Amazon was once a small business selling books on the internet. Now it’s at the top of its game, with its hands in a multitude of baskets. Surely there’s a wide variety of lessons we can learn from their dynamic strategies. Below, Karen Wheeler, Vice President and Country Manager UK at Affinion, presents Finance Monthly with a guide to Amazon’s operations through the eyes of financial organizations.

It’s rare to meet someone who has never used the world’s largest internet retailer, Amazon. Whether it’s conquering Christmas lists, watching boxsets through Prime or managing life admin through the intelligent personal assistant Alexa, its offerings are endless.

This extensive list of services and benefits that are all designed around user convenience, simplicity and enhanced customer experience is one of the biggest contributing factors to its success.

Financial organisations, however niche or specialist, can take a leaf out of Amazon’s book when it comes to engaging with customers and harnessing innovative solutions to continuously improve their offering.

Here are five lessons financial firms such as banks and insurance companies can learn from Amazon.

1. Put the customer at the forefront of any business model

Listening to what the customer wants has been the driving force behind many of Amazon’s products and developments. McKinsey’s CEO guide to customer experience advises that the strategy “begins with considering the customer – not the organisation – at the centre of the exercise”.

This can often be quite a challenging ethos for the financial services sector to buy into, particularly for the more traditional bricks-and-mortar companies where the focus is often on the results of a new initiative, rather than the journey the company must take its customers on to get there.

It’s a case of convincing senior management that the initiative is a risk worth taking and just requires some patience. Amazon originally launched Prime as an experiment to gauge customers’ reactions of ‘Super Saver Shipping’ and it was predicted to flop. Nowadays it’s one of the world’s most popular membership programmes, generating $3.2bn (£2.3bn) in revenue in 2017, up 47 per cent from 2016.

2. Don’t wait to follow a disruptive competitor

To stay ahead of the curve amidst the flurry of fintech start-ups, financial organisations need to come up with their own innovative customer experience solutions, rather than allow newcomers to do so first and then follow suit.

From the customer’s perspective, a proactive approach will always go down better than a reactive one. Amazon CEO Jeff Bezos has previously spoken about tech companies obsessing over their competitors and waiting for them launch something new so that they can ‘one-up’ it. He once wrote: “Many companies describe themselves as customer-focused, but few walk the walk. Most big technology companies are competitor focused. They see what others are doing, and then work to fast follow.”

What sets Amazon apart is listening to what the customer wants and prioritising them over competitors.

A great example in the insurance sector is US digital insurer Lemonade, who last year set a world record for the speed and ease of paying out on a claim of just three seconds. This was done through its AI virtual assistant ‘Jim’ and has helped to kickstart a new trend of using AI in the industry. Ultimately, Lemonade listened to the masses in that most of us see shopping around for insurance and filing claims as complicated and admin-heavy. A quick, simple, paperless alternative would no doubt result in increased customer loyalty and, in turn, increased profits.

3. Analytics are key for personalisation

It’s no secret that Amazon is one of the leaders that has paved the way for analytics. It’s through the company recognising the need for them which has led to customers becoming accustomed to personalisation and expecting it as soon as they have had their first interaction with a business.

Financial organisations are no exception to this and, while it may seem like a scary commitment to more traditional firms, it doesn’t have to be complicated. A classic, simple example is Amazon storing customers’ shopping habits and sending them prompts for new products similar or related to those they have purchased in the past.

In the financial world, digital bank Monzo is leading the charge by monitoring customers’ spending habits to offer them financial advice to help them save money and budget responsibly. For example, its data once showed that 30,000 of its customers were using their debit cards to pay for transport in London – so Monzo can advise them they could save money if they invested in a year-long travel card, for instance.

There are endless things financial organisations can do using customer data to provide the customer with an experience unique to them, rather than continuing to make them feel like just another cog in the wheel. At Affinion we believe in ‘hyper-personalisation’, in that these days it’s no longer good enough to just know a customer’s history of transactions with a company and when their birthday is.

Customers are getting more tech-savvy by the day and are expecting real-time responses with a deep insight into their interactional behaviour – they won’t remain engaged if follow up contact is irrelevant and untargeted. Customer engagement has moved on from companies communicating to the masses, it’s about creating tailored, intuitive relationships with them on an individual basis.

4. Venture out into new areas

The way we live as a society is forever changing and, as we get busier and busier, any small gesture to make life that little bit easier goes a long way. The consolidation of services such as banking, insurance, mobile phone networks, utilities and shopping is a great way to ensure customers remain loyal to a brand as it will – if done right – add value and reduce hassle to their lives.

As an expert at disrupting industries, Amazon has taken note of this growing need for convenience over the years and has expanded its offering for customers, allowing them to carry out multiple day-to-day tasks with one account. In the last few months alone, Amazon has hinted that it may acquire a bank to break into the financial industry and potentially start its own healthcare company.

Regardless of size, financial organisations should always be looking for new areas they could tap into to broaden their offering and show customers that their needs are at front of mind.

5. Always go above and beyond

A rising factor in the way that customers align themselves to a brand is its stance on ethical issues and its contributions back into society. It’s a shift that seems to be most prominent with Generation Y, as the Chartered Institute of Marketing found that 81 per cent of millennials expect companies to make a public commitment to good corporate citizenship and nine in 10 would switch brands to one associated with a good cause.

Amazon has gone that one step further, with its AmazonSmile initiative that allows the customer to choose a charitable organisation that it will donate 0.5% of eligible purchases to. Not only does this show Amazon’s commitment to charitable causes, it gives the customer control of where their money ends up.

This is an easy win for the financial sector, given that one of its sole purposes is to look after money and move it around. For firms that target younger generations in particular, looking at ways to involve customers in charitable donations in a fun, transparent and seamless way is a no-brainer for increasing loyalty and advocacy.

Always a chore, never a pleasure

For many people, personal finance is perceived as a chore and often quite complicated. Improving the customer experience and building in programmes to engage them can help greatly with this and financial organisations need to adopt the ‘customer first’ ethos that Amazon showcases so effortlessly. With new fintech disruptors creeping into view, keeping customers loyal has never been so important.

Brenda-Lee Russell is the Managing Director of Omni Corporate Services Ltd. and is responsible for the overall day-to-day operations and management of the business, with complete oversight of the business platform and business models. Here she speaks to Finance Monthly about trends within the financial sector in The Bahamas and tells us about her company.

What is the current state of the financial sector in The Bahamas?  

I think that the current state of the financial sector in the Bahamas is steady, but optimistic. Within the last few years, we have been faced with many challenges that would have brought us to a place where we had to do things differently. We found ourselves at a crossroad for a mandatory need to change some areas. One significant factor that compelled us to change the way we do business with our clients was the legislation and enactment of The Foreign Account Tax Compliance Act (FATCA). It was enacted in 2010 by the US Congress to target non-compliance by US taxpayers using foreign accounts. FATCA requires offshore Foreign Financial Institutions (FFIs) to report to the IRS information about financial accounts held by US clients (taxpayers), or by Foreign Entities in which US taxpayers hold a substantial ownership interest. The Bahamas did not hesitate to comply with such requirement and in November 2014, we entered into a Model 1 Intergovernmental Agreement (IGA) (Bahamas-US FATCA Agreement) for implementing FATCA. Subsequently, in 2015, The Bahamas and The United States of America Foreign Account Tax Compliance Agreement was enacted. Of course, the ultimate goal of FATCA is to deter tax evasion by imposing information reporting requirements on financial institutions throughout the world (with respect to US persons with accounts in those institutions). Many of the banks and other financial intuitions that work with people with some kind of US Indicia, would immediately have reporting obligations - firstly to the local Competent Authority, for the purpose and intent of being compliant with FATCA. As a result of FATCA, some FIs have opted not to continue to market within the US Jurisdiction and would prefer to stay far away from US clients. This is easily understandable.

Another challenge or change we face, as we speak, is the Common Reporting Standards, commonly called CRS. Once again, the Government of The Bahamas stands ready to comply. It has taken a policy decision to implement CRS by way of the Multilateral Convention. Financial Institutions must be ready to report to the Local Competent Authority, as early as mid-next year 2018.

Although we are faced with many challenges, we are very optimistic that the days, weeks, months and years ahead, shall produce growth and positive outcomes. However, we must be mindful to be on the cutting edge of change in every possible way and we have come to the stage where we must start thinking outside the box. It is safe to conclude that we would have seen a slight degree of shrinkage in our industry, with many of our Super High-Net-Worth clients exiting The Bahamas and a number of our banks restructuring internally. We’ve also witnessed a couple of our major banks decommission private banking, while focusing solely on the trust side of the business, or vice versa. It is understandable that these radical changes have resulted in a few job losses, but it’s safe to say that The Bahamas’ financial sector continues to thrive.

What do you anticipate for the sector in the future?

I anticipate to see overall growth in the financial sector, as well as the evolvement of many small financial institutions.

What is Omni’s mission? What differentiates the company from its competitors?

Omni has learnt how to manage risk to optimize solutions for our clients. We have trained our minds to think differently. We take the time to evaluate, calculate and assess our clients’ overall objectives and come up with a sound solution. While we will always comply with our local regulators and act within the ambit of the law, we will not be afraid to think outside the box to create a solution for our ever-changing clients. Omni’s mission statement is: “Infinite Possibilities, Answers and Solutions in a Changing World”. One of our distinct differences, when compared to our competitors, is that we will not send away our US clients. Instead, we help them fully understand our obligations under FATCA and that we must report to the IRS who they are, as well as their interest in the assets that we manage.
Things have changed in the past 15-20 years, but at Omni, we are open-minded enough to have adapted to these changes.

Website: http://thinkomni.com/