Amazon has revolutionized retail, and there are a lot of lessons financial industries can learn — increasingly important as Amazon and other large tech companies begin to turn their sights towards banking.
I took the opportunity to chat with Robert Poirier, Senior Vice President, Banking Solutions, who knows all about the digital transformation banks are pursuing to become more like Amazon.
Cam: We know that Amazon has expressed some interest in banking. Is that what you mean when you talk about the “Amazon-ization of banking?”
Robert: Let me start by saying what I am not talking about today — Amazon getting into banking. What we’re speaking to today, is the Amazon-ization of banking and how banks perceive Amazon. What the banks would like to do is take Amazon’s dynamic platform and enable it for themselves.
They see Amazon as an interaction between product, pricing, and client experience. And what the banks would like to do, is capture that type of interaction. Banks are looking to replicate the Amazon value proposition platform to clients focused on driving the client experience based on product recommendations that are relevant and appropriate for the client.
So when bank executives talk about their organization needing to be more Amazon like what are they saying?
What they’re really saying is that they want to be more platform oriented. When I say platform, I talk about hyper digital. Banks want to be more relevant to their clients. Amazon is, as anyone who has used them will know, they scrutinize data in very interesting ways.
They look at how you’re searching, what you’re buying, what you’re doing, and they try to rate about a third of their revenues from other product offerings. Banks too, want to capture you at critical points, as I mentioned earlier, and then want to be able to cross upsell you. Unfortunately, they lack the date knowledge or the data scrutiny to be able to do so.
When you speak to the industry what challenges are you hearing from banks?
Today, the banks see themselves as being product siloed not client centric. Having run revenue strategy for large banks, I argue banks are not even product centric. They’re really business siloed. I think that’s what we’re gonna speak about today. as they don’t have business unit control over all aspects of their products including all the attributes that make up a product including loyalty. By that banks cannot adapt to changing market dynamics as single offerings or bundles limiting their product response time to their clients.
This is what we at Zafin solve. Dynamic real time interactions between product and pricing. This is the Amazon-ization of banking.
How do you think banks pivoting to this strategy will impact the financial industry and their customers?
In doing so that will have, I think, a profound impact on the banking sector because it gives them the opportunity to grab young people. As you may know, the two times that you can capture a bank client is: 1) with a new savings or checking account, or 2) with a new mortgage. By offering transactional accounts you have the opportunity to catch young people at a critical time, when the banks will want to have them later on for cross upselling.
You mentioned young people. Why is their business important for banks to capture, and how would this Amazon-ization would help do so?
Young people have shown great interest to use a technology firm for simple transactional banking. For banks, lost deposits have a negative impact on interest and fee revenues and on their balance sheets and by that constraining their ability to lend. They also lose an important first product with young people.
This could have a profound effect on banks because young people may choose a sub transactional, or simple banking through that channel. Unfortunately, for banks that’s not only a loss of revenue and majorly impacts their balance sheet, which means they won’t be able to lend as much, but it also has the impact of not being able to cross upsell those clients when those clients have more wealth and they’re able to buy more products at that time.
Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.
Cam is the Digital Communications and Marketing Coordinator at Zafin. With a background in journalism and a passion for blogging, Cam strives to tell compelling digital stories. At Zafin he will share the latest trends and news in the FinTech world, and share the Zafin role as leader in the industry. Follow him on Twitter @CamSmoth