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In short, this means that in order to continue to be seen as a value-added service or department, finance professionals must evolve to keep up with ever-changing technologies.

Laura Timms product strategy manager at MHR Analytics explores  with Finance Monthly some of the biggest changes we can expect to see in the role over the coming years.

  1. From mathematician to business consultant

Traditionally, finance professionals had to rely on historical, internal data to draw insights.

Not only was this data limited in scope, but it failed to give a full perspective of how decisions today would impact the future.

Now, the introduction of predictive analytics has helped moved finance professional’s analysis from asking “why did it happen?” to exploring “what will happen next?”.

Access to in-depth insights will enable finance professionals to track customer data in real-time and evolve from simply keeping of records, to carrying out in-depth analysis of the data.

Gone are the days of working discretely behind the scenes as the “number cruncher” of the business. The future of the role will increasingly see finance professionals using value-added analytics to position themselves as a strategic voice within a business.

Their unique visibility of the holistic position of the business will allow them to analyse and interpret anomalies and trends. This information can then be passed to the internal stakeholders to help them to make value-added decisions.

  1. Remote working

The introduction of Cloud computing has taken the reigns off the finance professional.

Previously bound to the place of work or client’s offices, Cloud will work to exchange the cubicle lifestyle for more flexible working, with such roles able to be carried out anywhere.

The enhanced security of Cloud systems will allow finance professionals to unlock and share insights wherever they are, without having to worry about the traditional repercussions associated with handling sensitive data outside of the confines of the office.

Plus, a rise in businesses opting for a single online system, with all data in one place, creates simplicity without the need for multiple bulky applications.

Soon finance professionals will be able to share their analysis with their team at a click of a button and have a real-time view of what’s going on in their business whether they’re at home or on the go.

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  1. Use of non-financial data

Financial data has long been the cornerstone of the finance professional’s work. It was from this data that patterns were spotted, reports were created and recommendations were made.

But the truth is that financial data alone only tells part of the story. As other types of data become more widely available, this will be increasingly used to further enrich financial insights.

Customer behaviour patterns can be used to detect fraud and suspicious activity, and supplier data can be used to anticipate shipment information so that this can be considered when creating forecasts. Finance professionals can even use internal data such as employee performance metrics to identify the ROI that each employee provides to the organisation, so that they can make recommendations accordingly.

Implementing such data into the review process works to improve top-line revenue and injects further value to financial insights. Research by FSN on planning, budgeting, and forecasting backs this up, with findings revealing that CFOs that make good use of non-financial data are able to forecast with 90-95% accuracy.

  1. Highest ever standard of service

The rise of data analytics is facilitating an augmented workplace. In simple terms, we’ll see a rise in tasks that previously had to be completed by people, instead being carried out by machines.

Augmented analytics will allow much of the tedious administrative duties that have long been central to the finance professional’s role to be traded in for a more efficient way of working.

It will work to process data, bring it into context and lead in getting answers from it; giving more time for people to generate deeper insights for the business.

This technology will leverage finance professionals’ expertise, enabling them to focus on providing a higher quality service than ever. This will raise the bar in the industry, with businesses and clients alike recognising the direct impact that such roles have on their bottom-line.

  1. Emergence of data-driven roles

The augmentation of traditional roles will see the emergence of data-driven alternatives to traditional bookkeeping and accounting roles.

As data becomes more and more central to the finance professional’s role, and as organisations become increasingly reliant on finance professional’s insights to drive their business strategy, the mutualistic relationship between finance and data will become ever more apparent.

In the near future, all finance professionals will be expected to have some knowledge of data analytics. But leading up to this, we’ll see the emergence of data science hybrid roles that will form out of businesses’ demand for data-savvy specialists.

This means seeking extra training to become proficient in data analytics sooner rather than later will help finance professionals stand out from the crowd and solidify their knowledge before this becomes a necessity.

References: 

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Deloitte-Analytics/dttl-analytics-us-da-3minFinanceAnalytics.pdf

https://www.accaglobal.com/uk/en/member/member/accounting-business/2016/02/insights/data-analytics.html

https://blog.kenan-flagler.unc.edu/macwp-why-does-should-data-analytics-matter-to-accountants/

https://www.ey.com/en_gl/digital/how-analytics-can-help-transform-cfos-from-accountants-to-strate

https://www.accaglobal.com/ie/en/member/discover/events/global/e-learning/leadership-and-management/data-analytics-cpd-skills.html

https://careers.accaglobal.com/careers-advice/returners-to-work/finding-flexible-work/what-exactly-is-flexible-working.html

https://www.forbes.com/sites/workday/2017/08/23/why-non-financial-data-is-a-cfo-game-changer/#3a26278450b4

What’s that saying? You’re more like to get divorced than you are to switch your bank account. Below Matt Shaw, Strategist at RAPP UK, explores why high-street banks need to re-connect with young customers or face losing the next generation to digital first challengers.

For ten years now consumers have been used to getting less from their banks. Lower interest rates, fewer high-street banks and little reward for their “loyalty”.

Against this backdrop a quiet revolution has begun. New digital first challenger banks like Monzo, Atom and Starling are offering something genuinely different and are hoover-ing up younger audiences in the process. What’s more, Open Banking is set to explode consumer choice and making comparing and switching banks easier.

While these challengers pose a threat, established retail banks have a limited window of opportunity. At the moment young consumers are using these challenger bank accounts as “play money”, a supplementary account, allowing them to budget better, rather than a direct rival to the Big Four. However, this “play money” perception is likely to change as customers become more engaged challenger banks’ products and their brands become more established and more trusted.

Traditional retail banks need to sit up and take note if they want to capture the next generation of customers.

Driving preference

Whilst loyalty may be dead, retail banks still have an opportunity to deliver value to their customer base and protect against digital first challengers. Rather than aiming for (and missing) loyalty, retail banks should look to consistently drive preference across the customer lifecycle.

At RAPP we use three key elements to drive preference: Value Perception, Customer Experience, and Generosity.

Good customer data is central to all three of these elements. While new digital first challenger banks have no issues with this, it’s safe to safe that many retail banks will need to get their legacy data and systems in order if they want to deliver these elements.

Value Perception

One of the easiest ways retail banks can drive preference is by reflecting and reminding customers of the value they receive and the relationship they have.

Digital first financial services are currently leading the way in this space. Savings app Chip uses AI to analyze customer data and recommend opportunities for them to squirrel away money into their account in real time. Whilst this is a great new customer experience, the app is also amazing at replaying value back to customers. When money is transferred from your account, their friendly chat bot notifies you with an encouraging message and a humorous gif telling you that you’re #winning. When you ask for your savings balance they not only replay your balance, but your savings to date, your interest rate, the value of this interest and when this interest is due.

Customer Experience

The customer experience gap between digital first challenger banks and established retail banks couldn't be much greater at the moment. Whilst new challenger banks have no high-street stores, they’re beating established banks where it counts, through digital and mobile apps.

Monzo, Starling and Atom offer a stark contrast to the mobile apps of established banks. Their platforms offer spending analytics, integration with third parties and enhanced functionality like bill splitting and money pots; in comparison established banks can offer only the most basic functionality (balance enquiries, payments). Moreover these new challenger banks are constantly evolving their offering, while established banks can only give their apps a UX facelift with no new functionality.

New challenger banks are raising expectations of what a bank should offer consumers, particularly among urban millennials – something established banks should be concerned about as they are the most likely audience to switch provider (32% say they are “very likely” to switch in the next year[1]).

Generosity

Generosity is all about recognizing and rewarding customer engagement through regular value-adds that make customers feel valued.

Retail banks need to get out of the habit of using the transactional rewards based on cash back and increased interest rates. Instead, retail banks should looks to create value through customer data and collaboration with third parties. Both Starling and Monzo have added “marketplace” functionality to their apps allowing third parties to offer customers their services. Starling have two “loyalty” schemes (Flux and Tail) offering customers instant cash back when they make a purchase at restaurants and shops. However, this functionality has the ability to grow exponentially, and into non-financial generosity, with Open Banking making it simple for banks and third parties to interact.

Established retail banks can no longer sit back and let inertia reign supreme. Not only are new banks challenging the status quo and winning younger audiences, their nimble user interfaces and pristine databases mean they are also the most likely to profit from the future innovations of Open Banking. Established retail banks need to wake up to the challenge and rediscover how to drive preference. They can do this by innovating their customer experience to match new heightened expectations, using customer data to replay value and by smattering their base with product and non-product generosity.

The Lords Select Committee recently issued a report: “AI in the UK: ready, willing and able?”. It outlines the burgeoning AI industry including the public understanding, engagement and design of AI and how the UK can become best placed to build and develop safe, secure and successful AI businesses.

Louis Halpern, Chairman of Active OMG, the British company behind the natural language conversational self-learning AI, Ami, spoke to Finance Monthly below.

AI will penetrate every sector of the economy and has tremendous potential to improve people's lives. I am pleased the report aims to set out a positive framework for the UK AI industry. However, the proposal is not enough to make the UK a leading destination to build and develop AI businesses. We embrace technology when it is safe, normal, and when it makes our lives better. If AI policy is directed at these elements we have the opportunity to make the UK a world leader.

For us at Active OMG safe means personal privacy. Consumers need to know their data is safe. We have to avoid the AI industry being tainted with Facebook Cambridge Analytica type scandals.

We use personal data so our clients’ customers have a better experience. When we apply the machine learning part of what we do the data is anonymised. We do not know if they are Mr or Mrs Jones, Chen or Blackwell. We are not concerned with the details of individuals. There is complete separation of personal and anonymised data.

Overcoming fear needs education, not reaction to “scandal’. The government should be educating individuals on how their data is going to be used and kept safe by the current legislation. We suggest a government information campaign, like the drink driving or Aids campaigns of the past. By explaining the data issue to people it will proactively help normalise AI.

The report talks about investing in Phd programs and cultivating AI companies directly from academic research. Yes, but we need to start programs in schools now to teach children how to use AI as a tool to thrive in a world where AI is normal. In the Pan Canada AI strategy they argued that AI should be taught alongside degrees, e.g. Sociology with AI. To become a leading AI nation, Britain must adopt a similar stance and ensure AI is intrinsic and everywhere.

Economies thrive on entrepreneurship. Entrepreneurs will develop the AI that will change our lives, like the iPhone and the personal computer. These devices cut across every industry and benefit every consumer. Government needs to follow the same model. The report talks about specific Government departments and initiatives; these will stifle, not accelerate. Every Government department needs to set an example by making policy that puts AI at the heart of what they do. No western country has been this brave.

When electricity became available it’s light quickly illuminated everything. To be a world leader, the UK needs to ensure AI’s light shines in every corner.

By , Founding Partner, Masters Alliance Consultancy, LLC

The evidence is clear … Some slight reordering of time and priorities – and a different attitude –have astonishingly high personal and organization ROI. The payoff is great, gratifying and energizing. What is the simple secret? It is the word that has been on my mind for the past year – and I keep coming back to it in almost every aspect of the work we do at Masters Alliance. It is substantiated from my experience working with over 2200 CEOs, Presidents, BU Heads (and their direct reports, etc.).

 

Business Edgy-ness. Edgy as in teetering, pushing to the limits, on the brink of something. As in there’s energy buzzing, excitement brewing and something cookin’ in the business. Disruption, Leading, Edgy – all these modern words have been used to describe one of the fundamental principles of business – Discovery.

Businesses around the globe have been built on the single seed of an idea which was then developed, tested, adjusted, tested again and implemented with the mission of positively changing the way we work, play, or live – whether it is ground breaking technology, breakthrough medical advances, or simply a revolutionary way of thinking. It’s a thrilling process – one that motivates leaders to stretch, seek more, and invest resources in the unknown.

 

Have We Lost It?

Why has EDGY been on my mind for this long? Because we seem to have lost it. We seem to have backed off the edge in so many ways. Discovering creative ways to serve the customer, being adventurous in business strategy and driven to experiment in the unknown have become too uncomfortable. Instead, we talk about “winning” as being on the edge. Here’s the thing – winning is not edgy – there’s always a winner in every game – no matter the competition.

Can you remember the last time others were left speechless upon hearing what great new things your organization was planning to implement? Can you still feel the thrill of bringing a product or service to market that was top-secret, and your shareholders and customers were taken aback by how revolutionary it was? What happened to being part of the Age of Discovery? In talking with leaders from a diverse set of industries, I’m noting a disturbing trend – we’ve grown irrationally afraid of failure. We’ve lost our desire to teeter on the brink of greatness. Safety and security have won out over invention and exploration.

 

What is Edgy-ness, Really?

The edgy I’m talking about is planning for the new, the unknown, the risky. It’s surprising, unique applications, flashes of the obvious. The edgy I’m talking about also makes your employees’ hearts beat faster, gets them to the office early and stay late – without even realizing that time is passing. I’m talking about something that startles your customers with delight, that makes them look forward to whatever is coming next. When you are edgy, your suppliers and vendor partners work together with curiosity and wonder. But wait, if you are thinking that EDGY only means big things, please reconsider. Edgy is thinking and doing differently – internally and externally – making a difference in the way we and our customers do business.

Edgy means that we are on the edge of our seats, waiting for what happens next. Not in fear but anticipation, with a true experimental, learn, change, adjust, recover and do attitude – and most importantly, a plan for when it goes even better than our wildest dreams.

Does that sound exciting, exhilarating or like an impossible dream state? Is that kind of energy and enthusiasm the complete opposite of how you feel right now? It’s that time of year when you’ve given it all you had to make the last quarter’s results as good as possible, and frankly you’re tired. Maybe even feeling tapped-out and overworked. Edgy sounds like the right business thing to do, but frankly, it looks like a lot of effort and your energy reserves are drained. The New Year is already underway and calling out it’s familiar theme: “What have you done for me lately?” Keep reading – let’s work this out…

 

Encouraging Examples

Edgy-ness has many dimensions – Jeff Bezos purchasing the Washington Post for a presence in the “seat of government,” achieving an implied influence for Amazon that Microsoft lacked at the time their aggressiveness was considered “anti-competitive” [Forbes Magazine, January, 2018].

Edgy-ness is a client embracing all the fullness of our “double half-life” implementation principle – extending the 2X speed, ½ time, 2X more effective, to the equipment manufacturing discipline. One of three teams engaged in a 45-day effort, was challenged to keep manufacturing of large carbon fiber production equipment in the US, vs. Asia. Our guidance was to achieve a goal of ½ size, ½ weight, 2X throughput, 2X efficiency at ½ the cost of equipment. This Edgy goal engaged many other participants – including engineering “thinkers” who love being edgy, living for challenges. The result – within 45 days, an effective new design was achieved and the equipment manufacturer was retained in the US! And with somewhat unexpected competitive advantages.

Interestingly, we also take for granted important discoveries from firms which noticed how we play, work, live, etc. A few historically surprising “unknown-need” examples: disposable diapers, panty hose, microwave ovens, program recording, GPS, thumb drives, avatars, etc.

 

Status Quo is Transformation’s Enemy

You’ve already started a list of why it won’t work. It may include things like “Been there done that, we’d never get permission, our competitors have already tried and failed.” Also on the list: the statistic of “97% of all products don’t make any money (75% of consumer packaged-goods and retail products fail to earn even $7.5 million during their first year)” – according to a leading market research firm. These numbers alone would explain how we got to a status quo preference. The list might be very long. But if you really look at the list – you can see these items are a mere reflection of your fears. Fear of failure, fear of accountability, fear of change, it goes on and on. But here’s the real kicker – is it possible that you are actually afraid to really succeed? What does that mean? The predictable rhythms of success and growth to which you’ve grown accustomed keep you in a steady state. If you take that risk, and actually succeed, then the world changes quickly. With success comes new expectations, new demands and new activities. How do I know? Because we’ve experienced and seen these fears at work!

 

What’s In It for You?

Once you’ve lived on the razor’s edge, you know the excitement, exhilaration and the gratification of competing vigorously in the marketplace. You also know the stats and have experienced some disappointments. But if you haven’t experienced this competitive energy in your organization – or can’t remember the real joy of making a difference with customers – then let’s take a hard look at who you are, and who you want to be. So, what if others failed? Did they miss the mark on the idea, fail to execute, quit too soon? It is our experience that the real disappointment is directly related to 1) failure to really live in customers lives and notice their difficulties or complexities and 2) failure in effective, timely implementation.

Assuming you would rather be engaged than tired, you have everything to gain by getting closer to the edge – don’t you? First, from an employee experience viewpoint, you should imagine a dramatically improved, connected and engaged workforce. They are having fun, making a difference for customers and getting better business results. Customer loyalty scores are rising as they wait to see what’s next. You are setting the tone in the marketplace – you have the time and the talent to make sound decisions about whether you want to lead or be a fast follower. The closer to the edge your organization lives, the more resilient it becomes! Fear of failure morphs into energy of solving tougher problems, creating opportunities. The mindset of the entire organization begins to shift [but much, much faster than “conventional wisdom” would indicate]. It’s a “new way” of doing business and it’s attractive to the top talent you’ve been trying to recruit for years – the difference-makers. Isn’t that the kind of momentum you want to describe to your board of directors in your next meeting?

 

Still See Barriers?

Feeling immobilized from action? Is intense competition and slow growth dulling your creativity? I’d like to suggest a way out of the situation. Perhaps a good session with your customers and your customers’ customers can help you see the reality of your situation – opening up the hidden opportunities! In today’s expanding, but highly competitive economy, this means taking stock of what needs to be adjusted, digging deep, thinking, exploring, getting ahead of customer needs – helping your customers prepare to get more competitive, helping them have dynamite product/services to offer their customers. Venture out onto the field and see what your customers are really needing, or may need in the future – and stretch and anticipate to exploit those opportunities.

 

A Double-Check…BUSINESS EDGY-NESS, Always in Style, Always Needed

For companies that have spent considerable resources, time, talent and capital, to reach the top of their industry – it’s sometimes easy to get comfortable after celebrating great wins. The hunger to win is sated and the team wants time to rest and a reason to refocus after a hard-fought battle to the lead position. And yet, this is no time to rest on your laurels. It is time to get even closer to the edge. It is always time for successful companies to become even more successful.

 

Get a Head Start This New Year – Start Your Day Differently

Edgy-ness is looking at things differently, doing things differently, working differently…and seeing markets and customers differently. It’s even about beginning our day differently. Start by thinking about EDGY-NESS…what it means to you, your organization, and your team. Wrestle with the idea, experiment. Consider these thought starters / specific action steps.

 

Answer a few questions at the beginning of each day [6 minutes max!]:

 

Expand the influence:

 

We Can Help

In our 30 years of helping over 120 clients, we’ve helped companies break through fears / barriers and truly interrupt markets. Most recently, we helped a Health Information Network company unlock the market in the process of implementing highest quality e-prescriptions – increasing customer/partner engagement and satisfaction…and streamlining processes to work best in a digital world.

Edgy doesn’t come solely from the Innovation Group or Innovation Process. It also comes from deeper within – from those employees who are closest to the customer who can’t wait to solve their problems with some simply outlandish solutions. There are hidden opportunities, buried in your organization, that only need a sponsor who believes in them to see the light of day. Imagine all of the unsupported, undiscovered and untapped potential, safely and securely stashed in your organization – and all you have to do is create a barrier-free path to help bring them into the light.

We help you uncover the hidden opportunities and barriers faster and more pointedly – because participants will candidly and confidentially talk to us. We help you poke and prod your organization into feeling disrupted enough to make a breakthrough, a required change. We help you redevelop that skill – change the culture from within, while working together to help you get things done faster and more creatively in your organization.

 

Visit mastersalliance.com for more.

Masters Alliance Consultancy, LLC

Mastersalliance.com

7701 France Avenue South, Suite 325

Minneapolis, MN 55435

info@mastersalliance.com

Phone: 1.952.831.7300

 

 

About J. Allen, Founding Partner

Masters Alliance Consultancy, LLC

Creating new ways to gain unusual, breakthrough business results, competitive advantage

30 years of management consulting experience with over 120 client organizations in 20 industries, in 13 countries – ranging from Health Care, Financial Services and Retailing to Software, High Tech Manufacturing and Chemicals. A Marketing/Finance Graduate of the University of Illinois, a former US Naval Officer, and veteran of 12 years of intense corporate responsibility. Has guest lectured at the University of Michigan Graduate School Of Business, at New York University and served as Board Member, Board Chair and / or President of numerous corporate, volunteer and club organizations.

The ability to meet the challenges of difficult situations is demonstrated by these client comments: “…Courageous and effective in talking with executives about stretch opportunities as well as problems they were causing that impeded results and growth…Has a unique ability to promote positive change in organizations...Linked immediately with people at all levels, effectively documented their needs, helped them become a significant part of the business”

A few representative clients include: Microsoft Central Europe, Kellogg’s, Federated Insurance Companies, Allied-Signal Aerospace, University of Medicine and Dentistry of New Jersey, US Indian Health Service, ADC Telecom, Thomson Reuters, Raytheon Intelligence and Information Systems, Patterson Companies...

Helping management teams and others achieve what they did not believe was possible, is a primary driver. Helping organizations achieve strategic success, raise the operational bar, improve market penetration and strengthen the bottom line are tangible deliverables. Fast results and knowledge transfer are a must.

 

About Masters Alliance Consultancy, LLC

 Making Already Successful Companies More Successful
…creating opportunities and generating results

Engaged, Winning Organizations that go after markets delivering…Revenue Growth

Passionate, Driven Organizations for customer connection delivering…Competitive Advantage

Tenacious, Achievement Organizations for getting things done delivering…High Performance

At the Front of the Curve, Helping others Make a Difference, Excel in their Markets

Information Security in the Cyber World >> Inner-City Hospital Renewal >> Nuclear Weapons Complex Best Practices >> Solar Manufacturing Innovation Leadership >> Software Development / Distribution in European Expansion >> Aircraft Landing Systems Breakthrough Invention >> Drug Prescriptions in the Digital World >> Processing Center Transformation >> Record Setting New Channel Entry

 

We’re living in a data rich world. IBM estimates that 90% of the data in the world today has been created in the last two years aloneThis means it’s crucial that businesses keep control of their sensitive customer data. Tanmaya Varma,  Global Head of Industry Solutions at SugarCRM, illustrates to Finance Monthly the true potential of data use in the financial services sector.

For banks in particular, the safe and efficient storage of data is not just a ‘nice to have’ but a requirement governed by legislation and industry standards. I believe that whether on-premise or in the cloud, banks should strive to capture all their customers’ data together in one place. Why? Because it will empower employees with the right information to give customers the best experience possible.

Bringing together data streams

Perhaps more than any other industry, financial services firm have a huge number of channels to collect customer data from; in-branch, over the phone, via social media platforms. This means they need to have the right data systems in place which can bind together all of their data to build a complete picture of a customer.

The right system needs to bring together front-office data – calls, meetings, leads, opportunities – and back-office data – accounts, transactions, delivery schedules, fulfilment and so on. There is also a need, particularly for capital markets, to have external data integrated, for example LinkedIn data (where did this prospect use to work?) and trading figures.

In terms of where the data is stored, in my experience banks generally choose to keep their customer data in the cloud. No modern business – bank or otherwise – should keep their customer data in siloes, as this immediately breaks a 360-degree view of the customer.

Meeting customer expectations

Today’s customers expect the best experience possible. The instantaneous pace we now live at doesn’t leave much time for patience – so consumers expect an instant response to their demands.  This means customer-facing employees need to have easy access to their customers’ background as soon as the interaction begins, if they are to stand a chance of delivering the best possible experience.

Customers need to know that, regardless of the channel, they’ll receive the same level of service and understanding of their needs and expectations. This all amounts to the overall customer experience, which is crucial when customers are faced with so much choice. The threat of losing customers because of bad service is very real. According to Accenture’s UK research, 34% of customers who switched financial providers in 2014 did so because of a poor customer service.

All customer-facing teams (sales, marketing, customer service and so on) therefore need to have the right tools in place. Technology should empower employees in their interactions with customers; giving them all the information they need, when they need it. For example, providing clear information on the customers’ previous interactions (when did they last contact us? What other products do they hold with us?) – to enable a seamless experience which proves to the customer they are valued and understood.

Turning to technology

Looking ahead, AI will become increasingly important for banks when it comes to the customer journey. Many banks are already open to the possibilities of machine learning – and it has to be said, the capabilities of chatbots is becoming very impressive. Swedbank’s web assistant Nina, for example, now has an average of 30,000 conversations per month and can handle more than 350 different customer questions.

But the customer experience depends on both the quality of the data, and how well employees can use it to then bring insight to their interactions. In my opinion, customer-facing employees and technology should work side by side to enrich the customer experience. The role of chatbots, virtual reality, NLP and so on should be to bring efficiencies to business operations, particularly when it comes to automating tasks and processes where humans don’t add value. In fact, a recent report by Accenture found 79% of banking professionals agree that AI will revolutionise the way they gain information from and interact with customers.

If banks rise to the challenge to store and manage all their data together, and their employees are supported with the right training and technology to quickly access customer data and understand – and even pre-empt – their needs, they’ll be on the path to success.

Mark Hixon is a Partner at global advisory firm Transform Performance International with over 25 years’ experience advising Fortune 500 companies on their cost management solutions. Here he provides Finance Monthly with 7 ways to manage costs and what considerations to make.

Not long ago, British Airways suffered a huge and unprecedented system failure. Flights were grounded, and the plans of thousands of passengers were at best disrupted and at worst ruined. The scenes at Heathrow and Gatwick were predictably chaotic, and there were suggestions that had the airline not outsourced its IT work, the incident might have been avoided. This, and other recent events, have brought the negative impacts of cost reduction to the fore once again--but it’s unfair.

Cost reduction, when done properly, merely serves as an improvement to a business. It should never be used as an excuse to defend process failures. Of course, there are times when organisations change their service standards and the impact needs to be understood, but these changes should never manifest as process failures. When this is the case, it almost certainly stems from failing to consider the consequences of not funding certain levels of service.

Many organisations embark upon cost reduction or cost management programmes but almost as many fail to deliver the required benefits. Some organisations even find themselves worse off. For nearly 20 years at Transform Performance International, we have worked with clients to improve their existing cost management programmes, and have a found a pattern of recurring errors, all of which can be prevented.

  1. Senior executives are not aligned to the requirements and only provide tacit support. Cost reduction is always popular when undertaken in other people’s business functions but less palatable when it’s done in your own area.

Solution: Use an analytical approach to set targets. In recent years there has been a great deal of intellectual debate as to how to set targets. We successfully developed an analytical approach to segmenting the cost base and setting targets based on activity classifications. This is a non-confrontational way of defining targets.

  1. There is weak sponsorship at the executive level. This is characterised by certain executive members or senior managers paying lip service to the programme and the targets but spending their time protecting their own areas of the business.

SolutionEach person on the leadership team should be set a target and these targets should be embedded into their objectives: ‘failure to hit the target = failure to achieve their bonus’Businesses should also set end-to-end process targets that require collaboration.

  1. A ‘one-size-fits-all’ approach is used to make parts of a business take similar approaches to deliver savings. Most cost reduction programmes start with the premise that a consistent approach is required across all areas of the business, however some business areas are more suited to ‘process improvement’ type approaches whereas others require a service level driven approach.

SolutionDefine a programme of work that considers how savings may be achieved within the various business areas and then apply the tools and techniques appropriate to each area.

  1. The scope and scale of change is not agreed at the executive level so improvement options are rejected or undermined. Cost management programmes often begin with good intentions but as soon as ideas are placed on the table for consideration they are knocked back.

Solution: Hold an executive workshop where a range of ideas are put forward and apply what you learn to frame the overall programme of work.

  1. The dynamics of the cost base are not understood.When targets are set, the real implications of the targets are often misunderstood. This is because the true dynamics of the cost base are not understood.

Solution Segment the cost base and analyse it to find out how much of it is addressable, how much is fixed and how much is variable. Fixed or variable analysis should provide data on how costs vary with volume as well as time.

  1. The root causes of cost are not addressed. When cost-saving ideas are put forward, there is often very little consideration as to what is drivingthe cost within a business.

SolutionUse an activity-based approach to collect data that enables the root causes of cost to be collected. By collecting the data in a structured manner you will be able to see how much of the cost base is affected by each specific root cause. 

  1. The consequences of failing to fund a particular level of service are not well understood. Quite often, businesses suggest reducing levels of service but they do not analyse the risks of failing to support current levels of service. These risks can impact revenue, the ability of the business to maintain a going concern and potentially the end customer.

SolutionAll ideas and suggestions should be assessed in terms of their impact on customer service and the overall risk they pose. Some cost management techniques, such as zero-based budgeting, have this type of risk assessment embedded within the methodology: i.e., every service level is characterised not only by the resource and cost requirement, but also in terms of the consequences of not funding it.

The customer experience is at the heart of every brand’s interaction with its consumer. For financial service brands, experience has become even more important to consumers who are increasingly accustomed to taking more control over their financial affairs - brands are judged by their products, communication and interaction too. Below, Finance Monthly hears from Kirsty Maxey, Managing Director at Teamspirit, and Caroline Bates, Group Board Director at Chime Insight & Engagement Group, who give us their thoughts on how your business can better its brand by investing in the individual.

In recent years, the Financial Services marketplace has changed beyond all recognition. We have seen the emergence of challenger banks, mobile only brands and other disrupters that were once a rarity but are today an everyday experience for consumers increasingly accustomed to taking more control over their financial affairs. Changing regulation means that consumers have no choice but to take decisions they have never taken before, such as in the recent pension freedoms.

Meanwhile, the brands who were hard hit by the credit crunch have by no means gone away. Many are upgrading their back-end service and CRM systems and embracing innovation with as much enthusiasm as the challengers. They are playing to their strengths, using their reach and resources to flex their muscles. Others are seeking a more meaningful connection with consumers, repositioning themselves around their heritage, their values and their social purpose.

At the same time, consumers are no longer merely passive, or even grateful recipients of products and brand messages and are increasingly vocal in their criticism of those which don’t deliver on expectations. The concept of instant gratification, once confined to the FMCG and entertainment categories, has made consumers raise their voices – and brands, likewise, raise their game.

In the light of this change and in the wake of the Referendum, Chime Insight & Engagement and Teamspirit set out to identify the key drivers and dynamics within this new landscape. We sought to understand how consumers feel about Financial Services brands, what their expectations are in terms of brand behaviours and the criteria against which they are evaluating their choices.

To this end, CIE/TS conducted proprietary online research in Q4 2016, surveying a nationally representative base of 2,000 UK consumers on 20 consumer FS brands across multiple dimensions grouped under 4 key metrics named as the four E’s:

The brands included traditional leading banks, insurance and financial planning providers and payment providers and solutions.

Better customer experiences

The study found that consumers are backing financial brands that don’t just do good, but do more. They want brands that put their purpose into action, with better products, better customer experiences and better communication and interaction, not just better ethics.

The best performing brands have taken their social purpose and put it to work as a set of operational behaviours, in terms of the products they develop, the unmet needs they address and the customer experience they deliver rather than a more passive ethos of values and beliefs that sounds good, but ultimately serve little practical purpose.

The top drivers for Experience were:

By contrast, being contactable via social channels such as Twitter scored poorly with respondents. Only 13% considered this essential to their customer experience.

This shows how ultimately people want to feel that they matter to the brand and that their problems and needs are the reason why the brand is in business. “It’s not what you do, but what you do for me” is the prevailing theme when it comes to experience

Customers vs non customers

The results also revealed interesting differences as well as correlations in the attitudes of customers and non-customers of the surveyed brands. By giving customer and non-customer audiences equal weighting, regardless of the actual sizes of the audience, we were able to gain new insights into the high scores in the study overall of brands that have very small user bases but big reputations and conversely, brands which enjoy very high penetration but without the corresponding fame.

We were able to use this data to create 4 separate segmentations, which could be applied to each E in turn and also to create an overall market map.

Authentic brands included First Direct, Apple Pay and Nationwide. These are the brands that have a high degree of consistency between the external promise and the internal experience. They include Apple Pay, First Direct, Money Supermarket, Nationwide and Prudential

Discovery brands, which included PayPal and LV= are the brands that you need to experience in order to fully understand. In PayPal’s case, for example, it makes perfect sense, because if a person has never used it, they are unlikely to appreciate its security and convenience in any meaningful way.

Seduction brands, which include TSB, Santander and Standard Life tend to be those which have recently raised their profile in the market, through advertising or a new strategy, driving awareness and interest among non-customers whilst it’s business as usual for existing customers.

Outcast brands, which perform poorly with both customers and non-customers tend to be those with a legacy of a poor reputation.

It’s also interesting that the findings around the attributes on which customers rated a brand most highly, were often different to those chosen by non-customers. This suggests that what brands are promising in their marketing messages is not reflected in the customer experience and highlights the importance of ensuring that the brand and its customers are telling the same stories in order to present a united front.

Drilling deeper

The research study also looked at the perceptions of customers vs non-customers individually per ‘E’, that is specifically for Experience, Engagement, Ethics and Evangelism. This provided some interesting insights into consumer attitudes towards these brands and the factors behind what it takes to get an Authentic positioning.

Overall, although customers of all the brands in the survey rated them more highly that non-customers, there were some important differences that help to shed new light on how brands can ensure internal and external perceptions match and that the journey from non-customer to customer is seamless, satisfying and inspires the right storytelling.

When it came to experience, the Authentic brands of Apple Pay, First Direct and Money Supermarket had higher scores for both non-customers and customers than across the 4 Es overall. This would indicate that higher than average expectations by non-customers are matched by higher than average experiences by non-customers. By comparison, Nationwide and Prudential both scored lower for both groups on this measure, although still above average. This would indicate that despite scoring above average for both customers and non-customers, Nationwide and Prudential’s Authenticity is driven by something other than ease of doing business (our experience measure).

For engagement, every Authentic brand except Money Supermarket had a lower (although still above average) score for both customers and non-customers compared to their overall score. This would indicate that likeability is a less influential factor than might be assumed. But it’s interesting that for Money Supermarket, engagement is a driving factor in its Authentic positioning, perhaps as a result of its recent marketing campaigns.

Similarly, for evangelism, all the Authentic brands scored lower than against their overall score, albeit still above average. Apple Pay and First Direct in particular have a much bigger difference between their customers and their non-customer scores for propensity to recommend, showing how both brands rely on their customers to recommend them

By contrast, when it came to ethics, every brand in the Authentic quadrant scored more highly with both customers and non-customers. This contrasts with the broader findings in which respondents were ascribed an equal weight and experience was seen to be the key driver. When we attribute equal weight to customers and non-customers regardless of the actual relative sizes of the audiences, it’s ethics that really matters.

First Direct scored very highly with both groups, but particularly with its customers with 85% agreeing that they do the right thing. Prudential likewise scored particularly highly with its customers for ethics, with an 89% score, showing how its reputation for integrity and reliability as embodied in the Man from the Pru, is still an important part of the company’s brand equity.

Online vs branch customers

We also discovered some key differences when it comes to online vs branch customers. The need for personal attention is considerably more important, with 81% of branch customers considering staff with authority to solve their problems being their most important criteria, but only 30% ranking an easy to use online or mobile service as their number one. This shows how branch customers clearly don’t believe that an online or mobile service is an adequate substitute for a face to face experience and will lack the empathy and personal responsibility they need.

Nationwide performed very strongly on the measure of Experience with 76% of respondents believing that the brand is easy to deal with. This most likely reflects Nationwide’s commitment to being easy to deal with, attributing its mutual status to its customer-centric approach and bringing its ethos to life in its operations. It’s worth noting that Nationwide have recently reverted to calling itself a Building Society again in order to differentiate itself in the market – and create some clear water between it and the banks.

Verbatims from the research bear this out:

“UK based customer care centre, always answer phone quickly and resolve problem/answer query with minimal fuss”.

“Their website is simple to use and when you have a query they get back to you very quickly”

By contrast, branch users rated being told when there is a better deal or offer available and long standing experience in the financial sector more highly. After all, they won’t be able to shop around and keep up to date in the way that online users can, and are unlikely to have connected with the brand via social media, so will be more reliant on brands letting them know directly, in this case, via the branch. What the research shows is that branch customers are just as keen on the latest news and best offers as online users are, so should be looking to their branches as a real-world information hub.

To some extent, this can be explained by the demographic differences between online and branch users, who are naturally older. However, it does illustrate the vulnerability gap that online brands need to fill and need to not only claim, but prove, their reliability in order to be recommended to the older demographic.

Perception is reality

Perhaps the final point worth making is to never underestimate the halo effect of delivering a great experience and having a strong brand image. Both Apple Pay and First Direct score particularly highly among non-customers, demonstrating that perceptions of a good experience can be strong drivers of recommendation, as well as actual experience.

In Apple Pay’s case, as the only brand to score highly among both customers and non-customers, reflects the strength of the Apple brand’s halo effect on perceptions of the product and the attributes that even non-customers automatically associate with it.

All of which comes back to financial services communications benefitting from a clear brand purpose, demonstrated through behaviours. It gets both customers and non-customers talking and leads to brand evangelism. It doesn’t get better than that.

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