Podcast
Questions and Answers
What is one metric where customer-centric organizations scored the highest?
What is one metric where customer-centric organizations scored the highest?
Which business model focuses on satisfying customer needs rather than just offering products?
Which business model focuses on satisfying customer needs rather than just offering products?
According to Richard Rumelt, what is a fundamental aspect of strategy?
According to Richard Rumelt, what is a fundamental aspect of strategy?
What was the primary focus of traditional retail banks prior to adopting customer-centric models?
What was the primary focus of traditional retail banks prior to adopting customer-centric models?
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What aspect scored the lowest among customer objectives in the study?
What aspect scored the lowest among customer objectives in the study?
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How is a business model generally defined in the context of organizations?
How is a business model generally defined in the context of organizations?
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What strategy is described as focusing on delivery channels in retail banking?
What strategy is described as focusing on delivery channels in retail banking?
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How well is the average organization structured to optimize the customer experience based on the study's findings?
How well is the average organization structured to optimize the customer experience based on the study's findings?
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What percentage of consumers trust their bank to protect their data and accurately process transactions?
What percentage of consumers trust their bank to protect their data and accurately process transactions?
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Which group was most frequently sought for financial advice during life events?
Which group was most frequently sought for financial advice during life events?
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What is one consequence of a product-centric sales culture in banks?
What is one consequence of a product-centric sales culture in banks?
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What approach is necessary for banks to rebuild trust with their customers?
What approach is necessary for banks to rebuild trust with their customers?
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Which statement best describes consumer trust in banks regarding long-term financial well-being?
Which statement best describes consumer trust in banks regarding long-term financial well-being?
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What percentage of consumers sought financial advice from their bank during significant life events?
What percentage of consumers sought financial advice from their bank during significant life events?
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What can lead to customers being regarded as 'assets to be sweated'?
What can lead to customers being regarded as 'assets to be sweated'?
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What defines a customer-centric retail bank?
What defines a customer-centric retail bank?
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What is the primary focus of a channel-centric retail bank?
What is the primary focus of a channel-centric retail bank?
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How does a customer-centric bank approach customer relationships?
How does a customer-centric bank approach customer relationships?
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What kind of channels do channel-centric banks typically focus on?
What kind of channels do channel-centric banks typically focus on?
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In terms of strategy, what is a key characteristic of a customer-centric bank?
In terms of strategy, what is a key characteristic of a customer-centric bank?
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What can be a consequence of a channel-centric bank's approach to service delivery?
What can be a consequence of a channel-centric bank's approach to service delivery?
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What is a fundamental goal of a customer-centric bank?
What is a fundamental goal of a customer-centric bank?
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Which approach do channel-centric banks tend to adopt in servicing customers?
Which approach do channel-centric banks tend to adopt in servicing customers?
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How do customer-centric banks improve their understanding of customers?
How do customer-centric banks improve their understanding of customers?
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What is one of the primary roles of a retail bank regarding customer funds?
What is one of the primary roles of a retail bank regarding customer funds?
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What financial practice allows banks to lend money to customers?
What financial practice allows banks to lend money to customers?
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How did banks position themselves from the 1990s onwards?
How did banks position themselves from the 1990s onwards?
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What primary change emerged with the rise of the Internet for banks?
What primary change emerged with the rise of the Internet for banks?
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What does a product-centric bank primarily focus on?
What does a product-centric bank primarily focus on?
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What is meant by the term 'inside out' in the context of product-centric banks?
What is meant by the term 'inside out' in the context of product-centric banks?
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What is a factor that previously prevented customers from switching banks?
What is a factor that previously prevented customers from switching banks?
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What practice did banks focus on to acquire long-term customers?
What practice did banks focus on to acquire long-term customers?
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What is a common characteristic of banks that are described as 'financial supermarkets'?
What is a common characteristic of banks that are described as 'financial supermarkets'?
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What aspect of Open Banking is expected to significantly impact traditional banking models?
What aspect of Open Banking is expected to significantly impact traditional banking models?
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What unintended consequence can result from a product-centric approach in banks?
What unintended consequence can result from a product-centric approach in banks?
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Which of the following describes a likely behavior in a product-centric organization?
Which of the following describes a likely behavior in a product-centric organization?
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Why did banks become product-centric?
Why did banks become product-centric?
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How do product-centric banks often measure success?
How do product-centric banks often measure success?
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What is a potential issue that arises from friction between departments in product-centric banks?
What is a potential issue that arises from friction between departments in product-centric banks?
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Why might product-centric banks end up with products that have excessive features?
Why might product-centric banks end up with products that have excessive features?
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What is the primary focus of a customer-centric banking strategy?
What is the primary focus of a customer-centric banking strategy?
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Which of the following is NOT a result of positive customer experiences in banking?
Which of the following is NOT a result of positive customer experiences in banking?
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How do customer-centric banks learn about their customers?
How do customer-centric banks learn about their customers?
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What is one competitive advantage for banks in a saturated market?
What is one competitive advantage for banks in a saturated market?
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What is a main challenge faced by banks due to new challenger banks?
What is a main challenge faced by banks due to new challenger banks?
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Why are customer experiences considered hard to replicate in banking?
Why are customer experiences considered hard to replicate in banking?
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What is one way that customer-centric organizations balance customer needs?
What is one way that customer-centric organizations balance customer needs?
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How do banks measure their success in a customer-centric model?
How do banks measure their success in a customer-centric model?
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Study Notes
Retail Banking Business Models
- Candidates will understand the relationship between a retail bank's strategy and business model, and how it influences the bank's operating model.
- Key features, advantages, and disadvantages of common bank business models will be identified.
- Drivers of change in retail banking and their impact on existing business models will be examined.
- The importance of customer trust in financial services, and how business models can either erode or rebuild trust, will be understood.
- The challenges and case for banks adopting a customer-centric business model will be explored.
- Different business models that retail banks use (product-centric, channel-centric, customer-centric) to create, deliver, and capture value for stakeholders will be examined, including shareholders, investors, customers, employees, and the community.
- The trend of banks becoming 'financial supermarkets' and their product-centric approach will be analysed.
- The emergence of new players like Revolut, and their threat to traditional revenue streams, through unbundling and niche product offerings, will be discussed.
Business Models
- Key features of different business models used by banks will be understood, along with their advantages and disadvantages.
- Drivers of change forcing banks to re-evaluate their existing business models, to react to changes in the retail banking environment, will be identified.
- A customer-centric business model and its operationalisation will be explored, considering its impact on banks, customers, and employees.
- The reality facing many organisations where senior managers support a customer-centric model, but their departments operate in a product-centric way will be examined.
- A scoring system assesses how well companies are structured for customer objectives, outlining how optimising customer experience, understanding customer behaviour, and retaining customers are critical aspects.
Business Strategy and Business Models
- The importance of having the right business strategy and business model for success, especially within banking, will be discussed.
- The application of strength against weakness or pursuing promising opportunities as core components of a successful business strategy will be addressed.
- The concept of a business model as a description of how an organisation creates, delivers, and captures value will be explored.
- How a retail bank can align its business model with its strategic objectives and the ability to capture value with those objectives will be emphasized.
- Three different models (product-centric, channel-centric, and customer-centric) for retail banks to choose from in pursuit of their strategy will be highlighted.
Product-centric, Channel-centric, or Customer-centric?
- Product-centric models focus on product features, sales, and maximizing profitability, rather than understanding and solving customer problems.
- Examples highlighting how banks often prioritize what they produce above customer needs and the impact this has on their business will be explored.
- Channel-centric/delivery-centric models focus on efficient delivery and cost-effective channels. This prioritizes cost-effectiveness over customer needs, and may result in limited customer-centricity.
- Customer-centric models focus on understanding customer problems, needs, and dreams to offer solutions. Banks adopt this perspective to differentiate themselves and prioritize long-term customer relationships.
Drivers of Change and Un-bundling the Bank
- The increasingly saturated retail banking market, along with multiple products and services that have contributed to the competitive pressures will be discussed.
- Understanding customer needs, value, and problems is essential to hold a competitive advantage in retail banking. Enlightened banks actively listen to and respond to customers, fostering and maintaining trust.
- The development of "product-centric mentality" due to short-term profit pressures in some banking institutions will be mentioned.
- Customer engagement involves shifting from a broadcast approach to collaboration with customers, with customer-centricity as the ultimate objective for banks.
- The growing need for ethical and transparent use of customer data from external business pressures and technological advancements, which banks must now respect is a growing concern., will be discussed.
- The threat of "unnbundling" is posed by new players who offer selected services, thus disintermediating traditional bank offerings.
- Methods of customer retention and improvement using "Moments of Truth" is highlighted.
Defining Customer-centricity
- The importance of customer-centricity as a business strategy based on prioritizing the customer and building long-term relationships is emphasized
- The need for transparency and ethical data handling related to customer data will be highlighted.
Trust
- The importance of trust in financial relationships with banks will be highlighted, given that 53% of customers trust their banks to uphold their transactions, but only 43% trust their bank to look after their long term interests.
- Evidence will be used to show how a customer-centric approach can influence customer trust and loyalty, and how it is not necessarily enough to do a good job.
- Banks will adopt practices such as offering financial advice when there is an appropriate need.
- Product- and channel-centric models can damage trust, due to a customer service approach that prioritizes short-term profitability over long-term customer service.
Making the Case for a Customer-centric Business
- The importance of customer-centric business models for generating higher revenue, decreasing costs, and retaining customers will be outlined.
- How customer-centricity can enhance customer experience for increased satisfaction, loyalty, and reduced defections to competitors will be noted.
- The reasons given by executives for not adopting a customer-centric approach will be explored, and strategies presented
- Customer- centric practices can be successful, but often require a shift in priorities from a product-centric approach.
Customer-centric Business Model
- A customer-centric business model is one that is closely connected to customer behaviour, and therefore understanding their behaviour, needs, and expectations is key for creating a robust foundation for the business model.
- The need to respond to customer requests and issues actively demonstrates customer centrism.
- Customer satisfaction influences profitability, loyalty, and the reduction in defection to competing services.
- Identifying customer behaviour through interaction with the bank will be key for understanding the customer's journey and motivations.
Marketing's Customer-centricity Paradox
- The expectancy that a marketing department will be customer-centric is contrasted with the reality that it might not be.
- The significance of this inconsistency for meeting the customer objectives is examined.
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Description
This quiz explores the intricate relationship between retail banking strategies and their business models, highlighting key features, advantages, and disadvantages of various models. It delves into the drivers of change within the industry, the significance of customer trust, and the shift towards customer-centric approaches in banking. Prepared to test your knowledge on how these elements influence value creation for all stakeholders in retail banking.
