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COMMUNICATING CHANGE: A COST, OR AN OPPORTUNITY?

Andrew Stevens, Banking Expert at Quadient

 

It is predicted that the Bank of England will raise interest rates several times over the next couple of years. As any lender or homeowner knows, this means significant changes both for mortgage holders and providers, and increased costs for both. These costs don’t just come from rate changes themselves; to communicate these changes to their customers would cost a mortgage provider, on average, 40p each time to send a letter to every single customer. This kind of mass communication can rack up a significant bill when multiplied by the number of customers the typical mortgage provider has. More daunting is that industry conditions can change at any time – meaning more communications, and more frustration for customers. So how can financial institutions turn this kind of costly situation into an opportunity to thrive?

 

Keeping customers happy

Added cost from rising interest rates, or any other source, is bound to sour any relationship the customer had with its mortgage provider, no matter how happy they were previously. As a result, it is increasingly important that the bank does all it can to keep its customers happy. Research from Quadient found that more than three quarters (76 percent) of European consumers said they would be likely to switch from a business that doesn’t meet their expectations on communication.

 

This means consistently communicating to the customer with the right message, at the right time, and in the right way. Failing to do this – for instance, by only letting Tom from Bicester know about the changes to interest rates by post when he only ever checks email, and after the increased rates have taken effect – is taking the wrong steps to ensuring a fruitful relationship with the customer. It can also introduce unnecessary costs, such as spending money on posting letters to customers who only use email. Putting the customer first and ensuring communication is consistent will go a long way in getting past any obstacles.

 

Value added services

A time-honoured way of reducing the impact of bad news is to accompany it with good news. Banks can do this by offering customers services that will give them added value. This means in addition to sharing news of interest rate rises, also sharing more positive messages – such as suggesting alternative products the customer may want to consider, or ways to help save money elsewhere.

 

For example, the bank could suggest swapping current accounts to give customers cashback on mortgage repayments. By opening up the customer conversation, banks will increase their chances of upselling and cross-selling products, while also giving the customer something they will benefit from in turn. This approach to looking after the customer will reduce the risk of customer churn, as well as positioning the organisation as a trusted advisor. A bank that misses these opportunities could seriously damage its relationship with a customer if it fails to communicate how they could save money, or worse, only gives the best offers to its new customers – setting the stage for resentment from existing customers and from these new customers in a few years’ time.

 

Understanding the customer

Knowing customers well enough to know exactly what value-added services to offer them, and when, can seem an overwhelming task. But if a bank has a clear view of a customer’s journey with them and maps what steps the customer has taken at every point of contact – from when a bill was sent to a complaint on social media – it will make the task far easier. By utilising a customer journey mapping tool, banks can gain a better understanding of the customer and know exactly what value-added services would benefit them the most. For example, if Tanya has notified the bank that she has moved to the US for six months, she will not be interested in hearing about the new savings account that offers better rates for only those living permanently in the UK. But she will be interested to hear about the reduced card fees for customers travelling abroad.

 

Taking the initiative

With this setup in place, financial institutions can be on the front foot, ensuring any duty-bound communications will represent opportunities rather than irritating costs, benefitting both the customer and the company.

 

At a time when nothing is certain but the importance of the consumer to a bank, everything must be done to prioritise the customer experience. If banks can take the time to understand who the customer is and what they value the most, they can open up the conversation to ensure they are able to give the customer what they’re looking for. By looking at the customer journey and understanding what works for them, banks will be able to ride the waves of uncertainty, while keeping the customer happy.

 

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Top 10

WHY INDONESIA IS THE WORLD’S NEXT DIGITAL PAYMENTS BATTLEGROUND

Kelvin Phua, Global Head of Payment Networks at PPRO

 

The COVID-19 outbreak has seen the e-commerce sector surge. Despite economic uncertainty, consumers around the world are turning to the internet for the goods and services that they previously would have looked for in-store. In APAC, this has meant that some emerging markets have accelerated their adoption of digital services; the growth that was projected to take years has only taken months.

One notable example of this is Indonesia. According to a recent survey, Indonesia’s e-commerce sector is expecting 50% year-on-year growth with its value set to reach US$35 billion in 2020, up from $23 billion in 2019. What’s more, 30% of the country’s growing e-commerce market is new to online marketplaces and 40% intend to keep using e-commerce after the effects of the pandemic lessen.

With this upward trend has come a reliance on digital payments, and both public and private sectors have responded accordingly. Recently, the Indonesian central bank announced that all mobile payment providers were to replace QR codes with the standardised QRIS (Indonesian Standard QR code), providing a single integrated platform for all transactions made using QR codes across multiple e-wallet providers. On the private sector front, LinkAja has launched an online shopping solution to overhaul traditional marketplaces throughout Jakarta by enabling users to pay for goods using an app with the products delivered straight to their door.

For e-commerce and digital payment providers, these examples are good indicators that the time is right to go after a share of this market.

 

Understanding the playing field

Indonesia possesses many of the key characteristics that are critical to a market’s adoption of digital payments. With a smartphone penetration rate of 60%, well above the region’s average of 51%[1], and having witnessed its middle class grow from 7% to 20% of the population over the last 15 years, it comes as no surprise that Indonesia’s internet economy has more than quadrupled in size since 2015.

Currently, there are 37 local payment methods (LPMs)[2] in Indonesia, with GoPay, Doku, OVO, Dana, and LinkAja some of the frontrunners in the battle to claim a slice of the payments pie. This number is expected to grow as Alipay formalises its entry into Indonesia in partnership with Bank Mandiri and Bank Rakyat Indonesia, joining WeChat Pay which was officially granted a licence to operate in the country this January in collaboration with CIMB Niaga.

The growing number of players jumping on board with digital transactions bodes well for the Government’s National Non-Cash Movement launched in 2014. Go-Jek’s recent funding round and Facebook’s plans to build an e-commerce ecosystem around WhatsApp will help accelerate the adoption of digital payments for millions of SMEs in Indonesia, with businesses already using the popular messaging service to interact with their customers. Similarly, PayPal’s arrangement with Go-Jek will see the latter’s users use GoPay at PayPal merchants globally.

With the influx of foreign payment services and investment catering to higher consumer demand while creating the digital infrastructure needed to facilitate higher payment volumes, Indonesia is shaping up to be Southeast Asia’s next digital payments battleground. But what does this actually mean for businesses and consumers there?

 

Navigating a fragmented payments landscape

With all this consolidation and market movement, payment providers are innovating quickly to strengthen and enrich their offerings by partnering with others to develop their own unique payment ecosystems. Initially, these new partnerships will result in greater efficiencies when it comes to connecting consumers and businesses through one platform. But the fundamental pain point remains; the development of multiple payment ecosystems will continue to create the dilemma of choice. Consolidation in the truest sense of the word is yet to be achieved, and the payments landscape in Indonesia remains highly fragmented.

Since Indonesia loosened investment rules in 2016, foreign e-commerce players such as Amazon and Alibaba have entered the domestic market, competing against homegrown firms such as Tokopedia and Bukalapak. This has provided consumers with access to a wider variety of goods at more competitive prices.

To keep up with consumer preferences in Southeast Asia’s largest economy, merchants and payment service providers would need to evolve – by delivering a customer-centric experience where consumers are able to pay with the local payment method they prefer and trust.

In the long term, businesses should refrain from the drawing of battle lines in Indonesia’s fragmented payments landscape and create a payment ecosystem that takes into account payment preferences of the local consumers. Those who seek to enter multiple markets through one payments platform-as-a-service will be the ones most likely to succeed in capturing the lion’s share of the e-commerce market.

 

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Technology

ARTIFICIAL INTELLIGENCE AND FUTURE OF TECHNOLOGY

Ashish Jain, CEO, Future FX

 

Artificial Intelligence refers to machine intelligence that is programmed to think like humans and mimic their actions. For example while writing this article, I am not actually typing it but dictating it out using the microphone and the text is being typed by Microsoft Word itself.

The ideal characteristic of artificial intelligence is to rationalize and take actions to achieve a specified goal.

As technology advances the previous methods of artificial intelligence are taken for granted as new necessities are conjured. For example the computer was one of the most iconic invention of artificial intelligence but now it is considered as mandatory.

Artificial intelligence is continuously evolving and has to evolve. Machines are made in a way that they understand mathematics, linguistic, psychology and many more other terms that are related to human mind.

Artificial intelligence is used in many sectors for example the medical sector. It is used to test drugs and medicines.

We have applications and games which includes chess where the computer plays against us this is also a feature of artificial intelligence. Similarly self driving cars are also an invention of artificial intelligence. These have to be designed very intelligently.

This can also be used in the financial industry to trace and flag activities in banking and finance such as unusual debit card activity or usage and large deposits.

This also helps to estimate the demand supply and prices of the estimates and that makes trading easier.

Earlier, we had to pay a visit to bank on order to deposit a cheque. Then we updated to ATM/Debit Cards and now you can be identified by your retina. Many different sectors have also adapted this method to make actions it more convenient and safe.

Some more examples of artificial intelligence are iPhone’s Siri, Google’s Smart Assistant, Amazon’s Alexa, Google Maps, Ride- sharing apps like Uber and Ola, diseases mapping, Automated investing, virtual travel booking, social media monitoring, inter team chat tool, NLP tools, etc.

Artificial intelligence is all around us and playing an active role in our daily lives. Every time we open our Facebook newsfeed, do a Google search, get a product recommendation from Amazon or book a trip online, we are using it immensely.

In the coming years, computers might match or even exceed human intelligence and capabilities on tasks such as decision- making, reasoning and learning, analytics and pattern recognition, visual acuity, speech recognition and language translation.

Smart systems in commodities, vehicles, day to day use objects will save time and effort offering us a more customized and comfortable future.

It will help the medical sector hugely in upgrading the medicines and treatments, inventing new ones which haven’t been found yet and making everyone’s lives more safer and healthier. A large number of data can be collected from person to person about their health and nutrition and thus changes can be made in the lifestyle.

Artificial intelligence will bring changes in the educational system making it more revolutionary and advanced.

Overall, every factor has advantages and disadvantages and artificial intelligence has it’s lot too. Considering all the advantages artificial intelligence will also affect the human decision making power, analyzing and rational thinking, lifestyle etc. It will make people lazier and will affect their creativity. It can also lead to unemployment due to increase in usage of machines.

Like everything has a balance, artificial intelligence needs to be balanced too so that we can enjoy it’s benefits without suffering the negatives.

 

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