Why Enterprises should build Platforms and not just Standalone Applications…

                                                    Image Credit – Shutterstock 

Introduction..

The natural tendency in the world of Corporate IT is to create applications in response to business challenges. For instance, take any large Bank or Insurer or Manufacturer – you will find thousands of packaged applications that aim to solve a range of challenges from departmental level issues to enterprise-wide business problems. Over years these have given rise to application and infrastructure sprawl.

The application mindset creates little business value over the long run while creating massive technology headaches. For instance, the rationalization of these applications over time becomes a massive challenge in and of itself. At times, IT does not even understand how relevant some of these applications are to business users, who are even using them and the benefits derived. Over the last 15 years, Silicon Valley players such as Apple, Google, and Facebook et al have begun illustrating the power of building platforms that connect a range of users to the businesses that serve them. As the Network Effects connected to using these platforms have grown exponentially, so have the users.

What Corporate IT & business need to learn to do is to move to a Platform mindset.

The Platform Strategy…

Amazon is the perfect example of how to conceive and execute a platform strategy over a couple of decades. It began life as a retailer in 1994 and over time morphed into other complementary offerings such as Marketplace, AWS, Prime Video, Payments etc. These platforms have led to an ever-increasing panoply of services, higher revenues, promoted more directed consumer interactions and higher network effects. Each platform generates its own revenue stream and is a large standalone corporation in its own right. However, the sum of these platforms is higher than the sum of the individual products and this has led to Amazon becoming the most valuable company in the world (as of late 2017).

So what are the key business benefits and drivers of a platform oriented model?

Driver #1 Platforms enable you to build business ecosystems

Platforms enable enterprise business to orient their core capabilities better and to be able to deliver on those. Once that is done to a high degree of success, partners and other ecosystem players can plug in their capabilities.  The functionality that the platform provides is the ability to inter The challenge most times is that large companies always seem to play catchup with business models of nimbler players. When they do this, they often choose an application based approach which does not enable them to take a holistic view of their enterprise and the business ecosystems around them. In the Platform approach, IT departments move to more of a service model while delivering agile platforms and technology architectures for business lines to develop products around.

E.g. Post the PSD2 regulation, innovators in the European Banking system will become a prime example of platform led business ecosystems.

Why the PSD2 will Spark Digital Innovation in European Banking and Payments….

Driver #2 Platforms enable you to rethink and better the customer experience thus driving new revenue streams

The primary appeal of a platform based architecture is the ability to drive cross-sell and upsell opportunities. This increases not the number of products adopted by a given customer but also (and ultimately) the total revenue per customer.

The below blog post discusses how Payment Providers are increasingly using advanced analytics on their business platforms to generate not only increased topline/sales growth but also to defend against fraud and anti-money laundering (AML).

Payment Providers – How Big Data Analytics Provides New Opportunities in 2017

Driver #3 Platforms enable you to experiment with business models (e.g. Data Monetization)

The next progressive driver in leveraging both internal and external data is to use it to drive new revenue streams in existing lines of business.  This is also termed Data Monetization. Data Monetization is the organizational ability to turn data into cost savings & revenues in existing lines of business and to create new revenue streams. This requires fusing both internal and external data to create new analytics and visualization.

The Tao of Data Monetization in Banking and Insurance & Strategies to Achieve the Same…

Driver #4 Platforms destroy business process silos

One of the chief reasons that hold back an enterprise ability to innovate is the presence of both business and data silos. This is directly a result of an Application based approach. When underlying business processes & data sources are both fragmented, communication between business teams moves over to other internal & informal mechanisms such as email, chat and phone calls etc. This is an overall recipe for delayed business decisions which are ultimately ineffective as they depend more on intuition than are backed by data. The Platforms approach drives the organization towards unification and rationalization of both the data and the business process that creates it thus leading to a unified and consistent view of both across the business.

Why Data Silos Are Your Biggest Source of Technical Debt..

Driver #5 Platforms move you to become a Real-time Enterprise

Enterprises that are platform oriented does more strategic things right than wrong. They constantly experiment with creating new and existing business capabilities with a view to making them appealing to a rapidly changing clientele. They refine these using constant feedback loops and create platforms comprised of cutting-edge technology stacks that dominate the competitive landscape. The Real-Time enterprise demands that workers at many levels ranging from the line of business managers to executives have fresh, high quality and actionable information on which they can base complex yet high-quality business decisions.

The Three Habits of Highly Effective Real Time Enterprises…

Conclusion..

A business and IT strategy built on platform approaches enable an organization to take on a much wider & richer variety of business challenges.  This enables an organization to achieve outcomes that were not really possible with the Application model.

Demystifying Digital – the importance of Customer Journey Mapping…(2/3)

The first post in this three part series on Digital Foundations @ http://www.vamsitalkstech.com/?p=2517 introduced the concept of Customer 360 or Single View of Customer (SVC).  We discussed specific benefits from both a business & operational standpoint that are enabled by SVC. This second post in the series introduces the concept of a Customer Journey. The third & final post will focus on a technical design & architecture needed to achieve both these capabilities.

Introduction to Customer Journey Mapping…

The core challenge many Banks have is their ability to offer a unified customer experience for banking services across different touch points. The lack of such a unified experience negatively impacts the quality of the overall banking experience.

Thus, Customer Journey Mapping refers to the process of creating a visual depiction of a customers adoption and usage of banking products across different channels or touch points(branch,mobile,phone,chat,email etc). The journey provides dynamic & realtime insight into the total customer lifetime value (CLV) as the person has progressed in her or his life journey. The goal of the customer journey mapping is to provide the bank personnel with a way of servicing the customer better while increasing the bank’s net economic value from servicing this customer.

The result of the journey mapping process is to drive overall engagement model from the customers perspective and not solely the Banks internal processes.

Banks may be curious as to why they need a new approach to customer centricity? Quite simple, just consider the sheer complexity for signing up for new banking products such as checking or savings accounts or receiving credit for a simple checking deposit. At many banks these activities can take a couple of days. Products with higher complexity like home mortgage applications can take weeks to process even for those consumers with outstanding credit. Consumers are beginning to constantly compare these slow cycle times to the realtime service they commonly obtain using online services such as Amazon or Apple Pay or Google Wallet or Airbnb or even FinTechs. For internal innovation to flourish, customer centric mindset rather than an internal process centric mindset is what is called for at most incumbent Banks.

The Boston Consulting Group (BCG) has proposed a six part program for Banks to improve their customer centricity as a way of driving increased responsiveness and customer satisfaction[1]. This is depicted in the below illustration.

customer_journey_mapping

Customer Journey Mapping in Banking involves six different areas. Redrawn & readapted from BCG Analysis [1]
  1. Invest in intuitive interfaces for both customer & internal stakeholder interactions–  Millenials who use services like Uber, Facebook, Zillow, Amazon etc in their daily lives are now very vocal in demanding a seamless experience across all of their banking services using digital channels.  The first component of client oriented thinking is to provide UI applications that smoothly facilitate products that reflect individual customers lifestyles, financial needs & behavioral preferences. The user experience will offer different views to business users at various levels in the bank – client advisors, personal bankers, relationship managers, brach managers etc.  The second component is to provide a seamless experience across all channels (mobile, eBanking, tablet, phone etc) in a way that the overall journey continuous and non-siloed. The implication is that clients should be able to begin a business transaction in channel A and be able to continue them in channel B where it makes business sense.
  2. Technology Investments – The biggest technology investments in ensuring a unified customer journey are in the areas of Big Data & Predictive Analytics. Banks should be able to leverage a common source of data that transcends silos to be able to drive customer decisions that drive system behavior in real time using advanced analytics such as Machine Learning techniques, Cognitive computing platforms etc which can provide accurate and personalized insights to drive the customer journey forward. Such platforms need to be deployed in strategic areas such as the front office, call center, loan qualification etc. Further, business can create models of client personas and integrate these with the predictive analytic tier in such a way that an API (Application Programming Interface) approach is provided to integrate these with the overall information architecture.
  3. Agile Business Practices–  Customer Journey Mapping calls for cross organizational design teams consisting of business experts, UX designers, Developers & IT leaders. The goal is to create intuitive & smart client facing applications using a rapid and agile business & development lifecycle. 
  4. Risk & Compliance –  Scalable enterprise customer journey management also provides a way to integrate risk and compliance functions such as customer risk, AML compliance into the process. This can be achieved using a combination of machine learning & business rules.
  5. Process Workflow – It all starts with the business thinking outside the box and bringing in learnings from other verticals like online retailing, telecom, FinTechs etc to create journeys that reimagine existing business processes using technology. An example would be to reimagine the mortgage application process by having the bank grant a mortgage using a purely online process by detecting that this may be the best product for a given consumer. Once the initial offer is validated using a combination of publicly available MLS (Multi Listing Scheme) data & the consumer’s financial picture, the bank can team up with realtors to provide the consumer with an online home shopping experience and help take the process to a close using eSigning.
  6. Value Proposition – It is key for financial services organizations to identify appropriate usecases as well as target audiences as they begin creating critical customer journeys. First identifying & then profiling these key areas such as customer onboarding, mortgage/auto loan application, fraud claims management workflows in the retail bank, digital investment advisory in wealth management etc are key. Once identified, putting in place strong value drivers with demonstrable ROI metrics is critical in getting management buy in. According to BCG,banks that have adopted an incremental approach to customer journey innovation have increased their revenues by 25% and their productivity by 20% to 40% [1].

Conclusion..

As financial services firms begin to embark on digital transformation, they will need to transition to a customer oriented mindset. Along with a Single View of Client, Customer Journey Mapping is a big step to realizing digitization. Banks that can make this incremental transition will surely realize immense benefits in customer lifetime value & retention as compared to their peers.Furthermore, when a Bank embarks on Data Monetization – using the vast internal data (about customers, their transaction histories, financial preferences, operational insights etc) to create new products or services or to enhance the product experience – journey mapping is a foundational capability that they need to possess.

References..

[1] Boston Consulting Group 2016- “How digitized Customer Journeys can help Banks win hearts, minds and profits”