CUSTOMER CENTRICITY - Novabase · 2018-09-21 · Customer centricity why it matters? 01 What does “customer centric” mean?05 02 Obstacles 07 2.1 The way organisations are structured

Customer centricity why it matters?

CUSTOMER CENTRICITYWHY IT MATTERS?

WHITE PAPER

NOVABASE 2017 ©Strictly Confidential Information.All Rights Reserved.


KEY TAKEAWAYS

• Why it is so important to design business strategiesaround customers

• Understand the main obstacles for customer centric relationships

• What are the options to become customer centric

CUSTOMER CENTRICITY

WHY IT MATTERS?

WHITE PAPER

• CIOs

• CTOs

• CEO

• Heads of digital transformation

• IT Architects

WHO SHOULD READ THIS DOCUMENT

2


The contents of this document are strictly confidential and

proprietary to NOVABASE and shall not be disclosed. This

information may not be used by any third parties unless

authorised in writing. No part of this document may be

copied, reproduced, stored in any retrieval system or

transmitted, in any form or by any means, without

NOVABASE’ prior and express written consent.

This document may contain data and/or information

confidential and proprietary of partners, clients or third

parties, used under license or authorisation. Reading this

document constitutes an undertaking to observe the

confidentiality and copyright of legal owners and to not

disclose, copy or reproduce the information contained

herein, in whole or in part, for whatever means and

purposes and by any means, except where previously

authorised in writing by NOVABASE or the legal owners.

All rights in brands, trademarks and products are reserved

to NOVABASE, its partners, customers and/or legal

owners, as applicable.

PROPRIETARYNOTE

3


01 What does “customer centric” mean? 05

02 Obstacles 072.1 The way organisations are structured 07

2.2. Business strategy 08

2.3. IT Legacy systems and architecture 10

03 How to get there 123.1. Design principles 12

3.2. Architecture 15

CONTENTS

4


01WHAT DOES “CUSTOMER CENTRIC” MEAN?

Being “customer centric” will mean

different things to different organisations.

For some, it will be enough having a

consolidated dashboard with customer

information, others will focus everything

they do around customers, placing

ultimate value on customer experience.

If we take the customer’s perspective and

focus “customer centric” around the

customer’s expectations, we have:

Aspects of customer experience

consistent

insightful

timeliness

reliable

wow

engaging

• Customers expect to be consistently

treated in every interaction with your

services & products. Consistency is much

more than knowing the customer’s name

and having the same information available

on all channels (although this helps a lot). It

is fundamental that you design the

experience you would like your customers

to have, whenever and however he/she

contacts you or uses your services.

• People expect their bank to know a lot

about them – banks are handling their

money after all - they have a perception

of their value to their bank, and expect to

be treated accordingly. Additionally, they

expect banks to offer them products and

services that are tailored for them, based on

the information available about them, from

every possible source (including social).

5


Banking should become a lifestyle

choice and be present when needed,

not some place where you keep your

money..

• In the age of internet everything needs

to happen NOW. The timing for an

offer is as important as the offer itself –

sometimes more. Thus, customer

experience is strongly connected on

your ability to propose to customers

what they need when they need it AND

immediately making it available to them.

• Customers also expect a reliable

experience. They expect zero system

outages, 24/7 service, every time,

everywhere. It is very difficult to

achieve this with the legacy IT

infrastructure since when it was

designed, 40+ years ago, there were no

such challenges.

• Wow! is intimately related with

insightful. People want to have positive

surprises and if you can consistently

provide customers with new features,

capabilities and insightful offers this will

go a long way in building brand loyalty.

This is a very strong point for most

Fintech’s.

• Finally, customers want to have an

engaging experience. They expect their

mobile app to be easy to use, that you

don’t ask for information that you

already have, that the design keeps

them interested in using the app, that

their relationship manager, call-center

operator or bank’s partner are also part

of this engaging experience. This is

again related with the design of the

customer experience.

Banks need to decide what “customer

centric” means to them, and design a

strategy to get there. In fact, the

aforementioned “customer centric”

requirements are very much aligned with

the “digital transformation” requirements.

There is no point in doing a digital

transformation if, in the end, you are not

providing your customers a better

experience.

6


02 OBSTACLES

One of the most challenging aspects of

creating software to support customer

experience and digital transformation, is to

know who you should be talking to within

an organisation. Is it the CTO, the COO,

the head of digital transformation, the

head of marketing, the CIO, maybe all of

them?

Most banks are structured around

business units – departments for credit,

cards, collections, collateral, risk, etc. For a

bank, it makes sense to organize it this

way since:

• These are almost self-contained units

that handle specific businesses within

your business.

• There is specialized business knowledge

required for the operation of these

units.

• There are specialized IT systems

required to operate these units. These

systems are built on top of the

prevalent organisation and therefore are

both a cause and effect of the

underlying business structure.

This structure is just fine when looking

inwards into your organisation. However,

it becomes a severe obstacle when looking

outwards. If these aspects of your

organisation are perceived from the

outside (your customers) the results are:

THE WAY ORGANISATIONS ARE STRUCTURED2.1

There are three main obstacle areas on the way of becoming a customer centric

organisation:

1. The way your organisation is structured

2. Business strategy

3. IT Legacy systems and architecture

7


• Lack of consistency: each business unit

can, and will, have different rules,

requirements, compliance, timelines and

communication skills resulting in differ-

ent experiences for your customers

depending on the product, offer, or

service being sought.

• Lack of insight: each business unit “sees”

a slice of the customer and no one

“knows” the person that is dealing with

the bank. This is also a reason why the

Wow! factor will be very difficult to

achieve.

• It will be difficult and expensive to build

engaging, well designed, customer

experiences since multiple parties, with

sometimes conflicting requirements, will

have to work together and agree on the

digital experience that the bank wants

customers to perceive, for complex

(multiple business units) business

processes.

You may argue that it is up to the

relationship manager, your home banking or

your mobile app to know, and assemble one

reality for your customers. This is however

much more difficult than it seems:

• Relationship managers are not for

everyone and, as part of your cost

cutting strategy, you want to close

branches and have less of them. Not

more.

• The training and know-how required to

understand and operate with all the

different areas within a bank are

significant (and costly) making it difficult

to replace, outsource or acquire new

talent.

• Mobile apps and home banking systems

are built on top of your legacy systems.

Legacy systems are themselves built in

silos, and therefore you won’t be able to

easily build fluid, well designed, customer

focused experiences on top of legacy.

2.2 BUSINESS STRATEGYBusiness strategy can be summarized by

the answers an organisation can provide

to these questions:

Where are you placing customer

experience within your business strategy?

Is it core, or an afterthought?

Have you considered how your business

would look like if you closed 90% of your

branches within 10 years? Would it be the

same business? Can you do it without

losing your valuable customers and

revenue?

8


What is the purpose of a branch? Is it a

place where customers go for

“transactions” or where you do “sales”.

Are you planning to change the way your

organisation is structured for digital

transformation?

Do you have a “Customer experience” or

“Digital Transformation” officer that is

empowered to lead and has a corre-

sponding budget?

These, and other similar questions,

determine if you have a business strategy

that focuses on customer experience and

digital transformation, or if your

organisation is in business-as-usual mode

with an afterthought on digital transfor-

mation and customer experience.

2.3IT LEGACY SYSTEMS

AND ARCHITECTURE

Banking IT is usually the target of “choice”

when looking for a department to blame

for lack of progress on digital

transformation and customer experience.

It is easy to blame legacy systems, their

poorly documented complexity or the cost

and risk of massive IT transformation for

lack of progress in these areas. Banking, is

by nature risk averse, especially if the

venture ahead has huge risk of ending

badly, and is unlikely to provide the

promised returns.

In fact, most banks have been doing a very

decent job in providing access to their 40+

years, COBOL based systems thru multiple

channels, with decent reliability, security

and performance levels. What they cannot

do, is change the nature of the business

these systems were designed to perform,

when dealing with complex, multichannel,

customer journeys. The following diagram

depicts this scenario:

9


This diagram depicts a reality that most

banks will be able to recognize:

1. Multiple channels consuming simple

transactions (query customer, query

balance, transfer from A to B, …)

provided by a corporate Enterprise

Service Bus.

2. Some simple transactions are widely

re-used, while others are tailored to

specific channels resulting in multiple

versions of the same SOA service for

different clients.

3. Legacy application screens are used

directly by end-users, forcing them to

use multiple applications for complex

tasks (i.e. mortgage, ...). This also

creates an obstacle for sharing with

customers since these systems are not

ready for sharing.

4. Social is an afterthought. There may be

a department within marketing looking

at people’s opinions about the bank,

but social is not considered a “proper”

banking channel.

5. There are multiple channel systems

(internal and external), developed in

different technologies and platforms

that (may) share design and re-use

some of the existing services. These

channels will have duplicated parts of

the business logic and product rules to

allow for faster response times, but

create a huge maintenance bottleneck.

6. There is an Enterprise Service Bus (and

maybe a BPM), that is used to build

SOA services over the legacy systems,

a gateway to the core, a

security/authentication framework,

and a few more core components that

allow transactions to be exposed to

channels. There may be the occasional

“composite” service that accesses

information in more than one legacy

system, or even rarer, a service that

updates more than one system in real-

time. For complex processes with,

sometimes one of the core systems is

primed to be the master for this

transaction and point-to-point

interfaces are created between legacy

systems.

7. Core legacy systems are built using

technology from the 70s/80s,

sometimes with specific gateways and

modules allowing their integration in

the current context. Business logic is all

over the place, mixing business

validations, product validations and

rules, with compliance, product pricing

and data input controls. They are

seriously difficult and expensive to

change, maintain and upgrade and

there is a large set of customisations

built around them to compensate for

this. 24/7 availability for customer use

or real-time capabilities are non-

existent or have stringent limitations.

10


In this architecture, there is little room for

“customer centric” or complex customer

journeys designed to meet customer’s

expectations. This is an architecture built

for data processing, with nightly jobs and

off-line periods related with branch

working hours:

• There is no end-to-end representation

of a customer entity. Customers can

have a score, but their information is

scattered between different systems

and different accounts, depending on

their product portfolio.

• There is no end-to-end representation

of a customer journey with all

associated data. Once the customer

uses one channel, information about

what he has done there is not

automatically available in all channels.

You cannot pickup from where you left,

you lose all input data.

• Your internal branch systems are a

window to the legacy systems. Branch

systems are not considered part of the

customer experience, and relationship

managers are unaware of what

customers are doing with the bank for

the 99% of the time they are using the

on-line channels.

• There is little or no re-use of business

logic and validations across channels.

• There is no concept of public “Open

APIs” required for PSD2, and later on

for possible extensions, including

scenarios where Banking and customer

ownership are decoupled. In this

scenario Fintech’s “own” the customer

and shop around different entities for

the best banking products in each area

(deposits, cards, loans, …) fully

deconstructing the banking business. In

some financial services areas, this trend

has already started.

11


03 HOW TO GET THERE

There is no single path that leads to

customer centricity. Different combinations

of business and IT strategy leading to

different results.

Additionally, not many Banks will drastically

change their current strategy to become

overnight digital banks. This is doable but

not for the faint-hearted. It is however,

fundamental that Banks define a medium

and preferably long-term strategy with

committed funds and staffing, or risk being

caught off-guard by Fintech’s, their current

competitors with better plans, or even

something new that no one anticipated.

Novabase’s top-down-transformation paper

presents possible roadmap options for

digital transformation that can be focused

around customer centricity requirements

and strategy.

Additionally, it is fundamental to consider

the limitations imposed by the current IT

Legacy systems and architecture, and find

ways to, without going through a major big-

bang transformation project, create the

required end-to-end customer journeys,

DESIGN PRINCIPLES3.1

12


Going back to the “Customer Centric”

diagram (above), let’s look at the

requirements from two different

perspectives, the customer’s and the

bank’s internal organisation:

consistent

insightful

timeliness

reliable

wow

engaging

Consistent “Looking Out”

• Consistent means that all channels

(non-assisted and assisted) share

customer information, customer

journeys, business logic and

products. Today’s “standard”

banking architecture is not able to

seamlessly provide these capa-

bilities. This implies that a new

transversal architecture layer is

required, that is dedicated to

providing the best customer

experience, and allows for

consistent behaviour and infor-

mation, journey start/stop, API

openness, shared business logic,

ability to support swift changes

and quickly deploy them live, AND

is able to integrate with and

abstract as much as possible the

underlying complexity of the

legacy architecture.

reusable business logic, open APIs, and

transversal customer representation that

will, with time, allow the organisation to

focus on individual customer value,

tailored offers, openness, interoperability,

and seamless journeys that are tailored for

each individual customer.

13


Consistent “Looking In”

• Consistent means that your

organisation is able to cooperate in the

design of customer centric journeys,

allows for the progressive

implementation of a business focused

digital transformation and enables low

maintenance and development costs.

Insightful “Looking Out”

• Insightful means that you are able to

tailor customer experience, products

and offers using customer insights from

Big Data, Analytics and Artificial

Intelligence to understand, tailor and

deliver personalized products, offers

and journeys. The mechanisms required

for consistency and Insightfulness are

also fundamental for timeliness. If you

know your customer and have

processes to handle his/her requests

you can also design those processes to

have the right timing to deliver an

insightful customer experience.

Insightful “Looking In”

• Data gathered from customer journeys,

machine learning, social networks and

analytics can be used to drive business

and investment decisions. “Let the data

guide you” is the motto. Additionally,

the new data generated by the end-to-

end customer perspective can be used

to improve the way the organisation

reacts to customers and markets,

resulting in a more agile and versatile

organisation.

Reliable

• There are two main sources for lack of

reliability: inadequate design & bad

operation. Expecting a system to be

consistently reliable (as measured by

the availability expected by your

customers) outside its design window

by tweaking a design done 40+ years

ago with completely different

objectives, will often result in

compromised reliability or availability.

The introduction of a new architecture

layer abstracting many of the customer

facing roles, will enable new

perspectives on how to design and

operate focusing on today’s customer

reliability and availability needs.

Wow! and Engaging

• If we combine the ability to design the

customer experience with insightfulness

about the customer’s lifestyle and

expectations, and the ability to change

this experience at will with a creative

marketing team and a customer focused

business strategy we have all the

ingredients required to surprise and

engage customers.

14Customer centricity why it matters?


3.2 ARCHITECTURE

15

The focus of the proposed architecture is to

decouple customer experience from data

processing. A new architecture “layer” is

introduced that abstracts existing

integrations and data, and combines them

with workflow capabilities and rules engines

to create a new set of business focused

APIs that are then made available to ALL

channels (regardless of being internal or

external).

From this, a new incremental architecture

paradigm is created with the following main

benefits:

• Decoupling of the customer experience

from legacy systems, allowing for better

flow, and new capabilities.

• Decoupling the customer experience

from front-end channels, allowing for

design-once deploy-everywhere, enhanc-

ing reusability and end-to-end customer

experience design.

• Smart, integrated data caching allows for

better performance and response times.

Changing, upgrading or enhancing the

customer experience can be done by

changing customer journey definitions.

• End-to-end customer experience design

becomes a common language for

business and IT to interact and

cooperate. By exposing APIs and not

channels, re-use, consistency, security

and performance are easier to control

AND the organisation is not forced into a

major redesign of the existing channels.

• Can be progressively introduced one

business process at a time, creating new

avenues for the Bank’s digital transfor-

mation strategy.

• Since customer experience is now

controlled from a single place, it easier to

visualize, control, analyse and enhance.

• Removes complexity from legacy systems

by avoiding the need for the introduction

of customisations to cater for channel

needs.


ABOUT NOVABASEWith almost 30 years of experience,

supporting business transformation and

implementing complex projects around the

world, Novabase’s team has been assisting

the Financial Services sector and

delivering results with specialized finance

solutions.

Novabase has become Portugal´s leader in

IT. It is listed on Euronext Lisbon stock

exchange since 2000 and is part of the PSI

20 and Euronext Tech 40 indices.

Novabase Services and Products cover

Financial Services, Telecommunications,

Government, Transport & Energy

industries. With three business lines,

namely Business Solutions, Neotalent and

Venture Capital, we cover 40 countries in

4 continents.

novabase.pt

[email protected]

wizzio.novabase.pt

04 CONCLUSIONThis paper justifies the need for banks to

focus on customer centricity and digital

transformation, providing an overview of

the different perspectives on why this is

so important for their future. It also

highlights obstacle areas and provides the

overview of the principles and solution

design to enable customer experience to

become a central part of a Bank’s day-to-

day business without incurring in the huge

risk and cost of a full big-bang digital

transformation.

16Customer centricity why it matters?

Documents

CUSTOMER CENTRICITY - Novabase · 2018-09-21 · Customer centricity why it matters? 01 What does “customer centric” mean?05 02 Obstacles 07 2.1 The way organisations are structured