Who said banking was boring?
Let me explain first … before you conclude that banking is indeed boring. Banking is typically regarded as a low involvement product, a boring product. Based on some interesting research, however, we discovered that people actually have a lot of emotions and feelings when banking.
We recently asked and observed retail and business customers about our products and service – what they liked and disliked. It was part of a joint project with our Marketing team to study customer human emotions such as anger, boredom and surprise to see what affect if any they had on the ING brand.
Here’s what we found.
With routine banking, our research shows that customers feel bored and safe and have minimal emotional reaction. With complex banking products, more extreme emotions such as fear, hope and nervousness play a role. With complex banking products, customers feel emotions and feelings about fear and hope.
It may not come as a surprise to most that emotions play a significant role, but from a banker’s perspective, it was a great insight. The research clearly showed that we needed to pay more attention to the customer experience. In a very short time we had a banking crisis, and now we are dealing with the Euro crisis. So it’s understandable that customers today are insecure about their financial future.
Within ING, we had always focused IT on creating more efficiency and effectiveness. When dealing with other people’s money, we can’t afford any mistakes in our processes. Dealing or developing products was mostly about solving a problem from a technical standpoint.
The past few years have taught us that efficiency in customer interactions is not enough. To become the preferred bank for customers, we have to build a relationship of trust by delivering excellent products at a fair price and mitigating negative emotions surrounding personal finance. We’re now building a culture where we solve problems from a customer’s perspective vs. just from a technical standpoint.
I’m very enthusiastic about the possibilities that current technology will give us in the coming years, and this will only improve. CMOs and CIOs together must forge a shared agenda to drive marketing innovation, blending the art of marketing with the science of technology. As a CIO today, for instance, it’s important to consider how technology affects all departments in addition to managing traditional IT management responsibilities. Success for ING is not only doing things in a more efficient and effective way. It’s also taking into account the emotions when dealing with our bank and putting technology to work in creating great customer experiences.
On Tuesday, September 4th at 1 p.m. ET/7 p.m. CET, Ron van Kemenade, CIO ING Bank Netherlands and Yuchun Lee , vice president and general manager for IBM’s Enterprise Marketing Management Group will participate in a twitter chat about how Smarter Commerce plays a role at ING, what it takes to market to the digital customer, and the why it’s so important for the CMO and CIO to forge a solid relationship. To join the conversation follow the hashtag #GetRealChat or follow @INGnl_Ron and Yuchun Lee and @IBMSmrtCommerce.
Dr. William R. LaFontaine
Vice President, Technical Strategy
Coming from IBM Research, I think of innovation in two dimensions. First, there is the continuous innovation that goes into IBM’s products and services. This innovation provides important advances to current technology as well as helps IBM introduce breakthrough products. The benefits of this approach are clear in IBM’s next-generation computing platform PureSystems.
But we also look for more exploratory challenges that help us advance science by leaps and bounds. We call them grand challenges. Meeting them requires a very different set of practices and capabilities – and presents some interesting problems.
And that was the topic today as the Information Technology and Innovation Foundation in Washington, DC hosted a forum with the White House’s Office of Science and Technology Policy, IBM and Qualcomm to discuss how we can meet the next Grand Challenges.
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I think we can all agree that internet banking has proved itself to be a BIG thing! And yet, banks seem to be way off the pace in terms of quality of service and functionality provided to corporate and business customers online. In fact, I would say that internet banking for business is in a ten year time warp. It feels similar to where retail banks were back in 2000 – when they were still trying to understand what customers would do online and figure out if they could make money from that new-fangled ‘inter-web’.
It’s strange, really. These are the business accounts that are worth hundreds of millions – you would think banks would be lavishing money on them. However, business and corporate banking has remained a largely person to person relationship business. Internet banking has been a hygiene factor rather than a differentiator. This is especially as, by and large, it is small business people or junior finance clerks who most regularly use online services.
But I think this is all about to change – and for a few good reasons (and this list is not exhaustive):
Banks are waking up to the fact they can save money:
- The cost of a person to person service is growing. As relationship managers have to care for larger and larger portfolios of customers, banks will have to beef up their online offerings to compensate
- Collaborative working tools will give banks the ability to work more efficiently with clients – which will save banks money and save customers time. For example, web-chat built in to internet banking will allow banks to share information with customers in real time – answering questions in one touch.
It is becoming apparent that internet banking can differentiate service and deepen relationships:
- Banks will be able to provide new functionality as a value add – particularly for top end users. By adding quality reporting functionality to online services and making it accessible via mobile / tablet devices, banks can deepen relationships with CFOs
- By offering broader ranges of functionality and more user friendly processes, banks will be able to help their business clients to save time and cut costs – particularly important in the current environment
Customer expectations have grown:
- Online customer experience leaders like Apple and Amazon – as well as retail internet banks – have raised the bar. Customers are already becoming frustrated that they cannot do the things they expect to be standard.
I recently co-authored a white paper on the future of internet banking for businesses – spanning both the corporate and SME markets. As part of that process, I spent time reviewing all the major business internet banks and talking to users – both small business owners and corporate users. This conclusively confirmed that users want a better service.
Users want banks to get the basics right – which many do not do today. Users want their internet bank to provide a decent user interface – with simple to follow processes, a convenient log in process and proper multi-signature functionality. SME customers want access to a greater range of functionality. Corporate customers want more configurability – and to be able to fulfil their foreign exchange and money market transactions for themselves. However to truly differentiate themselves, I think banks need to look to the future – to the services that customers don’t even know that they need yet – or that banks are too scared to offer (online corporate lending anyone?). As all the banks bring their online services up to the standard of retail banks, that is where I think the true differentiation will lie.
So internet banking for business is in a ten year time warp – but it is starting to fast forward. There are clear areas for immediate improvement (banks need to get the basics right) – but differentiation will be achieved through innovation. Banks need to move now, before they get left behind by their competitors and their customers.
Alex is a retail banking and internet / mobile / social media professional with over 10 years experience.
Alex joined Lloyds TSB in 2000. During his time at Lloyds, Alex worked in both product teams and distribution. In his first permanent role, he managed a customer service call centre team of 100 people. He went on to work in Lean Sigma for Personal Lending and strategy for General Insurance. He also held roles in Telephony and Branch Network Operations.
Over the last few years, Alex specialised in internet and mobile banking. He started as a change programme manager and then moved into product management. In his last role at Lloyds, Alex was the product owner for Loans and Mortgages across the Lloyds TSB, Halifax and Bank of Scotland internet banks – the largest internet bank in Europe.
Since joining IBM, Alex has held implementation roles with UK online banking clients. He has also consulted on Retail, Corporate and Business internet & mobile banking and social media with European and Asian financial services clients.
After three decades of civil war, Angola has emerged in the past half-decade as one of Africa’s fastest-growing economies. It has an abundance of oil and diamonds and important fishing, forestry and farming industries. The government is doing a great deal to build infrastructure, boost private-sector investment and modernize agriculture.
Enter IBM. As part of its African expansion strategy, the company today announced the opening of a new branch office in the capital city of Luanda–following quickly on branch openings in Senegal, Tanzania,and Ghana. In fact, this move represents a re-entry for IBM. It was active in Angola in the 1950s and 1960s. Now the focus is on helping to build a modern technology infrastructure to help the country’s economy continue its growth trajectory and the government provide better services to citizens.
The expansion in Angola gives IBM a direct presence in over 20 African countries including South Africa, Kenya, Morocco, Egypt and Tunisia. In 2006, the company had a direct presence in just four African countries.
IBM’s smarter planet strategy offers African countries the opportunity to leapfrog other more mature economies. As these countries build out infrastructure ranging from telecommunications and utilities to transportation and health care, they can take advantage of new technologies that make it possible to harvest and analyze vast amounts of data, helping them operate businesses and institutions more effectively and efficiently. The advent of cloud computing offers companies and government agencies the opportunity to access cutting-edge computing capabilities in the form of convenient and affordable services.
Government-owned businesses are often dismissed as being bureaucratic, slow and unentrepreneurial. The Commercial Bank of Ethiopia and its president Bekalu Zeleke, left, explode that image. The institution, which is the largest commercial bank in Ethiopia and in the entire East African region, has opened more than 100 new branches in the past year, bringing the total to 372.
But the bank’s plans for the future are what truly make it stand out. The bank, with two million account holders now, plans on increasing the number of accounts by 25% per year, establish 200 new ATMS per year and open 500 new branches over the next five years. Its mission: to become a world-class commercial bank by the year 2025.
Zeleke and the bank demonstrate that state-owned organizations can be drivers of economic expansion in Ethiopia and all across Africa.”The bank is on a mission to transform its operations,” says Dan Kazungu, IBM’s country representative in Ethiopia.
When it comes to using mobile phones as electronic wallets, the emerging markets are clearly way ahead of the more developed ones. In Kenya, the Philippines and elsewhere, millions of people are using their phones to pay for things, transfer money, secure micro-loans and do their banking. Not so in the United States. Will the US follow the path of the emerging markets? Probably not.
This message came through during a media panel sponsored by IBM in New York recently. The event, “Driving Mobile Payments Adoption in Developed Markets,” featured as panelists Tomasz Smilowicz, global head of mobile banking, Citibank; Kate Kingberger, of the CTIA wireless trade association; and two IBM executives, Alberto Jimenez and David Mangini. “There will be two distinct markets,” said Jimenez, the mobile payments leader for IBM. “One market will be the developed economies and wealthy people in emerging markets. The other will be majority of people in the emerging markets.”
In the United States, it seems likely that mobile money will primarily be a means of conveniently paying for things and interacting with retailers. In emerging markets, its could become the main doorway to banking services for masses of poor people.
In two weeks I head to Barcelona for GSMA’s Mobile World Congress, the largest annual gathering for the mobile communications industry.
It’s always a great conference, but this year is particularly exciting for us; GSMA’s invited IBM and several of our clients and partners, like AT&T, Ericsson, Korea Telecom, Qualcomm and Vodafone, to exhibit in the Embedded Mobile House. The house is a new specialty pavilion that gives visitors a chance to Continue Reading »
During most of the history of computing, technology advances typically trickled down slowly from developed economies to emerging ones. The explosion of mobile telephony changed all that. Suddenly, tens of millions of mobile phone customers in emerging nations such as India and China not only skipped land lines and went straight to wireless networks, but they also began using new features such as mobile banking and payments before some of their developed-nation counterparts. Now the shift is starting to happen with enterprise-class technologies. A financial securities project in Mexico shows how.
Indeval, a privately-held company that manages the central securities depository and trade settlements for Mexico’s financial markets, is pioneering near-real-time securities trade settlements with a system called Dalí. The system makes it possible to settle trades in seconds, reducing risks for the parties involved and cutting in half the amount of money institutions must have on hand to cover trades. As a result, Mexican banks have saved more than $240 million in interest in 18 months.
At the heart of Dalí is IBM’s ILOG CPLEX optimization software. Its algorithms match thousands of transactions simultaneously, so that only net amounts of securities and cash need to be transferred among the participating financial institutions.
Dalí settles more than $250 billion in securities trades per day, representing about 20% of Mexico’s GDP. It’s the first system anywhere that operates a near-real-time trade settlement model. “Mexico now has a very efficient system, notwithstanding any other system in the world,” says Jaime Villaseñor, Indeval’s chief risk officer and the leader of the Dalí project.
Thanks to its stellar results, Dalí is getting the attention of other bank monitors around the world and winning accolades from operations research experts. Earlier this year, for example, Indeval won the prestigious Franz Edelman award from The Institute for Operations Research and Management Sciences.
The shift to near-real-time settlements won’t happen overnight, though. That’s because most settlement systems in use around the world now employ complex, multi-step processes. To streamline them and add powerful new analytics features, settlement organizations will have to fundamentally transform the way they do business–which can be expensive and risky. In some ways, its easier for institutions in emerging markets to make big bets like this, since, often, they have less to undo. So you can expect this sort of financial innovation to come to other emerging markets earlier than developed ones.
Securities trade settlements is just one example of an emerging market leapfrogging in enterprise technology. Now that China and India are establishing themselves as two of the leading global economies, more frogs will be leaping.
Editor’s note: The following is a guest post from Dr. David Ferrucci, Principal Investigator, DeepQA/Watson, IBM
Just as IBM set its sights on defeating a chess Grandmaster with Deep Blue in 1997, the company’s scientists have developed a Natural Language Processing, Question Answer machine, named Watson (after company founder Thomas J. Watson, Sr.), to challenge two of the world’s trivia grand masters, to be aired on U.S. television from February 14-16, 2011.
Win or lose on national television, Watson will answer the immediate questions, “does it answer questions accurately?” and “does it answer questions quickly?” with a resounding “yes.”
Beyond excitement for the match itself, the team of IBM scientists is motivated by the possibilities that Watson’s breakthrough computing capabilities hold for building a smarter planet and helping people in their business tasks and personal lives. Watson’s ability to understand the meaning and context of human language, and rapidly process information to find precise answers to complex questions, holds enormous potential to transform how computers help people accomplish tasks in business and their personal lives.
Watson will enable people to rapidly find specific answers to complex questions. The technology could be applied in areas such as healthcare, for accurately diagnosing patients, to improve online self-service help desks, to provide tourists and citizens with specific information regarding cities, prompt customer support via phone, and much more.
Like Deep Blue, Watson represents a major leap in the capacity of information technology systems to identify patterns, gain critical insight and enhance decision-making despite daunting complexity. But while Deep Blue was an amazing achievement in the application of compute power to a computationally well-defined and well-bounded game, Watson faces a challenge that is open-ended and defies the well-bounded mathematical formulation of a game like Chess. Watson has to operate in the near limitless, ambiguous and highly contextual domain of human language and knowledge.
Watson’s technology furthers IBM’s leadership in analytics solutions, which help organizations use the vast amount of information they collect to improve their business operations and service to their customers. Additionally, Watson harnesses IBM’s commercial POWER7 system, showcasing how IBM workload-optimized systems provide unmatched capabilities for processing thousands of simultaneous tasks at rapid speeds, once the realm of only scientific supercomputers.
Read more about the technology behind Watson at ibmwatson.com.
The powerful emotions of fear and greed have played havoc with markets throughout history–helping to create bubbles and crashes. Spurred by strong feelings that often trump rationality, individual investors too often buy high and sell low. And, since people also fall prey to the herd instinct, millions of individual emotional reactions combine to create massive market phenomena capable of destroying many trillions of dollars in wealth and crippling economies. The global economic crisis of 2008/2009 is a dramatic and still hurtful example of fear and greed at work.
So how can we humans get smarter about investing? Through a combination of analytics and data visualization. Marco Monti, an Italian scientist who was hired by IBM in July, is developing methods that investment advisers can use to help investors make wiser long-term decisions. “Technology will allow us to develop a better understanding of behaviors and the role of emotions like greed and fear,” says Monti. “I hope we’ll be able to help common people who are not experts understand that those emotions should be considered over a long perspective. They shouldn’t be a cause for impulsive action.”
Monti does applied research for IBM’s analytics consulting business. He’s a specialist in cognitive sciences and the psychology of decision making with a Ph.D in economics from Bocconi University, in Milan. Through a pre-IBM project, Cognitive Banking, which he led as a post-doc for the Max Planck Institute in Germany, Monti established that if investment advisors had a better understanding of the needs of different kinds of investors and the most effective ways of communicating with them, they could improve decision making and investment outcomes.
Now he’s combining data visualization techniques with other analytical tools to come up with ways of using visualization to get through to people with different levels of financial sophistication. “You can use a more metaphorical language for people with low skills and more statistical visualization techniques for more sophisticated people,” he says.
It’s interesting–and encouraging–that the the power of vision can be used to overcome the powerful motivators of greed and fear.