The Weekly Extract: December 22, 2020

  • Alex Jimenez
  • December 22, 2020

The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.

This week we look at how consumers are not going back to the former normal, per Salesforce, and instead a new consumer is emerging named Generation N. We also examine the five emerging digital business models being adopted in industry, and in financial services.


Not Going Back

In an article in ZDNet, Vala Afshar, Chief Digitial Evangelist at Salesforce, makes the case that we aren’t going back to “normal.” He notes, “that major events such as those we are living through now spark lasting change.” To support his message he points to Salesforce’s the State of the Connected Customer report. He writes, “nearly six out of ten customers around the globe say their engagement with companies has transformed, with greater shares having transformed how they live online and offline.”

As we all know the transformation towards digital is nothing new but as many other people have noted the pandemic has accelerated these changes. Afshar says,

“among the most notable shifts is a redefinition of and increased emphasis on convenience. In a physically distanced world, offerings like Zoom appointments to save a trip, curbside pickup to minimize contact, or chatbots to handle unexpected surges in service case volume are now commonplace and expected.”

While consumers were already shifting towards digital experiences, their expectations are now also changing. The pre-pandemic “good-enough digital experience” won’t cut it going forward. “As customers find themselves with less mobility and more time with their devices, their standards for convenience are more and more digitally oriented,” Afshar notes.  He adds, “customers have a critical threshold this year as more than half of their interactions with companies now take place online.”

Organizations that have already embarked in the digital transformation journey have instituted or have plans to institute personalized engagement. However, Afshar says that the stakes are higher now. He writes, “the mandate for companies now is not to just send relevant offers at the right time and on the right channel, but to demonstrate a clear understanding and concern for each customer, and to offer advice and help that makes their lives easier.”

Unfortunately, “most companies are falling fall short of providing customers with customer’s expectations for empathy and understanding, offering a clear and open opportunity for differentiation for those that do.” According to the Salesforce report, sixty eight percent of customers expect brands to demonstrate empathy. Yet, only thirty seven percent of customers say that brands actually do.

The disparity between what customers expect and what they experience is a reality for banks and Credit Unions. William Girling, Editor in Chief at Fintech Magazine, writes that “the window for enhancing (FI’s) digitial services is closing fast.

Girling quotes Andrew Stevens, Principal, Banking and Financial Services at Quadient,“rather than being the moment digital investments paid off, instead it was a wake-up call that many banks do not yet have the finished article. If they don’t become more customer-centric in the next six months, banks should expect their customer base to shrink.” While Girling was referring to UK-based banks, we believe that US banks and Credit Unions face a similar closing window. While the winners in Europe might be the challenger banks, in the US the winners might be the largest banks, as they continue to expand their digital capabilities while the rest of FIs struggle to improve.


Generation N

Brian Solis, Global Innovation Evangelist at Salesforce, had an excellent article in Forbes where he also examines the Salesforce Report and the meaning of it’s findings. Solis’ take is that the impact of the pandemic isn’t merely changing expectations but the rise of the “connected customer.” Solis writes, “a new customer is rapidly developing in broad daylight, behind their screens.”

“Brand loyalty is now up for grabs at unprecedented levels,” Solis writes. A report by McKinsey “illustrates this point quite dramatically. Consumers are already reconsidering brand loyalties and where they shop. In fact, 75 percent of consumers have tried different stores, websites, or brands since shutdowns. And, 60 percent of those consumers expect to adopt new brands and stores into their post-pandemic lives and routines.”

Solis refers to this new emerging customer segment as Generation-N (Novel). He notes,

“this ‘new and unusual’ customer segment is not defined by traditional demographics and is instead cross-generational, bound by similar digital behaviors, evolving preferences and expectations, and desired experiences and outcomes. Furthermore, their bound by the somatic marker that is Covid-19, an emotional and psychological bookmark that changes their values and aspirations and affects decision-making.”

This new segment is an important one for Financial Services. Solis says that the top brand improvement this segment is looking for is trust. Given that trust is one of the differentiators that legacy FIs believe sets them apart, it is imperative that FIs get this right. How can FIs prove their trustworthiness to this new segment?

Solis says that “actions speak louder than words. Ninety percent of customers believe that how a company acts during a crisis shapes its trustworthiness. Just this year alone, 31 percent admitted that they trust a company less because of its response to this year’s crises.” He adds, “this moment is the time for businesses to update and upgrade how they operate, engage, and contribute to society across a variety of fronts.”

We couldn’t agree more with this sentiment. I recently got a new automobile loan with my local Credit Union. The process of applying digitally and being approved was very good. However, I was still required to visit a branch to get my loan check – in the middle of a pandemic. The process within the branch was frustrating for me and for the CU employees. My identity was verified twice by two different employees. I was required to take my mask off, so they could compare my face to my driver’s license picture. Applying for the loan took less than 5 minutes, approval was immediate, but the branch process took nearly 30 minutes. My level of trust for the CU has diminished to the point that next time I will be using someone else.

The question for FIs is: are you operating in a way that shows your customers that you understand them and are there to help them? Or are you there to sell their the next product?


Digital Business Models

For the strategists among our readers, we recently read an excellent article by Simon Torrance, Senior Advisor at Rainmaking, examining the “five main digital business model archetypes.” Torrance’s discussions of the five models includes several examples from the financial service industry that readers may find enlightening.

The five models noted are:

  1. Digitized traditional products. Unfortunately, this is the model that a large number of FIs are still using. Digital banking is seen as a separate channel, sometimes an alternative to the main physical channels, even in a pandemic. Processes, like account opening, are merely digitized versions of existing analog processes.

Torrance notes, that organizations still using this model “are now recognising, with greater urgency, the need to define new ways to create and capture value as digitisation bites deeper and erodes traditional profit pools.” He adds, “the true digital business model archetypes (#2-5) all exploit platform thinking and platform economics, the principles of which are often new and alien to leaders.”


  1. Intelligent digital solutions. This model is “the next generation of digital services: personalised, low cost, AI-driven platforms combining different components to suit and flexibly respond to the unmet needs of specific niche but high value audiences.” Most fintech firms, notes Torrance, “start here, extending out with complementary capabilities once they’ve created a base of users.” Examples he notes are MoneyLion, China’s ZhongAn, and Silvur.


  1. Developer enablement. This model “is about exposing your capabilities to innovation teams at third party organisations, so they can enhance their end user journeys and experiences.” In financial services, Torrance points to the emerging Banking-As-A-Service (BaaS) model. Torrance recently wrote a detailed analysis of this $7.2 Trillion market category where BaaS “platforms are enabling ‘Embedded Finance’.”


  1. Marketplaces. These “are intermediaries focused on matching buyers with sellers, at volume. eBay is the classic example,” Torrance explains. “Marketplaces add value by reducing friction within value chains.” However, these aren’t models that are easily “to scale and then defend, but powerful if you can, especially if you combine workflow tools and community services to the marketplace mechanisms.” An example in financial services is LendingTree, the online lending marketplace.


  1. Echosystem orchestration. This model looks “to optimise a wide spectrum of inter-connected services and solutions to help individuals and organisations complete complex activities more efficiently.” Torrance notes that, “they typically combine elements of the other archetypes – intelligent solutions to support new workflows and marketplaces or developer communities to expand choice for customers.” An example he examines in financial services is Intuit who began as a provider of accounting software and has moved to other areas of financial services.

If these descriptions sound interesting, I urge you to read the article for more in depth discussions. We’d love to hear what you think about these models. Do you think we’ll see financial services adopt some of these models at scale?


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