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How Analytics Is Helping Banks Cater To Millenials

Interview with Rocky Scopelliti, Telstra’s global thought leader

21Sep

Rocky Scopelliti is Telstra’s global thought leader and industry expert. His pioneering work and membership on the innovation council of a major bank has delivered five industry first innovations. He is also a non-executive director on the board of Community First Credit Union - Sydney’s largest credit union.

We sat down with him ahead of his presentation at the Predictive Analytics Innovation Summit, taking place in Chicago this November 29-30.

Do you think traditional retail banks are capable of real digital transformation, or do FinTech insurgents hold the trump cards in terms of agility?

FinTech fraternisation has now become a collaboration conundrum – Digital partnerships have split financial services institutions down the middle. I think the key question is who will profit from the investment in innovation? The answer is likely to be those retail banks who execute strategies and models based on sharing critical assets – rather than restricting access to them. Collaborative institutions know how to leverage the innovation horsepower of FinTech which is not easily imitated by them. They leverage their complementary assets (e.g. balance sheet capacity, capital, scale, customer base, distribution channels, regulatory compliance, and risk management). Yet today, only 50% of financial services executives we surveyed reported that their digital tie-ups with partners inside and outside their industry have already proven their value ‘beyond doubt’. Still more studies indicate that 90% of bankers believe that FinTech will have a significant impact on the future of the industry – a third believe that FinTech will win an equal share of, or even dominate the market. This collaboration gap illustrates the significant ‘platformification’ opportunity for retail banks as the convergence of digitally-fused financial and lifestyle services accelerates.

How do you think attitudes towards banks have changed between generations?

Whilst the core needs of people to save, spend, borrow, and invest may not have changed between generations, our latest research highlights that we are now witnessing the Millennials fundamentally change their preferences for how they engage for financial services.

Our research suggests that trust, relationship, and technology are the new trinity for connecting to Millennials. Transactional competence is still critical. But the ‘always on’, automated and hyper-personalized online world of the internet and mobile devices, has created a new set of expectations in the minds of Millennials. They demand speed, convenience, flexibility and customisation. The optimum trade-off between privacy and personalization is changing daily, and institutions need to continuously balance those competing imperatives to become and remain relevant.

Do you think data analytics can help better target Millennials and Gen X? How do you think analytics can be used to enable a better customer experience on banking apps in general?

Millennials believe in using digital technology that can be customized according to their needs. Location intelligence and mobile application analytics are two of the technologies that can provide financial institutions with the insights they need to create personalised services. Both technologies have the potential to help institutions build a strong customer relationship with Millennials and deliver better consumer experiences.

In every country we covered, the Millennials surveyed expect and demand a value relationship with their finance provider – rather than a simple transactional one. That value relationship means fast, independent, personalised advice and service. Data analytics is the core capability to deliver this in the experience based economy that we now compete in

Do you see problems around people’s willingness to share data with their banks? If so, how do you feel these concerns can be overcome?

We understand the world in which financial services are delivered has changed radically. It is a world where an end user application might involve service components distributed across tens or hundreds of organizations. A world where Bring Your Own Device limits the control organisations have over the devices and applications their employees use. A world where organizations can dynamically create, reconfigure and deploy new networks in near real-time. A world in which the chains of data used to inform the business decisions that guide service personalisation and delivery are enormous and complex. Meanwhile, technological advances in mobility and internet connectivity; smartphones and tablets make it easier for users to access applications, information and services on the move, across devices.

The requirements for the confidentiality, integrity and availability (CIA) of data and systems haven’t changed, nor has the fundamental role of identity in financial services. In fact, these requirements have become even stronger. However, the technologies to provide these are evolving.

How do you think analytics can help boost innovation in mobile banking?

In 2014, Telstra Ventures made an investment in Near, a leading location intelligence platform. Near provides real-time information on places, people and products. The platform fuses various data including proprietary location, app, navigation, telco, geographic, demographic and various third party data. The platform is currently being used to generate consumer insights, enhance business operations, targeted marketing, attribution measurement, and for broader business and marketing intelligence.

Institutions can use the Near platform to create a custom audience by defining rules that could vary by real world location footprints, consumer interests, visit frequency around a particular location and geo-demographic attributes. This audience can be studied further to derive insights, create real-time actions from them, and to measure the impact of the targeting. Institutions can also integrate their own data with Near’s to create a private audience cloud for customised business intelligence.

What do you see as important business model impacting technologies for banks or FinTech moving forward?

Business models with the greatest disruptive impact are platform based, data intensive and capital light and will target profit pools that have the greatest friction. The platformification of institutions will require them to operate differently, and digitally. Collaboration between traditional and non-traditional players will create new ecosystems that unlock value through re-bundling enabled by capabilities including:

1.Software-defined cloud networks that can be reconfigured in real-time by applications to dynamically provide the required features and access;

2.Analytical platforms that provide access to data and tools so institutions can quickly gain new insights into the customer and turn them into operational actions;

3.Cyber security and identity platforms to protect highly distributed composite services and personal data, and that can evolve to address new and emerging threats for both Millennials and institutions, and;

4.Digital platforms that reduce the cost, time and complexity of building, deploying and maintaining applications. They also allow institutions to expose data and services to ecosystem partners in a manageable but highly usable way.

The prize for executing these capabilities well is a smarter, faster, agile, more efficient, convenient and relevant institution that is well positioned to adapt to the changing risk profile of the industry. We call this the anatomy of next generation, distributed, autonomous digital financial services.

What will you be discussing at your presentation?

I’m pleased to be presenting the eleventh in my series of thought leadership reports: Millennials, Mobiles and Money – The Forces Reinventing Financial Services. This report is a window into how the enigmatic Generation Y (now the largest demographic group), will transform the financial services industry as employees, customers, investors and policy makers, according to the role these self-styled entrepreneurs want finance to play in their digitally driven lifestyles, business and society.

You can hear from Rocky, along with other experts in data analytics, at the Predictive Analytics Innovation Summit. View the full agenda here.

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