Five of the top 10 companies in the latest Forbes Global 2000 company list (published in May) are from China, and four of them are commercial banks. If you think this is only due to China’s massive consumer base, and that you can easily apply your global innovation strategy to the Chinese market, you’re almost certainly wrong. Enterprise architecture (EA) professionals at companies doing business in China should take a look at what the country’s banking and financial services industry (BFSI) is doing to enable customer-centric innovation.
I recently published two reports focusing on China’s BFSI. In these reports, I analyzed the Chinese banking landscape and the business challenges banks face, described a systematic approach to innovation that EA pros should consider when planning their transformations, and shed light on how they use both mainstream and emerging technologies to unleash the power of innovation around products, operations, and the organization. Some of the key takeaways:
Chinese banks suffer from their own customer experience issues. As a longtime monopoly, China’s BFSI has suffered from inefficiency, quality problems, and an uncompetitive ROI — and thus can no longer meet the high bar for customer satisfaction in the age of the customer. EA pros must find innovative ways to resolve these issues.
Internet companies and regulatory changes are challenging BFSI players. Visionary Internet companies like Alibaba and Tencent have launched financial services products, including innovative products like Yuebao, that are disrupting China’s BFSI with higher profits, lower barriers to entry, and better flexibility. The government is also making regulatory changes that will open up the market and intensify competition.
Banks and other types of firms in financial services typically like to know the answer to the question: “What are the others doing?” They leverage the answer when, for example, assessing their overall strategic position, planning for the transformation of their application landscape to a more powerful customer-centric approach, or determining the “best” sourcing approach for this transformation.
It is time to update the survey results: Forrester has just started surveying banks in North America, Europe, and further geographies about their major business drivers, the current state of their application landscape, their key issues and concerns, and their plans for the future. At a high level, the survey is designed to answer the question: “What are others doing?” Phrased in a different way, it targets the question: “What are the key trends regarding the transformation of the application landscape in financial services in the Age of the Customer?”
To make this survey successful, Forrester needs your help. If you are working in financial services in any role that is related to financial services business applications, architecture and strategy, please participate in Forrester’s Global Financial Services Architecture Survey 2014. If you have not yet received an email invitation, please contact me – JHoppermann (at) Forrester.com and I ensure that you will receive a link to the online survey.
Last week I presented an overview of cloud adoption trends in the banking sector in Asia to a panel of financial services regulators in Hong Kong. The presentation showcased a few cloud case studies including CBA, ING Direct, and NAB in Australia. I focused on the business value that these banks have realized through the adoption of cloud concepts, while remaining compliant with the local regulatory environments. These banks have also developed a strong competitive advantage: They know how to do cloud. Ultimately, I believe that cloud is a capability that banks will have to master in order to build an agility advantage. For instance, cloud is a key enabler of Yuebao, Alibaba’s new Internet finance business. 80 million users in less than 10 months? Only cloud architecture can enable that type of agility and scale (an idea that Hong Kong regulators clearly overlooked).
When it comes to mobile banking, customers' expectations are growing faster than the hair on a Chia Pet. So every year, Forrester reviews and scores the mobile banking offerings from the largest retail banks in the US across seven categories: Range of touchpoints; Enrollment and login; Account information; Transactional functionality; Service features; Cross-channel guidance; and marketing and sales. You can read the complete report here or by clicking on the link below:
Here is a sampling of some of our findings:
Chase and U.S. Bank tie for the top spot. With scores of 69 out of 100, Chase and U.S. Bank received the highest overall scores among the five banks we evaluated. Chase delivers the basics superbly, with a wide range of transactional features for transfers, bill pay, and P2P payments as well as strong cross-channel guidance for customers to contact Chase and find ATMs and branches. By contrast U.S. Bank stands out for more advanced features, including marketing and research for additional products, the ability to take a picture of a paper bill to enroll in bill pay, and the ability to pay another person using the contact list in a mobile phone.
In Canada, mobile banking is growing up faster than Justin Bieber. So from March 21 to April 9, 2014, Forrester reviewed and scored the mobile banking offerings from the five largest retail banks in Canada across seven categories: Range of touchpoints; Enrollment and login; Account information; Transactional functionality; Service features; Cross-channel guidance; and marketing and sales. You can read the complete report here or by clicking on the link below:
Here is a sampling of some of our findings:
CIBC earns the highest overall score with BMO and Scotiabank on its heels. With an overall score of 71 out of 100, CIBC received the highest overall scores among the five retail banks we evaluated, continuing the firm’s leadership in mobile banking since it launched its first iPhone app four years ago. But the other large Canadian banks are hot on CIBC’s trail: BMO and Scotiabank each earned a score of 70 out of 100 with impressive – and recent – overhauls of their mobile offerings. Scotiabank lets users apply for new products via mobile with pre-filled, mobile-optimized applications. BMO, meanwhile, ensures that all mobile money movement task flows are clear and consistent -- incorporating the same progress meter at the top of every screen.
The first email I received at work in 2014 was from a bank; along with a festive new year’s greeting, the email touted the bank’s new mobile app and a new feature that let customers set up travel notifications directly from the bank’s website. Later that day, I was in an airport reading a friend’s Facebook post about how she wished “more apps were like Uber.”
These are just a few small anecdotes about ongoing digital trends impacting businesses and banks both large and small. I recently spoke with a banking executive who put it simply: “Digital is what we do now.” (This quote is now the header of my Twitter feed.)
Forrester recently published our Trends 2014: North American Digital Banking report, in which we identify major forces impacting banks and lay out five actions that we recommend digital strategists take to prepare for the future of digital banking. Here’s a sample of some of our findings:
Banks will face a sustained – yet unclear – regulatory environment. In both the US and Canada, banks are confronting an uncertain regulatory future. The Dodd-Frank Act was signed into US law on July 21, 2010, but a large number of the rules and regulations remain unwritten. It's unclear when they'll be finalized, and the fact that 47% of deadlines have already been missed – according to the law firm Davis Polk & Wardwell – doesn't bode well.
It’s that great time of year when I finally get to talk publicly about Forrester's Forum For Customer Experience Professionals in New York at the end of June. If you’ve ever been to one of our events, you know that we always have a theme, and this year that theme is “Why Good Is Not Good Enough.”
We picked our theme because of the good news/bad news story told by our Customer Experience Index (CXi) results this year. First, here’s the good news: The number of brands in the “very poor” category of the CXi is down to one out of 175 brands we studied. What’s more, only a handful of brands — 10% — are in the “poor” category. Together, those findings show that as customer experience improvement efforts got traction over the past year, the number of truly awful experiences dropped like a rock.
Now for the bad news: Just 11% of brands in the CXi made it into the “excellent” category.
Taken together, those two pieces of news mean that most brands are bunched up in the middle of the curve — not awful in the eyes of their customers but not differentiated either. I think of this situation as “okay is the new poor” or, in my darker moments, “the year of ‘meh.’” Regardless, it adds up to the same thing: A merely good customer experience is no longer good enough if you want incremental sales, positive word of mouth, and better customer retention.
Our report lays out many commonly-encountered obstacles to mobile banking execution success and how digital teams can overcome these obstacles. Here are a few of the areas the report looks at:
Overly ambiguous — or nonexistent — business goals. Clearly articulated business goals should be part of a bank's mobile strategy. But a successful road map also lays out the business objectives and records specific goals for each initiative. As one eBusiness executive at a bank told us, "We literally have a section we call 'What's in it for us?' and we use sticky notes to write out what we think we can gain from each action."
Legacy systems and back-end integration. Technology may well be the largest obstacle to executing a mobile banking strategy — especially for larger, traditional banks. As such, successful mobile road maps need to outline how initiatives will plug into existing or soon-to-come platforms and systems.
Yuebao is a hot topic in China, and has even gotten international attention. But what is it? Yuebao is a value-added service that customers of Alipay (China’s version of PayPal) can use to earn interest and to make payments and transfers. An individual can start a Yuebao account with as little as RMB 1 (US$0.17).
The Alibaba Group launched Yuebao in June 2013. By mid-February 2014, 61 million people had invested money in Yuebao, and total fund skyrocketed to RMB 400 billion (US$65 billion) – making it the largest fund in China.
People are drawn to Yuebao because of its:
High yield. The average annualized return is around 6% — much higher than similar funds and banks’ financial products.
Good liquidity. Yuebao offers great flexibility; investors can deposit and withdrawfunds anytime. Other financial institutions require lock-in periods and much higher initial investments.
Ease of use. Yuebao offers a much easier way to invest. People can see the value of their assets anytime, anywhere on their smartphones.
A version of this post originally appeared on Re/code.
The rollercoaster ride for Bitcoin enthusiasts continued this week: There was good news from UK regulators, who have taken a relatively progressive stance on virtual currencies, and bad news with the latest heist of 890 Bitcoin (roughly $600,000) and the resulting demise of Flexcoin, a Bitcoin storage service. The breaking news frenzy perhaps reached a new peak with the claim that the real Satoshi Nakamoto has been identified. There’s no doubt that additional revelations are on the horizon when it comes to the first crypto-currency, and with that, the debate about the longevity and usefulness of Bitcoin will continue. In our new report on Bitcoin, we address the following questions:
1. What is Bitcoin?
2. Who are the main players?
3. What headway has Bitcoin made?
4. How viable is Bitcoin as a consumer payment alternative?
5. Should I worry about crypto-currencies like Bitcoin disrupting my business?
6. How can I outsmart crypto-currencies?
Here’s the bottom line: Bitcoin is deeply flawed as an alternative currency or payment method for mainstream consumers. It will, however, be a catalyst for a more efficient global payments system because it demonstrates one way to tackle the many embedded inefficiencies.
Bitcoin Is Not A Viable Payment Alternative For Mainstream Consumers