Thursday, 28 September 2023

How financial brands can leverage the rise of the platform economy

5 min read

By Vipin Kalra

The emergence of the so-called “platform economy” has brought a new trend to the financial services industry. Vipin Kalra, chief executive officer of BankBazaar International, discusses how financial brands can leverage the move to platforms to further market their products and strengthen their brands.

  • Kalra stated that banks need to prepare for the potential challenges due to a changing financial ecosystem
  • The advent of the platform economy, which brought in one of the biggest changes in consumer purchase behaviour, has also began to disrupt the financial services industry
  • Banks can leverage the move to platforms through opportunities including: focussed digital spending, using data analytics to customise offers, and seamless customer experience

Look up any brand study over the last few years, chances are some of the top brands belong to the financial services industry, particularly in Asia. In Singapore, DBS, OCBC and UOB make it to the top of the list, while in Indonesia, Bank Central Asia and Bank Rakyat Indonesia are the most valuable. In Malaysia, Maybank, CIMB and Public Bank make the list of top ten most valuable brands.

Banks have been able to build powerful brands over the years because of their extensive network and the strong trust customers have placed in them. However, some studies and reports have noted that while consumers’ trust in banks continue to remain high over the years, non-traditional providers have received parity on the foundational dimensions of trust and moved ahead on relationship-driven and differentiating dimensions of trust that matter most. As such, even though banks have strong brand value, they need to gear up to face the challenges presented by a changing financial ecosystem.

One of the biggest changes in consumer purchase behaviour is being brought in by the emergence of the platform economy. Online market places such as Amazon are becoming the go-to site for consumers faced with more choices. We are beginning to see the same trend in the financial services industry. According to a report on disruptive forces transforming financial services, prepared by the World Economic Forum with support from Deloitte, “platforms that offer the ability to engage with different financial institutions from a single channel may become the dominant model for the delivery of financial services.”

While the shift may be seen as disruptive in the short term, banks can leverage the move to platforms to further market their products and strengthen their brands. Here are some of the opportunities:

      • Focussed digital spends: Digital spends are increasing across various industries and the banking industry is no exception. However, with a plethora of digital channels and growing number of players in the market vying for the customer’s attention, focussed digital spends are key. Marketplaces provide an ideal platform for banks to reach digital customers who are engaged and have the intention to apply for financial products. Banking brands also stand to benefit from the digital marketing expertise marketplaces have developed. For instance, BankBazaar has built search engine optimisation and search engine marketing capabilities to target relevant customers and drive high-intent consumer traffic to its website.
      • Using data analytics to customise offers: As customer usage of digital channels grows, there is a treasure trove of data that banks can leverage to enhance their offerings and drive brand value.
        While banks have a wealth of data, operations tend to be complex and siloed. As such, it is challenging to put together relevant data from different departments to provide a comprehensive picture.

        Marketplaces offer a holistic view of the customer journey from search, all the way to approval and beyond. This opens up avenues for banks to personalise the customer experience by offering real-time offers based on the customer profiles. Bank Bazaar provides an “Offer Deviation Engine,” which leverages customer analytics to mimic the bank’s back-office offline deviation process in real time, allowing banks to utilise customised offers to acquire new customers and also retain existing customers.
      • Seamless customer experience: The modern consumer interacts with brands across multiple channels and touch points. In such a scenario, creating a seamless customer experience can play an integral role in building brand equity. According to a customer experience study commissioned by Accenture and conducted by Forrester, a 1%increase in customer experience scores can translate into $10-$100 million in annual revenue. Customer experience high performers also saw higher rates of digital success, including a 21% improvement in brand relevance.

In the world of digital there is constant change in consumer behaviour and buying patterns, evolution of current products, and emergence of new ones. Banking brands need to adapt to keep pace with their customers. With the rise of the platform economy, it will be more important than ever to be on marketplaces. By working together, banks and marketplaces can create a path to mutual success. 

Vipin Kalra is the chief executive officer of BankBazaar International. The views expressed herein are strictly of the author.

Keywords: BankBazaar International, Platform Economy, Technology
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