days of in-person meetings), the very 4 words that are a subset of this article’s title – Consumerization of Commercial Banking, and at that moment, I remembered my former mentor and the connection to those golden words that he graciously gifted to me.

So what exactly does Consumerization of Commercial Banking mean?

It’s quite simple actually… Taking the keyword “Consumerization”, it is literally the way in which the behavioural, operational and technological aspects of an individual consumer shapes up and dominates how businesses think and work, in lieu of adapting to the age old tenets of “how it was done” in years prior. It is a very powerful and all-encompassing phenomenon that will only accelerate over time, especially in the oh-so-digital world of today.

The proliferation of these aspects, which influences and shapes up how banks are now rethinking and redefining their offerings to large corporates and mid / small-sized businesses is pretty much what Consumerization of Commercial Banking is all about

Why exactly are banks thinking in these lines and why now?

There are a few key driving factors for this trend, especially in the current day and age –

  1. Many new and evolving businesses in recent years have been, and continue to be dominated by a newer generation of entrepreneurs (I fondly call them wannabe-corporates) who view the world with a “digital eye”. They grew up in a world where digital technologies were as table stakes as hundreds of TV channels, gaming systems with awesome graphics or a plethora of social media forums. It would be so very naïve to think that they would leave all that behind just because they are “off to work”. No siree Bob… not happening
  2. Engaging, quick, convenient and interactive solutions for consumer banking has created a desire for similar interactions for commercial customers, who after all, are consumers in their daily life, so they know what they want and how to experience it…
  3. Commercial online banking operations, especially payments, are still largely inefficient, process heavy activities, and users like to do a lot of their work “on-the-move”. This is not a generation that is happy with being tied to a desktop or lug a laptop all day long, and they certainly don’t want to look at a long boring set of fields that are to be entered before they send money to someone for a simple business transaction!

So what really is happening to make this a reality?

Banks have been learning… and fast.

They are inspired by examples around them, especially in the retail world where consumerization is a simple and straightforward need for survival. Entities like Amazon, Uber, Starbucks, Netflix, etc., have created (and have been constantly evolving) newer paradigms on interactive engagement, and the spill -over of this desire to commercial banking is just natural.

However, this is still not a level playing field – The larger banks have had a head start on this over the relatively smaller banks, who will hopefully catch up soon. These larger banks have had the advantage of strong technological muscle and big bucks to invest in state-of-the-art tools, setting up their own digital think-tanks, some even buying out AI / ML firms and investing hard dollars into various initiatives, a few examples being –

  1. Increased focus on “unburdening” the commercial banking customers and just “keeping things simple”
  2. Understanding the transactional needs of the customer by “leveraging data and statistical models” is complete passé. The future is in understanding the emotional and contextual needs of the customer and their interactions. Banks are investing heavily in this space and looking at how the digital experience can become a lot more contextual by deriving the right intelligence from interactions and past historical trends of customers
  3. Driving “contextual” experiences in every step of the user journey. The magic is to “think-ahead” into what the customer wants before they get there… and guide them on the best way to get there
  4. “Look ma, no hands…” –There is an Increased focus on moving the commercial client to the mobile / wearable / voice based devices, especially since they are getting used to managing their daily activities with minimal physical intervention
  5. Emphasis on “human” interactions (like biometric authentication, facial ID recognition, voice controls, etc.) to make the experience a lot closer to the consumer world

And many more…

So in a nutshell…

Long live the consumer!

All hail the Consumerization of Commercial Banking!!

This is one space to watch out for in the future…

 

 

Personal blog of Balakrishnan Narasimhan

 

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