1. What is the business challenge?
Having analyzed the case, the writer pointed out key business challenges that must be dealt with for retaining current customer and capturing opportunity of potential customers. Here are the key business challenges:
a. Excellent performing of long journey for migrating, aligning, and integrating all of spread branch to new branch model and system. The amount of 650 that spread nationally is huge. The bank need to migrate the ex-branch to new one under chosen platform, to rationalize the overlapping ones, to align the related system at all branch, and establish customer oriented branch model and system.
b. Keeping and gaining customer's trust. After financial crisis, the loss of customer loyalty has been main issue. Customers not only tend to lose their loyalty for financial institution but their trust for bank. They think that bank loses its value to provide them expected service. It'll be worse if there's lack of customer's service operation due to merger process.
c. Catching up the continuous changing of customer need, behavior, and attitude. The customer's need, behavior, and attitude keep changing so that the bank must change to meet their expectation.
d. Optimizing constrain of time, cost, and talent for customer relation purpose. To keep customer from going to other and capture potential customer, the bank need a lot resources. But the resources are limited. So there's need of optimization for available resources to achieve the goal.
e. Staying focus on core competitiveness of merged bank, as corporate and consumer-commercial banking player.
f. Building and expanding the innovative channel network for excellent service operation. To get positioning on market, there is need of expanding branch and ATM availability. Besides it, there's also need build new channel network since the changing of customer base. Utilization of digital infrastructure can be focus to meet market.
g. Building strong brand for targeted segment of customer.
2. How to transform the business challenge into opportunity to win customer?
Using accenture's software design, the writer focuses on retaining customer from going to other and to capture potential customer. Here is the detail:
1. Conducting assessment of current service operation and opportunity of potential customer. The output of this step is getting clear picture of current position of merged bank's service operation relative to potential customer. They are four activities in this step. They are building and organizing appropriate data, developing assessment variable of service operation, developing assessment tool, and deploying assessment.
Build and organize appropriate data. This activity focuses on gathering of appropriate information series and then organizing the information series into data series. The key is capturing customer aspiration regarding service operation.
Develop assessment variable of service operation. The assessment variable is key variable that give customer value. These variables will be base for assessment process. The key is defining the area/variable that customer have willingness to pay such as business and financial transaction, customer relation, information technology service, availability of branch, and brand image of bank.
Develop assessment tool. The key is to utilize digital technology and keep capturing customer aspiration. The tool must be simple and meet the need of assessment.
Deploy assessment. The execution of assessment is base on assessment variable and using related assessment tool. The result of assessment must give clear picture of current position of merged bank's service operation relative to potential customer.
2. Driving customer insight and defining competitive essence of merged bank. The output of this step is to get deep understanding of targeted market through comprehensive segmentation and to define competitive area that merged bank will focus on. There are two activities. They are developing comprehensive segmentation model, defining competitive essence of merged bank.
Develop comprehensive segmentation model. This segmentation model allows merged bank to understand complete, multidimensional picture of both current and potential consumers. It provides demographic, value, behavior, attitudes, and needs of customer. The output of segmentation will be foundation and base for further step to provide customer treatment. The key is deep understanding of targeted customer and stay focus on targeted customer. This segmentation must answer
"What is the driver of my existing customer in terms of value, attitude, behavior, and needs?"
"How well I'm aware of my potential consumers outside my current consumer's base?"
"Who is the most attractive segment of my customer?"
"What is the service value that costumer would pay for?"
"How I align both current and potential segmentation into new segmentation model?"
"What I need to get new segmentation model executed well?"
"How I ensure new segmentation model executed well and giving optimum result?"
Define competitive essence of merged bank to meet expectation of targeted customers. After knowing customer, the merged bank needs to define its competitive essence that allow bank to deliver differentiated experience for customers. Simply it's to find answers for
"What does the merged bank have that better than any its competitor to be offered to targeted customer?"
"What capability does bank need to build to achieve this competitive essence?"
The key is deep understanding of internal condition of merged banks and value driver of its targeted customer.
3. Construct strategy to win costumer's trust and loyalty. Having knowing targeted customer that merged bank will focus on and what competitive essence offered to deliver excellent experience for targeted customer, next step is to construct strategy to ensure everything run well at right track. There are four focus areas that will be concern and there are three activities in this step.
Here are four focus areas:
1. Integrating all spread branches and ATM. The merged bank must transfer its old branch to new model of branch. The overlapping branches will be closed. The new model of branch will be developed base on customer centricity. Old branch will be migrated to new model one gradually and conduct renovation activities. Meanwhile the system of branch will be aligned. To stay focus on customer service, call centre will be optimized so that it'll minimize customer confusion and distraction. It's the same for ATM. The system will be aligned so that customer can access at every ATM network of merged bank.
2. Build strong infrastructure for capacity development. To build strong infrastructure, firstly the management of merged bank must ensure to align all of supportive function. Each function must move together to same direction. The marketing function knows well regarding who is targeted customer, what is customer's value and what is competitive essence that must be offered. The operation and IT function know how to translate these needs into capacity development and how to build operation service model that meet customer expectation. Human resources function knows how to provide talented resources, what kind of treatment (such as training or workshop) needed for excellent service. The key is leadership and clear communication. Second is developing needed capacity to meet consumer's expectation. In order to deliver excellent customer experience, the merged bank must translate its competitive essence into daily business organizing and service operation model. Simply, it's to answer these three questions:
1. What capabilities merged bank need to achieve competitive essence?
2. Where these capabilities come from?
3. How to build these capabilities?
3. Building strong brand. Branding is critical in merged bank. It's how bank establish their position in the market. Branding shows to customer what merged bank's competitiveness offered to customer. Further it also plays an integral role to unify staff. Here are steps to build strong brand. First is translating and visualizing the competitive essence of merged bank into merged bank's logo, symbol, and jargon. The visualization must communicate "what is bank's competitive essence" and "who is targeted customer". Second is building internal branding of merged bank. Everyone in merged bank must deeply understand that it's new model. Third is build strong and extensive communication with customer. Every part of merged bank should show off the new of merged bank.
4. Optimization of cost management. To deliver excellent experience, the merged bank face constrain of high cost. That's why there must be optimization cost management. Simply cutting available budget for cost saving will ruin customer value that in the end give them more reasons to switch to competitor. And the opportunity cost is too huge since it'll be more difficult to attract the switching customer. The writer sees balancing short and long optimization cost management while stay focus on building sustainable future value and strengthening market position is the key for high performance. To optimize cost management, the writer suggests developing customer centricity cost management. This management focuses on innovative cost treatment base on targeted customer value. The key is customer centric, effective simple treatment, and root problem solving.
Three activities to win customer are:
1. Developing excellent customer service operation model. This covers what kind product offered to customers and how to deliver it to customer. The key is simple product based on need, behavior, attitude of customers and flexible distribution channel approach, especially digital technology based.
2. Reaching customer with right channel at right time. The customer trend tell that customer want multiple channel. There's tendency they use more secure, simple, and self-service channel. The key is capturing technology optimization.
3. Keeping consistency of delivering excellent service operation. Trust and loyalty can't be achieved by single movement. The merged bank must keep its consistency to deliver excellent service for targeted customer. Keeping consistency means that every effort of merged bank corresponds to capture and win customer trust and loyalty. That's why it is needed for bank to do its best performance in detail way while stay alert to changing. The key is balancing short term excellence performance and long term strategy.
4. Total execution to win customer's trust and loyalty. In this stage, the writer suggests to translate the constructed strategies in focus area into detail strategy execution. There must be clear guideline that covers all of execution activities. Real time table for execution is critical to ensure that there's no execution postpone. Clear communication is needed to ensure that everything move to the same direction with harmony. Further, having every bank's employer, especially the ones who keep in touch with customers, understand regarding execution model is critical. And the end, we conduct measurement of result realization. The key is clear coordination and real time execution.
5. Tracking, controlling, learning, and keeping journey on right track. This stage focuses on measurement of execution result, continues learning for development and ensuring that merged bank's journey is on right track. There are three activities in this stage. They are measuring and tracking of execution result, continuous learning for total development, and keeping journey on right track.
Measuring and tracking of execution result. This activity focuses on assessment of execution result. Simply it is to answer "How is execution result?" and "What is actually the driver for consumer's value?". Answering these question allow merged banks to measure and track how good the developed strategy and treatment is and how well they are executed. In this activity, the writer suggests utilizing key indicator performance. The key is customer focus.
Continuous learning for total development. Knowing the targeted premium consumers and the driver for their trust will be meaningless if the merged banks can't translate it into competence building. That's why there is need of continues learning to meet expectation of targeted consumers. Continues learning is investment for sustainable high performance.
Keeping journey on right track. Just getting excellent performance is not enough. There's need to move on. Defining and choosing the direction where the merged bank head for coming years is the focus of this activity. Everything will be change and the way to do business also will be changed. There'll be always uncertainty time. The key is adaptability and high performance focus.
It's how the writer suggest how to transform the business challenge into opportunity to win customer, not only for these years but also for next coming years.
3. Key of high performance
There are some key for high performance that differentiate the winner from others.
1. Costumer focus: The winner always perceives that customer is key of sustain and winning the banking industry. Focus on customer means that how to do business is on the same way what customer need, want, and behave. The keys are knowing the right customer, reaching by the way they want, and delivering the most excellent experience they value.
2. How to make consumer want us more and more, not to keeping them from competitor. It's not only us who move on. Everyone move, including the business competitor. That's why our focus is not how to keep consumer from competitor's hand but how to them need us more and want us more. The key is to differentiate customer's experience.
3. Differentiating strategic investment from wasting resources. The path to win banking industry is rough. It needs a lot of resources. That is why managing and optimizing the limited resources is critical. To keep on track of high performance, strategic and long term investment is inevitable. The bank needs to invest to win the industry game, but it must be kept in our mind that the resources are limited. So that, differentiating strategic investment from wasting resources is critical. The key is deep understanding of what give consumers more value.
4. Developing innovative, simple, and customer friendly offered service. There is tendency that customer want innovative product and service. They want new one that is suitable to their need, behavior and attitude. Their preference is simple one. Complexity just makes them lack of understanding of product. Further, they believe that there's "cheat" behind complexity. Customer also prefer to easy service operation that allow them to use it whenever they want. The key is deep understanding of customer and open minded.
Reference:
1. "How chief marketing officers can drive a new growth agenda", Outlook Point of View, Accenture: 2010.
2. "Creating Customer Loyalty: A customer-Centric Approach", Customer Acquisition and Retention, Accenture: 2009.
3. "Customer 2012: Time for new contract banks and their customers?", Accenture: 2010.
4. "The New Customer Imperative: Retaining and acquiring customer in a changed banking landscape", The Point, Accenture: 2009.
5. "The Five Hallmarks of Operational Service", Accenture: 2009.
