The coronavirus pandemic has irreversibly altered society and the global economy. This forced companies in every sector to reflect on how they have been dealing with market forces in the past and, moving forward, how can they address the rapid shifts in consumer behaviour. Some of the biggest shifts are going to be witnessed in the financial, telecommunications and retail sectors, with significantly accelerated steps taken towards digitalisation.
Even before the pandemic, disruptive technology startups (created in the digital age with purely online marketplaces or platforms) that organically intensify disruption in various sectors forced industry leaders to undergo digital transformation to compete and, for some, to survive. For many entities, it has become critical to develop a digital customer experience that creates a personalised, seamless process across every touchpoint a consumer has with a brand.
For banks, COVID-19 has accelerated shifts in consumer behaviour patterns, while elevating the risk of financial distress for businesses and customers. Telecommunications providers find themselves in a unique situation where they provide the very platform that so many disruptive technology startups depend upon — powering the phones that make their mobile apps possible. And yet telcos find that they too, must still digitally transform to remain relevant. Traditional retail companies find themselves in the precarious position of seeing a dramatic drop in foot traffic as consumers shift almost exclusively to online purchases.
Although digital transformation is multi-faceted, this segment will cover just two aspects of it.
• Increasing current customer value — This segment of the dual transformation initiative relies on companies offering better experiences and more services to its existing customers. This enhances the likelihood of “stickiness” for their customers, meaning it is more likely that those customers will continue to transact with the company, but it also increases the customer lifetime value through availing of new subscriptions and up-selling/cross-selling various other products. The perfect example of this are the telcos that not only offer consumers an online platform to pay their bills but also additional services such as savings, investment products, and small ticket loans. One particular telco offers its consumers an opportunity to borrow load amounts via its digital payments app. Another telco is utilising alternative credit scoring data to offer gadget loans to its customer base, albeit offline. Financial institutions are similarly undertaking this journey to enable customers to not only transact digitally but be able to avail of various products for their needs.
• New customer acquisition — This segment of the dual transformation journey pertains to how organisations can transform digitally, thus enabling them to broaden their customer base in cost-effective ways. For financial institutions, this is critical: 66.4% of the population in the Philippines remain unbanked or underbanked (BusinessWorld article dated May 22: “Unbanked Filipinos to decline by 2025”). Traditional financial institutions are increasingly adopting an omni channel model to enable branchless banking. Initiatives such as agency banking, virtual on-boarding, and relying on alternative credit scoring models to lend to more retail customers enable banks to significantly reduce friction in reaching untapped segments. For telcos, the race to develop the next super app is imperative for them to reach new customers in a market where Internet penetration is at 67% (Datareportal Digital 2020 Report). Since new demand for traditional telco products has stagnated, they must shift to offering more innovative products through cost effective digital channels.
To execute a dual transformation strategy, it is critical for organisations to establish a viable channel strategy that can accelerate their objectives and can provide an effective route-to-market.
To accelerate their digital transformation, traditional organisations are increasingly moving towards an omni-channel approach. This approach enables companies to cater to their customers in a more efficient and effective way by reducing overhead and expenses and marketing a new service or product to a certain geographical demographic.
Organisations such as banks, telcos and retailers can analyse data to better understand the prospective adoption rates of digital services so that they can better expand to those markets digitally rather than physically. For example, a bank can analyze which consumers in which areas are more likely to undertake simple transactions (check deposits, money transfer, cash withdrawals) to better understand which customer bases can be reached through a digital platform that offers the same service. Areas where a majority of the transactions are complex (high-value loans, wealth management services, etc.) can still be catered to via the bricks and mortar route.
Similarly, telcos can use their own data to ascertain which customers are more interested in transacting online, thereby giving the telcos more initiative to reduce overhead through shorter branch hours and fewer personnel, among others. The shift from offline to online can also be accelerated through the gamification of tasks that can tie into rewards programs, especially those catering to a more digital-savvy generation of customers. One online retailer, for example, offers additional coins or rewards points on their app in exchange for completing tasks such as watching livestreams or reviewing products. Some banks or telcos are also adopting this approach by offering reward points in exchange for additional information about their customers on their apps.
As we move through challenging times because of the pandemic, it will be important to see how organisations and even countries manoeuvre to address the ultimate shift to the digital sphere, the timeline of which has been accelerated. Organisations need to disrupt internally to meet the future demands of changing consumer preference, behaviour and real-time priorities. At the same time, governments need to promote regulations that not only encourage improvements in existing technological infrastructure, but also create an environment that strongly supports and encourages innovation. We live in troubling times, and the only way to see our way to the future is by taking the necessary steps to evolve and adapt digitally, rapidly and efficiently.
Originally posted here