Too Big To Innovate? A Road Map for the Digitally Disrupted Banks

Too Big To Innovate? A Road Map for the Digitally Disrupted Banks

Still smarting from a global financial crisis and barraged by publicly-revealed impropriety, Britain’s largest banks – Barclays, HSBC, Lloyds and The Royal Bank of Scotland (RBS) – face a fleeting window of opportunity; invest in digital Relationship Capital in 2015 and beyond, or die.

Britain’s ‘Big Four’ banks have been barraged by bad news, the latest of which is this: They could face fragmentation after the competition watchdog, The Competition and Markets Authority (CMA), found a “lack of effective competition” in small business lending, unacceptably high barriers to entry for new banks, and damningly declared that “essential parts” the UK banking sector do not meet customer needs[1].

Aside from the yet another scandal (for rigging the foreign exchange/FX market), of which the FCA fined five banks – including HSBC and RBS – a total of £1.1billion[2], British banks are on the cups of another round of ‘stress tests’, this time undertaken by the Bank of England.

Lloyds and RBS only narrowly passed a test by European regulators in October, with Lloyds facing rejection of its dividend plans if it falls below the test levels this month (December 2014)[3]. Lloyds has said it is confident it will pass[4]. The Co-operative Bank, which has endured a year of scandal[5], has already said it wouldn’t be surprised to fail the stress tests, admitting it has it has insufficient capital to cope with the most severe economic shock[6].

A matter of trust

Trust in banking is dire. According to one YouGov survey, 73% felt banks reputation was bad, with just 4% considering the industry to observe high ethical standards[7]. In the same survey, banking was listed in the top three of most important sectors to the economy, but also ranked number one for the sector most responsible for holding the economy back.

According to research by New City Agenda, a think-tank, Britain’s largest banks will take a generation to change their cultures and recover the trust damaged during the financial crisis and subsequent mis-selling scandals.

While the report acknowledged that banks were working to improve their stance towards customers, it added that “an entire generation of staff have been raised, and some instances promoted, in an aggressive sales culture”[8].

As digital ‘touch points’ and ‘softer’ mass personalised marketing practices such as content marketing gain increased traction, the banks’ hard-sell cultures are completely at odds with their customers’ cultures and expectations. Whether or not the ‘Big Four’ banks are broken up by the competition regulator, embracing social technologies, personalised direct marketing and investing in digital relationship capital with their customer base will be the key to the competitiveness of British banks.

Relationship Capital

Digital Relationship Capital

Relationship Capital is the combination of market relationships, power relationships and cooperation established between a brand and its ‘stakeholders’[9]. Relationship Capital can be considered the cultural heart of an organisation, which is a central nerve centre informing brand equity.

To quote my friend and Relationship Capital expert, Rob Peters, RC is providing insight into what arguably is the greatest asset on the balance sheet: The quality of your connections and social relationships. Those stakeholders who buy from you; advocate on your behalf, and even defend you when you make mistakes. 

Digital experiences are playing an increasingly important role in building and maintaining brand relationships. As I wrote in my blog The Evolution of the Brand Promise and Moments of Truth, we are now beyond the ZMOT (Zero Moment of Truth), the Google-identified moment in which a consumer researches the product or service online before purchasing.

Trust is the generalized expectation that the brand promise is consistently delivered and while physical interaction will continue to be a core component of relationship capital, today brands have to deliver parts of the promise through digital and social channels, as well as through each piece of content, whether online or offline, even before a customer makes a purchase.

Relationship Capital – a Financial Marketer’s Toolkit

This has led to an explosion in content marketing and information overload threatens to make it increasingly difficult for brands to reach their target audiences. The ability of financial marketers to work with a complex mix of content, data science and technology is becoming central to driving mass personalization and agile, direct-response campaigns.

This won’t be without challenges for the banking sector.

  • In terms of influencing brand perceptions, enjoying bi-directional communication with customers and communicating brand promise, digital and social technologies can be a double-edged sword. As the scope for delivering on a brand promise consistently to the right person, through the right channel, at the right time has increased, so has competing ‘noise’ increased – both from competitors and a other brands and personal influencers.
  • Large organisations struggle to breakdown the silos that separate departments which, in the modern post-Internet business landscape, now must collaborate. Data, content and customer experience/service silos in particular must work towards integration.
  • A further challenge is for banks’ IT infrastructures and historic software systems to be reviewed, updated or replaced so that they act as an enabler and not a barrier to cross-departmental collaboration and company-approved direct communication with consumers.

The challenge: 4 Vs

4 Vs Big Data

4 Vs Big Data


The big challenge for banks – and other large incumbents – in delivering a customer relevant and differentiated experience consistently, based on the brand promise and values is to work with the 4 Vs of Big Data:

  • Volume The scale of data available to banks
  • Variety Differentiating between forms of data to mine insights from the volume, variety and complex inter-connectedness, rather than confusion
  • Veracity Big Data often contains large quantities of unverified, untagged ‘anonymous’ data, which adds a large element of uncertainty to data sets and potentially skew data ‘signals’
  • Velocity Analysis of constantly updating ‘live’ data – the foundation of any agile marketing campaign – rather than relying on rear-view data collected within set time boundaries

In the trust stakes, the good news is that financial services topped a poll of organisations most trusted by the public with their personal data – ahead of the NHS and central government[11]. As marketing has become more data-driven, this legacy trust gives financial marketers a head start – and should encourage them to experiment with ways of personalising the banking experience for customers.

CMOs take larger bite of tech budget

Gartner predict that by 2017, Chief Marketing Officers (CMOs) will spend more of their budget on technology than Chief Information Officers (CIOs)[12]. This has widely been interpreted as a sign of the changing skillset required of marketers, but such thinking simply perpetuates existing and unfit-for-purpose organisational silos.

While new hybrid roles, such as Chief Marketing Technology Officer, have started to emerge, providing a central role for ensuring technology and systems integration within the business, it’s crucial to remember that it’s not just signals coming in from media channels that matter in developing personalised relationships at scale.

Enter programmatic marketing

In a Google blog (The Programmatic Marketing Transformation – Nothing to be Scared Of?), Michael Nutley of Communitize says: “You shouldn’t be scared of programmatic, because you’re already doing it; but the change to programmatic is like the banking industry’s Big Bang. It’s an efficient way to buy media, or it’s the arrival of personalised marketing at scale.”

By making brands smarter as they use it, programmatic enables them to become truly customer-centric, and to build personal relationships at scale, to quote Andy Mihalop, Google’s industry head for insurance.

Now banks have the perfect window of opportunity to fundamentally shift their focus from products and services to being truly customer-centric, which is achieved through programmatic marketing and streamlined internal and external social technologies. Not only will this approach revitalise their relationship capital with ‘stakeholders’, which will buoy their flagging brand equity, but in delivering on the brand promise across all consumer touch points, online and offline, will consequently rekindle trust in the banking sector too.

In the era of mass personalization, both large and small banks need to move away from their dependence on heavy-handed sales techniques and instead invest in the latest digital technologies to help engage them in creating a more collaborative business environment, which in turn will start to re-build trust with both consumer and business banking clients through the development of digital relationship capital.

It’s time for the banking sector to cut through the hot air and hollow promises and actually demonstrate that they are customer-centred businesses, and not just proclaim it.









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[11]53%) of those surveyed feeling confident in their abilities to handle and protect personal information.



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