The Future of Banking: Data, Technology, and Customer Focus
By Gustavo Méndez, Leader of Financial Services at Deloitte Latin America
Relevance of Acquisition, Penetration, and Retention in Banking
In the financial industry, concepts like acquisition, penetration, and retention are becoming increasingly crucial. Leveraging data and available technologies can amplify these efforts, potentially leading to greater growth, efficiency, and profitability for banks that prioritize the customer.
Peter Diamandis’ Principles and the Six Ds Model
Peter Diamandis’ principles and his six Ds model—Digitized, Deceptive, Disruptive, Demoneitized, Desmaterialized, and Democratized—can help banks reach the next level through exponential growth, primarily by utilizing four of these principles.
Digitalization
Digitalization accelerates processes from customer onboarding, enhancing their experience, improving data quality, and enabling online identity verification. It can be enriched with precise data, from the customer’s registration location to their interaction with other apps on their devices.
Demoneitization
Demoneitization involves reducing acquisition and servicing costs, allowing neobanks and fintechs to provide economic sense to their investors by demonstrating potential profitability once they achieve economies of scale.
Desmaterialization
Operating in the virtual world has several advantages, such as reaching customers through daily-use apps. Previously, a bank’s success depended on the physical location of branches and competition for those sites through traditional media advertising. Today, becoming a new customer involves downloading an app and registering within 10 minutes, while advertising is more direct, eye-catching, and cost-effective through social media.
Democratization
Democratization refers to the increased digital offerings of advanced banks, along with neobanks and commerce platforms offering digital wallets, credit cards, and various payment options. A recent Mexican financial inclusion survey shows that the country’s potential remains untapped, as credit penetration to the private sector is only around 40% of GDP, far from the ideal 80%.
Creating a Superior Customer Experience
By prioritizing the customer in all banking projects, a great user experience can be created, complementing daily products and services, and even forming partnerships with health companies, retailers, entertainment, and more.
Data is essential for understanding customers better, generating hyper-personalized offers (often talked about but rarely seen), and providing exceptional service to earn the right to be a primary bank.
Key Ingredients for Success
Two key elements are crucial: having data in the cloud for more effective use and enrichment with user interaction data from their mobile devices. The second ingredient is a customer-centric organization, allowing constant alignment with an organization that also generates value for the customer.
Key Questions and Answers
- What is the new banking model? The new banking model shifts from traditional branches to superapps, prioritizing data, technology, and customer focus.
- Who is Peter Diamandis? Peter Diamandis is an entrepreneur, author, and the founder of the XPRIZE Foundation, known for his work in promoting innovation and technology.
- What are the six Ds in banking? The six Ds—Digitized, Deceptive, Disruptive, Demoneitized, Desmaterialized, and Democratized—represent principles that can help banks grow exponentially.
- How does digitalization benefit banks? Digitalization accelerates processes, enhances customer experience, improves data quality, and enables online identity verification.
- What is demoneitization in banking? Demoneitization involves reducing acquisition and servicing costs, making neobanks and fintechs more attractive to investors.
- Why is desmaterialization important? Operating in the virtual world allows banks to reach customers more efficiently and cost-effectively through apps.
- What is the significance of democratization in banking? Democratization refers to increased digital offerings, enabling partnerships with various industries and enhancing customer value.
- What role does data play in the new banking model? Data is crucial for understanding customers better, enabling hyper-personalized offers, and providing exceptional service.
- What are the key ingredients for success in this new model? Having data in the cloud and maintaining a customer-centric organization are essential for success.
