kobie quarterly: financial services edition, october 2014

october 2014 • financial services edition • kobie.com

QUARTERLY REVIEW

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Empowering 21st Century Digital Banking through Mobile Innovation by Nancy Berg

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ROADMAP

An Integrated Future for the Mobile and Financial Realm by Matt Stein

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PERSPECTIVE

Targeting and Rewarding High Value Customers by David Andreadakis

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EXPERIENCE

Banks and Financial Institutions Using Digital Wallets, GPS Technology and In-app Messaging to Boost Loyalty by Nicolle Schreiber

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ABOUT

About the Authors

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WELCOME

From the President, Michael Hemsey

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STRATEGY

5 Hurdles that Banks and Financial Institutions Must Overcome by Margaret Meraw

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QUARTERLY REVIEW OCTOBER 2014

KOBIE QUARTERLY REVIEW 3

Every quarter, Kobie meets with banking clients and

financial institutions to discuss loyalty trends and

innovative ways to drive activation and usage, increase

share of wallet and decrease churn while providing new

up-sell and cross-sell opportunities. And while new

online-only banks, virtual currency and banking models continue

to disrupt the FI industry, one thing remains the same and that

is the need for consistent positive experiences that fully engage

individuals with your brand. Enter mobile and digital banking.

Despite security concerns, mobile, social and online channels

are the preferred channels for engaging with FIs. That’s why we

dedicated most of this issue to the key considerations asked of us

from financial institutions as they embark on building a roadmap for

mobile or evolving their existing roadmap. You’ll find innovations

and trends in mobile payment, mobile apps and the overall mobile

experience as the hub of a two-way brand-consumer dialogue that

support customer retention and other important key performance

indicators.

We also cover the steps and considerations when building a total

relationship banking strategy that go beyond acquisition and some

of the top benefits of integrating your loyalty platform across

enterprise banking solutions.

Using advanced analytics and segmentation strategies, we reveal

how FIs can attract, understand and retain high-wealth customers.

We hope the Kobie Quarterly Review: Financial Services Edition

broadens your appreciation for mobile and digital banking as a key

part of your loyalty strategy.

Does your bank have a successful mobile experience strategy? If so,

we’d like to hear from you. Drop us a line at [email protected].

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MICHAEL HEMSEY

President

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techM

obile penetration across consumer segments has risen so rapidly that 87 PERCENT OF U.S. ADULTS NOW OWN A DEVICE – and half of that population has a smartphone. This aggressive new rate of adoption creates both unprecedented opportunity for and demands of financial institutions regarding their mobile products.

Empowering 21st Century Digital Banking through

MOBILE INNOVATIONby NANCY BERG


tech

Customers already use financial

institution apps for remote deposit

capture, loan management, bill payment

and account alerts. But data reveals

a hunger for additional capabilities,

even in the already-maturing world of

mobile commerce. In fact, 57 percent

of respondents in a recent smartphone

user survey said they would be more

inclined to purchase goods on the

device if they could do so through their

bank’s branded mobile app – particularly

for expensive items. Forget future

benefits – for financial institutions, viable

revenue streams are already on the table

waiting to be collected.

All signs indicate the mobile

revolution will expand and persist, and

FIs are wise to embrace it. Never before

have they had the chance, unfettered

by the limiting legacies of established

architecture and practice, to maximize

ease-of-use and improve the customer

experience in highly relevant ways.

INTO THE MOBILE LOOKING GLASS: THE FINANCIAL FUTURE

Though mobile technology has

and will continue disrupting existing

FI strategies, banks’ flexibility will be

rewarded with a positive transformation

of the way these financial institutions

and their customers interact.

Here are just a few of the ways

mobile devices will impact the future of

finance:

Digital payments will change the

way we think about money. Mobile

advancements will render all but

obsolete the need for brick-and-mortar

branches, shifting attention instead to

digital wallets and virtual currencies. As

developers find new ways to mitigate

concerns over mobile security and

account fraud, digital currencies will

move to the forefront of an industry-

wide shift towards virtual payments

that will operate primarily through the

mobile channel. As payment trends

across all industries evolve, traditional

banks and financial institutions are

warming to the many payment services

and options that can be delivered

through the mobile channel.

Mobile platforms will redefine the

consumer relationship. More than ever,

banking customers today demand

barrier-free access to their assets. The

proliferation of smartphone technology

has forever changed the future of

financial institutions by putting banking

and financial services at customers’

fingertips and establishing the mobile

platform as a 24/7 access point that can

address their every financial need.

Mobile technology has put FIs

ubiquitously at their fingertips – in

the process uprooting the traditional

customer relationship into a seamless,

interactive electronic landscape.

Linking financial institutions and

customers will facilitate constant and

transparent communication. At the

core of any mobile strategy is the

technology’s ability to facilitate an

open and easy information exchange

at any moment, anywhere. As financial

institutions have taken advantage of

functionalities like SMS and in-app

mobile messaging to notify customers

when their checks are deposited,

when balances reach a certain level, of

ATM withdrawals or when charges are

incurred, more opportunities are being

created to communicate with account

holders, genuinely and transparently.

Mobile’s transformation of banking

services will continue to push FIs to

innovate and provide more immediate

and convenient ways to interact

with customers and build stronger

relationships. With this we will see

much more personalized experiences

based on the customers’ past behavior

– having an opportunity to introduce

marketing messages during key points

of the buying process. This will open

up a tremendous opportunity for

building customer loyalty not only with

the FI but also with their cobrand and

merchant partners in ways that haven’t

been available historically including at

point-of-sale.

Empowerment through

collaboration–microfinance and

crowdfunding demonstrate a broad shift

in certain consumer segments from a

“me culture” to a “we culture,” and FIs

are adapting to serve it. At the core

of this model is one that encompasses

the “four P’s” of modern economics

– profit, people, planet and purpose –

proving that today, banks and financial

institutions are determined to make a

difference beyond revenue potential.

Their mere presence in the equation, in

addition to the required collaborations

with other businesses, establishes a

brand identity that appeals to young

and cause-minded consumers.

Mobile paves the way for financial

growth. According to a recent J.D.

Power & Associates survey, customer

banking satisfaction has returned to

pre-recession levels – due in part to the

proliferation of smartphone technology

and the financial sector’s adoption of

new web and mobile strategies.

To expand and retain market

presence, financial service companies

will have to carefully plan and

continually improve their customers’

mobile experience. That requires

foresight, testing and a careful ear to

consumer concerns. But the rewards

are extensive for those committed to

the notion that the future is in their

pockets. Buying in now means reduced

operating costs, more durable long-

term relevance and new opportunities

to meet customers’ emerging needs for

decades to come.

“MOBILE PLATFORMS WILL REDEFINE THE CONSUMER RELATIONSHIP.”

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BUILDING A ROADMAP FOR

MOBILE

by MATT STEIN


4


Financial institutions are looking for

innovative ways to build relationships

with a customer base that is constantly

adapting to new technology trends

and capabilities. Creating a mobile

presence allows them to stay ahead

of the curve, differentiate product

offerings and inject convenience

and immediacy into the consumer-

institution relationship. It also provides

an opportunity to improve customer

retention through better loyalty

and rewards engagement, reduce

operational costs and produce a

seamless banking experience that’s

universally accessible.

Today’s consumer requires definitive

command of their assets through this

channel, yet craves a simple mobile

experience that instills confidence in

their financial institution.

For FIs, the technology is critical –

but still new. The challenge is how to

create a mobile strategy with a suite

of capabilities so compelling the app

embeds itself into consumers’ daily

lives, yet ensures reliability and security

throughout the process?

FINANCIAL INSTITUTIONS VERSUS

MOBILE: THE CHALLENGE

As central as it has become to

the modern business landscape,

implementing a mobile strategy for

financial institutions comes with its

own set of challenges.

While mobile commerce is growing,

it still comprises a relatively small

market share. An app may reduce

operational costs, but the incremental

revenue produced by each mobile

transaction and split among various

involved banks and mobile network

operators may make it difficult to

justify the investment necessary to

create the platform.

Banks and other financial

institutions also need to consider

whether the potential security risk is

worth the financial reward. Providing

mobile services, such as financial

planning or the remote depositing

of checks, risks the exposure of the

extensive private account and customer

data FIs keep. Theft mitigation could

require limits on mobile deposits or

a means of authentication, such as

fingerprint recognition, password

protection or voice activation. Further,

FIs must provide proactive solutions to

malware attacks, service interruptions

and other potential security breaches.

From a technical perspective, the

legacy systems still in use by financial

institutions may not be equipped to

integrate with today’s mobile software.

If they do, FIs may still be challenged

to create apps for every mobile

operating system (such as Android,

Apple, Windows and Blackberry). In

addition, successful mobile apps could

cannibalize retail traffic – requiring

financial institutions to find creative

mobile solutions for the cross-sell and

upsell of products and services.

THE PERFECT MOBILE ROADMAP

Given technology’s impact on

purchasing decisions, an effective

mobile roadmap is key to keeping FIs

in line with current consumer trends.

The following guidelines will help

ensure FIs get the most out of their

mobile platform.

With 58% of the U.S. adult population owning a smartphone and 44% using tablets on a regular basis, consumers clearly appreciate the ubiquity and convenience of mobile devices. In just a few years, they’ve quickly incorporated technological leaps enabling consumers to complete everyday tasks from anywhere – be it a couch, restaurant or a seat on the commuter train.

Mobile technology has so transformed consumer behavior that it now endangers the financial institutions that don’t have a mobile roadmap or strategy. According to a recent report, 60% of smartphone and tablet users who switched primary banking services cited mobile banking as “important” or “extremely important” in their decision.

AN INTEGRATED FUTURE FOR THE MOBILE AND

FINANCIAL REALM


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Implement a ground-up strategy. Mobile is the newest and most

advanced channel in today’s business

landscape. To capitalize on it, FIs

should take care not to model their

strategies on older access methods,

such as desktops. Apps must also be

scalable – able to adapt to consumers’

rapidly evolving needs – but capable of

meeting immediate demands, such as

mobile payments.

Make it simple and intuitive. Credit

and debit cards are today’s preferred

forms of payment, and that won’t

change unless another method with

extensive advantages appears. When it

comes to how they pay, consumers are

looking for three things: convenience,

low cost and security. Mobile banking,

commerce and payment services

should be widely accessible, limit

transaction surcharges and raise

confidence by accepting liability for

fraudulent charges.

Focus on pre- and post-payment.

Financial institutions should offer an

all-inclusive experience that

incorporates customer support, loyalty

program access, relevant additional

purchase opportunities and GPS

services with local offers and locations

of branches and relevant merchants.

FIs can achieve this by establishing a

mobile commerce payment platform

that supports other merchants, brands

and service providers relevant to

banking customers.

Build a network for distribution and customer acquisition. Aside from

promoting new mobile offerings

directly to their customer base, FIs

should establish partnerships enabling

them to reach even consumers who

don’t use the app. The platform can

then be used for payments and account

services, and additionally serve as an

acquisition tool for partner loyalty

programs and promotions. These

partnerships, and others with mobile

network providers, can also facilitate

long-term success by creating a larger

alliance more capable than single FIs

of taking on dominant players, such as

Google. Institutions must be careful to

deal only with companies that meet

industry standards in technology

and offer their own partnerships

(with credit card leaders, innovative

platforms, etc.) that FIs can leverage

with limited integration points.

DESIGNING ROADMAPS

FOR THE FUTURE

Mobile technology has created

an impressive channel for growth by

changing the day-to-day interaction

between consumers and banks.

However, this “gift” is also wrapped in

limitations, such as security concerns

and challenges in cross-platform

and network compatibility. Financial

institutions must at once be both agile

and carefully strategic.

Those financial institutions who

get mobile right – offering innovation,

simplicity and convenience -- can enjoy

new heights of loyalty and acquisition

in an era when customer-centricity and

relationship building have never been

more important.

MOBILE BANKING, COMMERCE AND PAYMENT SERVICES SHOULD BE WIDELY ACCESSIBLE, LIMIT TRANSACTION SURCHARGES AND RAISE CONFIDENCE BY ACCEPTING LIABILITY FOR FRAUDULENT CHARGES.

“

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With real-time and predictive analytics, we can help you understand how members are behaving, anticipate how they will behave and inspire more loyal behaviors. We’ll help you make smarter decisions about complex business problems faster than your competition. Simple.

SOLVE COMPLEX PROBLEMS BEFORE THEY HAPPEN.

Call 800-821-7892 or visit www.kobie.com to learn more.

Solve complex problems before they happen.

The worldwide population of

smartphone users swelled

past the 1 billion mark in

2012, and today experts

expect 1.75 billion users

by the end of 2014. An estimated 73%

of them want to access their financial

accounts through a mobile app, and

53% want to use that same app to

view their transaction history, and

preferably their Rewards information

in a completely integrated experience.

Enterprise customers provide limitless

possibility, but will require a different

app integrating now-disparate

components of their business.

Mobile apps in the banking and

financial services sectors reduce

business costs and keep brands current

by enhancing the overall customer

experience. These apps offer capabilities

like location-based discounts and

rewards, in-app banking alerts, one-click

bill pay, money transfers, authentication

services and more. For financial

institution brands looking for ways to

interact with their

customers and boost

revenue, the mobile

application platform

presents a significant

opportunity to

present an innovative,

engaging, convenient,

and seamless banking

experience.

In addition,

opportunities abound

across consumer

segments. Some

32 million U.S.

households are

expected to use

mobile banking by

2016, while 64% of

Millennials – a generation

with $600 billion in

purchasing power – already

use mobile devices

regularly to make

purchases.

Given their history

as being part of an established financial

system, with refundable transactions

and government-backed insurance,

banks have clear advantages over other

platforms and virtual crypto-currencies.

However, because they charge higher

fees and are typically slower to adopt

new technology, financial institutions

encourage customer curiosity about

emerging offerings. Even with a mobile

app, FIs must continue exploring new

strategies for engagement – creating

new and relevant offers that provide

choice and scalability to keep the

undivided attention of the modern

customer and fit seamlessly into his or

her daily life.

CUSTOMERS DON’T FIT MOBILE APPS – MOBILE APPS FIT THE CUSTOMER

For financial institutions, a well-

designed mobile app has the potential

to establish a platform for relevant and

meaningful brand-customer interactions,

build consumer confidence in the brand

and create opportunities for those

brands to drive real customer loyalty.

Focusing on emerging functionalities

– such as digital wallets, geo-location

services and push notifications – can

help financial institutions offer a

seamless and competitive retention

strategy.

DIGITAL WALLETS ARE THE FUTURE OF FINANCIAL SERVICES.

As smartphone usage increases, so

does the prevalence and acceptance

of digital wallets. By 2017, industry

experts predict 29 million North

Americans will use mobile wallets,

generating $44 billion in revenue. This

surge in popularity is a product of more

discriminating consumers, who seek the

ability to carry fewer payment cards and

prefer easy-to-use apps that support a

variety of needs.

Mobile wallets can entice loyalty

by offering rewards tracking and

integrating multiple virtual and loyalty

currencies into a central location.

Demand is already there, with 55%

of consumers expressing interest in

the use of rewards or points to make

payments through their mobile wallet

and businesses increasingly accepting

the practice.

However, both merchants and

consumers are concerned with

e-commerce security, from online

banking to virtual currencies and

beyond. The Federal Trade Commission

warned in 2013 that free digital

wallets, and even prepaid cards used

online, lack the federal protection of

limited liability attached to credit and

debit cards. Consumers seem willing

to pay for the use of systems that

establish a comprehensive level of

trust and security for mobile wallets.

This puts nimble financial institutions

and interchange networks uniquely

in position to attract and retain new

customers.

by NICOLLE SCHREIBER


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IN-APP MOBILE MESSAGING AND PUSH NOTIFICATIONS PROVIDE CUSTOMER INSIGHT

While promotional email

continues to hold strong

as an effective means of

marketing communication,

the channel is unable to

exploit perishable marketing

opportunities with short

publication cycles. In-app

mobile messaging and

push notifications enable

financial institutions to

enhance customer loyalty

with techniques such as

“flash sales,” which provide

continuous opportunities for

brand engagement.

Of the 60% of consumers

who download mobile apps,

70% have enabled push

notifications, which can

take the form of special

sales, payment reminders

and the status of a recently-

placed order. Since push

notifications use more in-

depth analytics and provide

access to data concerning

the delivery, open rates,

time and engagement of

smartphone users, the

technology can give banks

and financial institutions

more insight into how their

customers behave.

GEO-LOCATION SERVICES OFFER BOTH RELEVANCY AND PROTECTION

From a messaging

perspective, geo-location

services enable brands to

send customers relevant

offers and information – as

directed by transactional

and CRM data – when

consumers are near branches

or other points of individual

interest. The lifestyle data

captured can curate partner

merchandising offers, drive

sales and measure how

appealing brand efforts are

to customers, or not.

MAKING THE CASE FOR MOBILE APPLICATIONS

According to a recent

report on mobile phone app

statistics, apps developed

by FIs only constituted 3%

of all downloads in 2013 – a

surprising result given that

51% of all smartphone users

have used mobile banking

over the past year. For

banks and financial services

brands, the key to growing

this statistic is developing

a mobile app with more

convenience and capabilities

than in-person banking.

The product’s value must

be conspicuous – apps

should operate on a simple

user interface, incorporate

clean design and assimilate

seamlessly into customers’

daily lives. In addition,

they should enhance the

customer experience by

offering in-app messaging,

push notifications, geo-

location services and digital

wallets while ensuring user

security.

Integrating these

solutions within a mobile

app and evolving with

customers’ needs empower

financial brands to

position themselves as an

indispensable, effortless

and central part of the

consumer’s life. Which is

exactly where they should

be.

64% of

Millennials

already

use mobile

devices

regularly

to make

purchases

55% of

consumers

express

interest in

the use of

rewards

or points

to make

payments

Apps

developed

by FIs only

constituted

3% of all

downloads

in 2013

51% of all

smartphone

users have

used mobile

banking

over the

past year

73% of

smartphone

users want

to access

their

financial

accounts

through a

mobile app

64%

55%51%

3%

Experts expect the population of smartphone users to increase to 1.75 billion by the end of 2014

32 million U.S. households are expected to use mobile banking by 2016

By 2017, experts predict 29 million North Americans will use mobile wallets

A T A G L A N C E

73%

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TARGETING AND

REWARDING

HIGH VALUE

CUSTOMERS

by DAVID ANDREADAKIS


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With bank revenue

declines tied to

persistently low

interest rates, high

compliance costs and the adoption

of unconventional banking methods

(like PayPal and Google Wallet),

financial institutions are seeking new

ways to improve their bottom line.

Loyalty programs are emerging as an

attractive option, with recent research

demonstrating most customers only

align 46% of their deposit share with

one FI brand and 70% of banks believe

new customer acquisition is more

expensive than retaining existing

customers.

Banks are shifting attention to their

“most valuable” customers—a high-net-

worth, loyal demographic with greater

financial needs. Wealthy customers—

those with assets valued anywhere

from $1 million to $30 million--are six to

ten times more profitable than regular

customers. While they constitute no

more than 30% of financial institutions’

customer bases, they are responsible

for as much as 60% to 70% of total

customer profits.

The demographic has so much

purchasing power that The Boston

Consulting Group estimated those

within the category worldwide had

investible assets of some $122 trillion,

enough to buy all New York Stock

Exchange securities ten times over.

No longer are large retirement

savings pools or rapidly developing

economies the most attractive places

to find new, high-value capital. After

the downturn, Bain Capital theorized

wealthy investors’ new needs for

diversification would be equally

successful drivers.

To convince these existing high-

wealth customers to trust a given

institution with even more of their

assets, FIs need to find out what

customers really want and need from

their providers.

Transitioning to this new revenue

strategy will require a well-executed

plan that emphasizes cross-sell, upsell

and a return to data and analytics-

driven segmentation. In today’s

competitive market, FIs need clearly

defined motivators for customer

behaviors within different income

brackets, particularly for those expected

to have a high net worth in the future.

HIGH-WEALTH CUSTOMERS

ARE KEY TO REVENUE GROWTH

While every customer is important,

given the value of the assets they

possess, the high wealth customer

WITH THIS SELECT CUSTOMER SEGMENT CONTRIBUTING MORE THAN 60% OF A BANK’S PROFITABILITY,

THE STAKES ARE VERY HIGH

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segment has a much greater potential

to make a significant difference in bank

revenue than lower-income segments.

By using segmentation and the analysis

of existing data to isolate this customer

group, banks and financial services

providers can get a much closer look

into the individual customer profiles and

take action to ensure the services they

receive match their financial needs – or

anticipate their future ones. To gain

trust and capitalize on this investment,

however, banks and financial services

providers must identify the three or

four attributes that differentiates their

behavior and shape their relationships

accordingly.

TOO MUCH ATTENTION

CAN GET TOO DIFFICULT

Banks need to reach an

unprecedented level of understanding

for the preferences and motivations of

wealthy customers. Delivering on them

and connecting on a personal level

motivates further engagement with the

brand. Key to the equation is finding

a balance between relevancy and

practicality.

In an effort to interact with

customers on any level, many financial

institutions waste time and resources

offering incentives and rewards for

products customers already intended

to use – or even have. However,

improved targeting and motivation

are easier touted than implemented.

Advances have improved analysis

and segmentation across industries,

but banks are limited by their historic

reluctance to invest in new technologies.

For high-wealth customers, large

investments in an FI brand usually

involve less risky, fixed-income securities

with a pre-determined return on

investment. Historically, banks only start

courting these customers as the end of

their term approaches—creating renewal

opportunities, but limiting cross-sells

and upsells. Instead, financial institutions

should communicate with these

customers on a regular basis, build a

high-engagement relationship over time

by learning whether needs are being

met and whether they should address

any core concerns about the brand.

Instrument maturation dates are too late

to operate on, as most customers will

have already researched any next steps

and alternative institutions.

The key for FIs is to cultivate a

situation in which a customer has been

treated so well he or she feels a moral

obligation to continue the relationship.

WHAT DO HIGH WEALTH

CUSTOMERS WANT?

Following the late-2000s recession,

wealthy customers, more than ever,

demand to understand how their

financial services providers are

simultaneously protecting their assets

and producing strong returns. They also

seek an emotional component to their

relationship with the bank —knowing

they can trust a given brand, and

perceive a direct interest from that bank

in their well-being beyond wallet size.

These customers also crave consistent

follow-up and reassurance that their

immediate needs are a priority for the

bank to meet. They’re accustomed to

concierge services and single points

of service for all needs, be it ordering

or cashing checks or purchasing new

financial products.

An example of this can be seen

at BB&T private banking. A former

employee said the bank made

everything negotiable to high-net-worth

clients, from interest rates on products

ranging from CDs to checking and

deposit accounts, bank fees and closing

costs on mortgages or home-equity

loans.

For the best chance at retaining

customers in this income bracket,

FIs need targeted strategies that

include efforts to enhance the overall

customer experience, bridge the gap

between older and more modern

high-wealth customers and keep this

demographic talking about the brand.

From hotel stays to concierge services

and personal shopping, customers of

this status are used to receiving the

highest levels of attention. FIs are no

exception, and should strive to offer

a holistic experience that includes

asset allocation, insurance assistance,

retirement/ tax planning and debt/trust

fund management.

HIGH VALUE, HIGH STAKES

Future leaders in the financial

sector will be those who understand

that segmentation is not a one-time

ordeal, but an ongoing process as is

the analysis of customer behaviors and

preferences found in their data. It will

change as demographics, customer

needs and technology change, and give

financial institutions the tools they need

to personalize products and services for

high-wealth customers.

So how can institutions prospect this

valuable customer segment? We see

it through the application of analytics

to data and ongoing evaluation of

currently held financial information.

Wealthy clients are more likely to spread

investments among advisors and various

account types, to pay lower fees and

have more fee-based accounts than

mutual fund investments.

The bottom line: With this select

customer segment contributing more

than 60% of a bank’s profitability, the

stakes are very high. Banks simply can’t

afford not to invest in analytics that will

help them not only identify high-value

(or potentially high-value) customers,

but help them cater to their very

exacting needs.


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creating a total relationship banking strategy beyond acquisition

5 HURDLES THAT BANKS AND FINANCIAL INSTITUTIONS MUST OVERCOME

by MARGARET MERAW



The Great Recession of the late 2000s

undoubtedly challenged financial institutions

to engineer new profit centers. With real estate

loans impossibly risky, liquidity scarce and

revenue lines from interchange fees crimped

by regulators, many FIs went back to basics. The underlying

goal was this: Build a comprehensive strategy that increases

satisfaction and confidence among their best customers.

With surveys indicating 63% of consumers still believe

U.S. financial institutions are no more secure than they

were prior to the recession, the industry has more work to

do. The challenge for FIs is finding new ways to develop

deeper relationships with customers and communicate how

they’re adding value to consumers’ daily lives. The solution

for some is total relationship banking, a philosophy that

incorporates brand-encompassing loyalty programs with

the core notion that customers should be the impetus for

all business operations.

Although the idea was first introduced in the early

2000s, it wasn’t until 2009 that FIs began to apply this

philosophy to the integration of loyalty, mobile and online

portals. When conceived and executed correctly, total

relationship banking has demonstrated significant increases

in cross-sell and upsell opportunities, reduced attrition and

improved profit margins.

TOTAL RELATIONSHIP BANKING PUTS THE CUSTOMER FIRST

Historically, financial service companies have attracted

customers with a products-based approach.

Marketing collateral would variously

emphasize benefits in home equity

lines, interest rates and debit card

fees. Business came, but it also went. Customers were

persistently prone to flee if they lost interest in the feature

that first attracted them.

Conversely, a total relationship banking strategy seeks

to build trust and deep ties with a consumer, nurturing

a dynamic that culminates in the consolidation of entire

financial need portfolios within an institution. The approach

relies on high-level customer satisfaction, enticing rewards

programs and even personalized products conceived out of

the vast universe of customer data collected by FIs.

Other points of potential friction include:

1. Integrating services under one customer I.D.

Customers holding multiple accounts with the same

bank are likely identified by separate IDs created at the

point of sale and integrated with third-party solutions that,

over time, have failed to communicate. Some financial

institutions will find it challenging to pull them into a

centralized location.

2. Extracting private data from separate departments.

FIs protect personal information by storing it in separate

departments. The implementation of a enterprise-wide

loyalty program will require the consolidation of such data

to provide appropriate rewards – not just initially, but on a

continual basis.

3. Value propositions and liability acceptance.

When FIs integrate across multiple products, each

party involved needs to accept the liability

that comes with awarding

points for various


15

transactions. To convince siloed departments to accept

this liability, FIs must ensure all participants understand the

value of rewarding customers for their loans, mortgages and

additional accounts.

4. Poor marketing in an era of distrust.

Because total relationship banking involves the integration

of multiple product groups into a single solution, and each

group has its own marketing strategy, FIs often struggle to

create a unified marketing approach. For example, some

departments may wish to engage consumers through mobile

and social media strategies, while others have no interest in

those channels at all.

5. Government regulations and stricter protocols.

The Credit Card Act of 2009 and Dodd-Frank legislation

are changing the way FIs operate and disclose information to

customers. The regulations apply even to loyalty programs,

causing some banks to pause rewards program launches until

they see how others within the sector are affected.

IT’S A MARATHON, NOT A SPRINT

Total relationship banking has the unique ability to

simultaneously strengthen consumer confidence and increase

profit. But it won’t happen overnight. True success is achieved

when operations become so seamless that customers feel

they are interacting with a unified company that appreciates

and rewards their business – not disparate departments for

each of their accounts.

To achieve this goal, banks and financial services brands

must conceive, evaluate and execute a strategy that analyzes

results over several months, or even a year. It will take time to

marry various customer initiatives, but it’s worth the effort.

The following are best practices to consider when

implementing a total relationship banking strategy:

• Organize and integrate financial databases so customers

can see their profiles and account history through one portal,

in real time.

• Establish a collective tone and standard of messaging

to avoid confusion about the bank’s value proposition or the

products and services it offers.

• Develop a loyalty program which limits churn and

leverages the data collected into behavior and preference

insights.

• Create opportunities for team members to collaborate

with one another, ensuring employees understand the full

scope of the products and services in use.

THE GOAL: CUSTOMER ENGAGEMENT BEYOND ACQUISITION

Unlike traditional banking, total relationship banking goes

beyond the scope of acquisition and focuses on the big

picture: long-term revenue growth.

It starts with the simple premise of focusing on customers

who have been most valuable – in this case, those who’ve

interacted with the brand regularly and over an extended

period of time. And it concludes in the transformation from a

simple brand to an integral part of consumers’ financial lives

and future planning.

The approach also proves banks don’t have to discover

new revenue streams to compete on Wall Street. They just

need to keep the customers they already have.


16


abo

ut

the

auth

ors

MICHAEL HEMSEY

President

As President of Kobie Marketing, Michael

is responsible for leading all facets of the

loyalty marketing organization including

business development, IT initiatives, client

services, as well as the overall direction

of the Kobie brand. For 20 years, Michael

has cultivated a rich background in

client services, product development,

marketing, technology and operations

through several key posts. Prior to Kobie

Marketing, Michael was Executive Vice

President of TSYS Loyalty (formerly ESC

Loyalty) and led the loyalty marketing

implementation and relationship

management teams serving the world’s

largest issuers and retailers.

NICOLLE SCHREIBER

Director of Partnership Marketing

Nicolle has 18 years’ experience

in Partner/Vendor Relationship

Management, including Retail purchasing,

loyalty program management, and

product management. She developed an

interest in purchasing/product marketing

after working in a retail store during her

early years of college. Prior to joining

Kobie Marketing, Nicolle worked in buying

and product management at several

companies including Bealls Inc. and FIS.

Notable is her 15 years as Buyer for Bealls

Inc. Nicolle holds a Bachelor’s degree

from St Leo College.

NANCY BERG

VP of Client Services and Partnerships

Nancy is responsible for all aspects

of Account Management and building

strategic and tactical marketing

partnerships that differentiate Kobie’s

client programs. Nancy takes great pride

in delivering against Kobie’s mantra that

we will never sacrifice an existing client

for a new business opportunity, and

that we will do what we say we will do

each and every day. She is a strong and

trusted leader, that has nearly 20 years’

experience in Customer Loyalty Marketing

working in several industry verticals with

top brands including Verizon, RBC Bank,

AMC Theatres, Hawaiian Airlines, Bank

of America, Northwest Airlines, US Bank,

Westin Hotels and others.

MARGARET MERAW

VP of Loyalty Operations

In her role at Kobie Marketing, Margaret

is responsible for all aspects of the

organization’s day-to-day operations

including oversight of the Project

Management office, process management,

Tier I and Tier II Call Center Operations,

as well as management of internal and

outsourced Fulfillment. This role is vital

to the organization to ensure flawless

execution and ongoing endurance of

Kobie’s client’ programs.

MATT STEIN

VP of Customer Experience

and Agency Services

Matt serves as the head of Kobie’s

Customer Experience & Agency Services

capabilities. With over 15 years of

marketing experience in senior leadership

roles, he drives industry-leading loyalty

engagement and marketing solutions

that span the online, mobile, social, print

and broadcast media channels as well

as the full customer journey from digital

channels to physical locations.

DAVID ANDREADAKIS

VP of Loyalty Strategy

Andreadakis has extensive experience

analyzing the strategic and financial

aspects of loyalty strategy and program

development for clients and their

customers, as well as providing insights

that will help enhance Kobie’s design,

analytical, behavioral and platform

offerings.

17


Kobie Marketing is a global leader in loyalty marketing and an industry pioneer, delivering end-to-end strategy, technology and program

management solutions. Kobie drives results and ROI through Kobie Alchemy®, a best-in-class loyalty marketing technology platform.

W E A R E K O B I E FIND OUT MORE AT [email protected]

Kobie Marketing, Inc. @Kobie_Marketing Kobie Marketing [email protected]

kobie quarterly: financial services edition, october 2014

Economy & Finance