Digitization brings with it an enormous opportunity for banks and insurers – if they use their customer relationships to improve and update their products. How do you do that? That’s exactly what customer management experts Roger Peverelli, Reggy de Feniks, and Walter Capellmann explain in their latest book Reinventing Customer Engagement.
Peverelli, de Feniks, and Capellmann use more than 200 best-practice examples to illustrate how companies around the world utilize digital technologies in order to improve their customer relationships. Most of the examples are taken from the finance and insurance industries. But their methods and approaches can also be applied in a number of other sectors as a means of closing the gap between “digital transformation for updating outdated processes” and “digital transformation for creating a profitable future.”
No fear of platform competition
Dr. Markus Pertlwieser, Chief Digital Officer at Deutsche Bank, highlights the opportunities digitization offers for the finance and insurance industries: “This is an amazing opportunity for banks and insurers to get closer to their customers again. In the digital age, however, genuine customer loyalty is only achieved if the bank is relevant to its customers on a day-to-day basis.” The situation is far more favorable for banks than it is for retailers, publishers, and the music industry, who are facing stiff competition from online platforms. Why? Pertlwieser: “With a wealth of customer data at our disposal, we can give people real added value – as long as they agree to that, of course. All we have to do is get it right, and do so quickly.” The data pool can help them find opportunities beyond the old business models. Customer relationships are said to be the gold of the platform economy: “Digitization paves the way for so many new methods of keeping customers happy,” says Pertlwieser. One of these new methods involves the development of “contextual ecosystems” to proactively address latent customer needs. According to Dr. Jörg Richtsfeld, Chairman of Allianz SE, the Allianz insurance company has pursued this course and has become the main player and preferred partner in the relevant ecosystems of its customers. Allianz is involved with an e-commerce provider of product insurance, a used-car platform, and a number of InsureTech companies.
Digitization is just the beginning
The new players in the finance and insurance sector are setting the standard because they offer added value, business models with lower friction losses, and an innovative level of service. Here’s what the three authors have to say on that: “This provision changes the customer’s frame of reference and leads to higher expectations. Users then expect a comparable level of innovation in the service provided by traditional companies.” But these traditional companies often only automate their processes, which is a mistake according to Peverelli, de Feniks, and Capellmann. It may speed up problem solving and initially offer more convenience for customers, but “it leaves consumers with much more to do.” Moreover, several banks and insurance companies see digital processes as the “end of the line,” they say. “But we see these endeavors simply as a prerequisite for market participation. They bring the past up to date, but they don’t build a future.”
Innovative customer engagement
They see the solution in “innovative customer engagement,” i.e. establishing authentic relationships with customers in order to optimize their own products and to innovate – an aspect that has long been neglected in the financial sector in particular. The Dutch health insurance company Achmea is a prime example of how that can be done. The company has developed an app for patients with diabetes. The app supports policyholders by providing them with information about the nearest pharmacy or medical practice at the touch of a button, while also reminding them to take their medication regularly. Mobile banks such as Soon and GoBank, on the other hand, provide real-time balance projections to help customers stay in control of their finances.
The three authors advise companies to always keep an eye on what is happening outside their own industry, and they recommend “an architecture that allows them to adjust to new requirements, to constantly develop new services, and to add new partners and let go of old ones. Furthermore, the architecture must serve to increase the number of hubs and interactions.” Their key tip for traditional companies is: “Combine the agility of a start-up with the power of an established brand and a broad customer base.”
The book: Roger Peverelli, Reggy de Feniks, Walter Capellmann: Reinventing Customer Engagement: The Next Level of Digital Transformation for Banks and Insurers Lid Publishing, London, 2017, £19.99/$25.00
The authors: Roger Peverelli is a partner at VODW, a leading strategy consulting company based in the Netherlands. Reggy de Feniks is a partner at the Spanish strategy consulting company 9senses. The financial services expert has published several articles on topics such as strategy, innovation, and building customer-centric organizations in the financial services sector. Walter Capellmann founded Capellmann Consulting in 2005. His professional focus lies on international marketing, public and investor relations, sales, and corporate management.