By Martin Häring
One of the chief forces is the will of the customer—something not unique to banks. In every sector, customers are expecting more from brands than ever before. More services, frictionless experiences, available from any device. For banks, this means being more than a bank. It means building or buying-in new capabilities, so customers don’t have to go elsewhere to get them. This is not simply about end-to-end banking services, but creating a platform that can wrap around a customer’s every need.
Another major force is that nonbank brands are trying to do exactly the same thing. They are looking to embed banking and financial services into their offers. This will keep their customers’ attention for longer, and create new revenue streams. This presents a valuable revenue opportunity for banks, as the invisible banking as a service partner to these other brands.
Bank chief marketing officers may be tempted to see these two directions as a choice—engage customers directly on their own platform or relinquish some level of customer intimacy by becoming a BaaS partner to other brands. That is the wrong mindset. Not only are both plays possible in parallel; they can be complementary.
What reconciles this false dichotomy is an obsession with customers. And that’s where the anatomy of an effective bank CMO must begin. Traditionally, bank CMOs have been product-driven. That is to say, they find audiences for products that have already been made. Today, they must start with the customer, understand what they need (and not just banking services), and then feed that into the product strategy.
What they will find is that different customers want different things. For example, in markets where banks are more visible and dominant, CMOs are likely to find customers for whom the bank represents security and familiarity. There, institutions will want to double-down on this loyalty.
That doesn’t mean standing still. I believe that 95 percent of innovation happens elsewhere. In other words, if the scale and user-experience of your banking platform does not remain competitive, even the most loyal customers will jump ship. It’s in these markets that banks should focus on creating even more customer value through the ecosystem model.
On the other hand, in markets where banks have relatively little footprint, banking-as-a-service may be a better strategic approach.
As banks adapt to these changes, CMOs must be advocates for innovation. They need to be brave in their suggestions. The old banking ways—closed systems, proprietorial technology, shielded data—do not deliver the fast development cycles that modern banking platforms demand. For that, you need a more open stack of tools that encourage integration and collaboration.
CMOs must also champion the right culture. Open-source technology becomes redundant without open working principles, such as diverse participation, knowledge sharing and flat hierarchies. Co-innovation is the name of the game, and the CMO should see developer engagement as a core tenet of the bank’s brand. Building that ecosystem is about much more than a few cool hackathons every year. It’s about giving developers the sandbox to continuously ideate and experiment with, the marketplace to let them monetize their innovations and the incentives to keep going.
In contrast to the banking loyalists, the digital generation is more transactional. They see banking as a utility—as long as they get the basic functionality, they don’t particularly care where they get it from (all other things being equal). What they do care about is convenience. For these people, banking should be an unseen part of daily life. When they shop, travel, buy property, educate their kids or invest in their well-being, banking services should seamlessly integrate into the experience. Nonbank brands that can offer accounts, deposits, loans, payments, currency conversion and other financial services become very attractive prospects for customers. Banks that help nonbank brands do that become valuable partners.
So, the modern bank CMO needs to be as comfortable in the B2B or BaaS space as they are in B2C, because they’ll be marketing their bank’s services to partner brands. They need to be technically minded. For example, they must understand (and articulate) how their APIs make third-party products work, enable innovations and ultimately help brands attract new customers. And crucially, they must know how to manage a fast-rolling schedule of product launches, and package and sell those as subscription cloud services. It is a very different skillset to selling a platform directly to your end-user. For marketers that have only ever done B2C, that can be a challenging shift.
But while BaaS does mean banks diluting their contact with end users of their services, it doesn’t need to mean that a CMO surrenders customer marketing to another brand entirely. Quite the opposite. Only banks are licensed to bank, meaning at some point the bank will need to get hold of the end-customer data. Enabling third parties to embed banking services gives a CMO access to more customers.
How effective they are at turning those contacts into sales opportunities, and ultimately revenue, marks a truly modern bank CMO. For some, it may mean learning new skills. For example, data literacy is key, as well as an appreciation of the power of explainable AI to inform, recommend and then take action. The final piece is navigating the interplay between the bank’s brand and the third-party partner. Goldman Sachs decided there is brand value in everyone knowing about its role in Apple’s new credit card. NatWest has taken a quieter approach in its partnership with GoHenry, a debit card for children.
Banks are having to make some pretty big decisions about their brand. The CMOs who are adaptable to these new challenges will find their stock rising.
Martin Häring is CMO of Temenos.
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