Thursday, October 12, 2006

The banana of financial services

By now you are probably thinking I have totally lost my mind. First it was the hamburger and spring roll analogy earlier in the week to explain the concept of relationship based pricing, the spring roll representing a more integrated view of the customer's total value to the business and the hamburger of course, constituting a less integrated approach. (Please note all food analogies are not my own creation but that of vendors and analysts who spend a lot of time thinking about these things.)

Now it seems the banana's turn (which may be quite apt as Australia is currently facing a banana shortage thanks to last year's floods). According to Ralph Silva, research director, TowerGroup, most consumers of financial services (80%) would like to receive all of their financial services from one company, but only 12% believe that is currently possible.

It's this "financial supermarket" concept, which draws inevitable comparisons with Tesco's supermarket franchise in the UK. Silva believes that customers want the same level of consistency in their financial services as they have in their supermarket experience; "If you pick up a banana you know it is a Tesco banana," he says. Apparently, consumers want the same thing from their banks; consistency that is, not bananas.

Not as easy as it sounds though, after all haven't banks invested millions in CRM or something masquerading as CRM only to find it doesn't work. Silva says this is because banks are not very good at capturing the relevant customer information within their financial data.

We all know that banks have a lot of information on us, but they haven't really been able to leverage it successful to the extent say that an has by relaying our buying history to us every time we log on.

TowerGroup's CEO Karen Cone believes that SOA will make a difference here in terms of allowing banks to leverage their data silos.This perhaps explains why a number of software vendors including the likes of Fundtech, Misys, i-flex,Oracle and IBM are are SOA enabling their applications.

According to Cone, it is not just about knowing your customer's needs. In fact she goes as far to say that while banks need to listen more to their customers, they shouldn't listen too much. "Most customers don't necessarily know what they want," she says. "It is about being one step ahead of your customers and knowing what they want before they do."

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