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China's banks need to offer more digital solutions to customers

Albert Chan | Aug. 4, 2014
Growth in recent years has been solid, but digital disruptors are poised to take market share unless China's banks offer more day-to-day digital solutions.

China's banks should become Everyday Banks. By that we mean they should reach out to customers on a variety of topics-from financing for a new home to health insurance, to planning their leisure activities. Offerings can be optimised for a digital world and presented in an omni-channel context, including mobile offerings. Then banks need to provide just in-time, relevant discounts and offers, pre-sale advice, post-sale support and cross-sale opportunities.

How can banks do that? China's banks would need to leverage their deep customer knowledge via sophisticated purchasing algorithms. Before they can do this, China's banks must accelerate the move away from cash-based purchasing (which provides limited insight into consumption behaviors) to more electronic transactions. Electronic transactions enable banks to capture contextual information about each transaction (which merchant, how much, what time) and flow this information into a "data lake" to build analytical insight into customer needs that help not only banks but also partner companies that work with the banks.

Building a Data Lake
In order to create the purchasing algorithms, and enhance their offerings to customers, banks need to engage customers more on a digital front. For example, they need to leverage social media. To earn this right, they must add value to a customer's social network, not just gather information from it. This means proactively starting the right conversations, focused on developing a deeper understanding of needs and goals.

They also should engage customers through gamification-a high priority given the popularity of mobile gaming among Chinese consumers. This means taking the essence of what makes games so addictive and applying it to non-game contexts, such as teaching customers more about finance.

And they could extend traditional loyalty programmes to provide a single programme that aggregates interactions across multiple events. This simplifies the loyalty experience for the customer and provides "big picture" visibility, while also reducing costs for the businesses that provide these programmes.

Above all, China's banks need to embrace the threat of peer-to-peer financing by providing a platform where it can take place-and participating on it as both a provider and a user of financing.

This includes enabling collaboration between customers in everyday financial services to enhance or replace the bank's role. This plays to its strengths by administering P2P financing agreements.

There is no single path to how China's banks should start this process. Some banks of the future will have branch-less, cash-less, paperless legacies. Others will transform from a branch-based banking model. Leading banks and digital disrupters are already mapping out their path. In China, where both Tencent and Alibaba already are edging in on business, we expect this journey to proceed at a rapid pace.

Albert Chan is Accenture's Managing Director–Banking Lead, Greater China.


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