Banking Newsletter - December 2013

In this edition we cover social media risks, customer value proposition in a digital age, dividend washing, major banks and mutuals 2013 performance.

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Banking Newsletter - December 2013

Keeping your customer value proposition relevant in the digital age 

Customers today expect more.

And they want it now, cheaper, and tailored to their specific needs.

You may think you have a first-class Customer Value Proposition (CVP) that'll keep everyone happy while growing your market share, increasing revenue and keeping costs down... but it may be best to think again.

Evolving technology is proving to be a game changer. Combine that with growing customer expectations (realistic or not) and their perceived power (realistic or not), and it becomes clear to see that maintaining a CVP that continues to resonate is increasingly difficult.


These changes to technology are ultimately seen as ‘disruptive behaviour’ and the traditional banking model cannot keep pace. Globally KPMG observes many institutions struggling to keep up and respond to these disruptive forces.


How can financial institutions (FIs) quickly adapt to shifting consumer demands while catering to new consumer profiles? How can they address a changing regulatory environment, reduced barriers of entry to the Financial Services sector, and low consumer trust of FIs (leading to decreased revenue and increased costs)?


The challenge for FIs is that if they do not appropriately and quickly respond to these changes, they’re putting their share of market and profitability at risk.

It is, however, a challenge that can be met by shifting to a customer-centric operating model.


The primary concern in doing this is, of course, the overall cost, time and transformational effort in transitioning your current organisational model and value chain. It also means re-thinking key aspects of how you approach change and the development/enhancement of your systems and processes.


Yet by doing so, you can put yourself in a better position to answer the needs of your consumers while keeping up with – if not passing – your competition.


A key step to achieving this is to utilise customer journey mapping. This will enable you to critically evaluate your customers, assess the channels they are serviced through, and understand what customer needs must be satisfied to better drive an economic benefit for your organisation.


This evaluation and assessment can help you consider a variety of factors to help future proof your CVP, including:

  1. Understanding which customer segments are most vulnerable to disruption and how focused you are on delivering services that will resonate with them.
  2. Understanding which of your delivery channels are most susceptible to disruption
  3. Identifying the key threats, both bank and non-bank, that may potentially take and build market share through disruption.
  4. Learning and using your competitive advantages/weaknesses to differentiate yourself and proactively counter disruptive forces.
  5. Determining how you can use the momentum of disruptive forces to dramatically improve the products and services you offer.

KPMG recently worked with a client who was looking to enter the retail banking industry and used customer mapping to idenitfy the disruptive forces that might have an impact and designed journeys that were flexible to adapt should these forces come to market.


Embracing ‘disruption’ may seem counter-intuitive but it is taking place today all over the world.



Some interesting examples include:

  • Banks and non-banks are leveraging ‘social disruption’, for example, ASB has a virtual Facebook bank and Turkey’s Deniz Bank offers loan applications through Twitter.
  • Non-bank entrants accepting credit payments and small loan approvals via smartphones are disrupting the traditional payment value chain.
  • Pay tag stickers on the back of phones, balance updates to a consumer’s watch when they are close to an ATM and codes can be sent from your Google glass device to withdraw funds as soon as you arrive at an ATM have the potential to change how and when customers interact with a FIs ATM network.


The primary need is to ensure you give your consumers relevant solutions to their needs. To do this you need to closely monitor and engage your customers along all points of their journey. Leading organisations are taking this one step further and are using ‘ethnographic observation’ techniques to support a truly customer centric journey design.


If you can do this well, and see ‘disruption’ as a catalyst for positive change and growth, you can better manage the risks of ‘disruption’ to your CVP and be better placed to benefit from change.

Daniel Knoll

Partner and Retail Banking Centre of Excellence Leader

+61 2 9455 9148

Geoff Rush

Partner, Business Performance Services

+61 3 9838 4958 

Adrian Chevalier

Associate Director, Operational Improvement Services

+61 3 9838 4134

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