Category Archives: blog

Customer engagement lessons from the holiday season

holiday-shopping-1921658_640-1Let’s start with some cool statistics to set the stage for customer engagement. The numbers are hard hitting. Online sales clearly exceeded offline sales as nicely explained here. 25% more people did not stand in early morning lines.  Obviously the availability of blockbuster deals is not an issue anymore. Good in a way but kind of takes some fun and thrill out of Black Friday.

More interestingly, 40% of online sales were dominated by Amazon. Wal-Mart and others are catching up slowly of course. The prediction is that the big retailers will outperform small and smaller retailers which is a bummer. And lastly all of this pales in comparison to what happens in China. The US thanksgiving TOTAL 4 day online sales are only about 10-15% of online sales on Singles Day!!

Here are some lessons I took away for creating deeper customer engagement:

Ecosystem is important

As we are learning from Amazon, eCommerce is not just transactions and volume, Its about stickiness. With Prime, affiliate marketing, and more products by more marketplace vendors, the ecosystem dwarfs that of other retailers. Consider the added advantages such as eBooks, Amazon video and so on. The question every retailer needs to start asking is very simple. What’s our ecosystem game? And how do we get started?

Mobile is beyond transactions

The steep rise in online sales means that more customers are transacting via mobile phones and tablets. Merely optimizing your mobile site or app does not help. Features such as re-targeting to remind shoppers of products they’ve looked at before, searching local inventory, and allowing social validation and interaction are crucial. In addition, the broad catalog sales approach must give way to more personalized shopping. For this, customer engagement on wishlists or social causes are good methods.

Customers need help planning

A few customers know exactly what they want and go for it. But many are impulsive shoppers. While we know that returns are expensive, online returns are even more expensive. Helping customers set goals, analyze their needs, figure out their gifting etc. is commercially smart. On the one hand, such customer engagement efforts will reduce buyer’s remorse. Even better, customers will avoid the feeling that they somehow lost out on the deals party. It will also help tie your efforts to a noble cause.

Digital commerce is truly here and gaining fast. What we need now is to reinvent our channels for true customer engagement.

The dilemma of digital banking is not about tech

scientist-762627_640I recently had the privilege of speaking at the BAI Beacon conference in Chicago. The topic was about the potential for APIs in financial services. The focus was on customer engagement.

Update: A more detailed version of this blog is now on as an article titled: Pieces in Place: The Rubik’s Cube Model of APIs

This session presented a 3-step model for how opening up and become more connected will improve customer engagement. The 3 steps are below. You can read more on BAI under the pretty bubbly title of “Financial Services APIs: Amazing Potential Innovations“.

  1. Opening up access: Adopt APIs so we can make our services and products available when and where they are needed. This can boost top line growth and help retention.
  2. Originating transactions: Get in the middle of customer experiences to help initiate transactions that otherwise would be triggered elsewhere. For example, improve the adoption of features such as card linked offers, develop wish lists, provide better tools for personal financial management etc.
  3. Connecting experiences, creating value: Focus on improving financial well-being. Orchestrate between both banking and non-banking services. Such services include bill pay, PFM, investments, retailer loyalty programs, goal setting etc. Guide customers, advise them, and ultimately help them meet their financial goals.

However, one thought keeps coming up: Is the first step of this journey really the wholesale core technology and delivery transformation? Should that take place before we can do anything else? Indeed, if we go by popular opinion on financial technology (or FinTech), it does seem to be the case.

In my opinion, upgrade of technology is a reality that must be met as soon as possible. Doing so will help us deliver more efficiently. However, the immediate challenges have to do with customer engagement, differentiation, and building of context. This is arguably more so for full service banking. That is because their business purpose is higher (or can be higher) than simply helping us transact and hold balances.

If we look at what’s happening in the sector, its actually this higher purpose of financial money management and financial well-being, rather than the core banking landscape, that is being disrupted. Innovations are cropping up and aiming to meet peripheral customer needs. Such innovations include – personal financial management, saving for retirement and education, peer to peer payment transactions, lifestyle needs, product warranties, lending and mortgages, broad based loyalty management, and so on. As a result, it is evident that simply supplying various (and disjointed) products and services to customers to choose is not proving to be enough. We need to actively help customers with their goals.

Furthermore, two important considerations arise:

  1. As digital innovations drive customer experience based engagement, the underlying core is becoming more and more invisible and undifferentiated.  Given this trend, step 2 of the model to build context assumes higher importance. I outlined some approaches in this article on BAI titled Think Simple for Digital Transformation.
  2. Although innovations in Fintech provide better and effortless customer experience, the silo transactions may actually be causing defragmentation of customer engagement. So we should be looking at integrating the customer context where possible to drive immediate impact. Here step 3 of the model to build partnerships takes priority.

Those who have scale can start with Step 1 to build strong momentum in a broader market. But for others, there’s actually an opportunity to solve for customer engagement and context first. The underlying enabler will still be technology but they can first focus on creating models of customer and community engagement. These models will then demand various building blocks. And based on these we can then properly utilize and structure the core, if at all we can call it that in the future.

For those out there who are helping their organizations or clients think through these issues, please feel free to get in touch. I’d love to interview you for an upcoming series on best practices. As usual, most of the thought process in this post is based on the 5 principles from my book Dancing The Digital Tune, which are now being extended in my upcoming book – Connected! – How #platforms of today will become apps of tomorrow.

Referenced links:

Appreciate your comments!


PayPal, Visa and MasterCard Collaborate – For Now.

In a turn of events that demonstrates how rapidly the financial payments market is evolving, Visa and MasterCard have both entered into separate deals with PayPal. (ref 1 and 2 below)


Image courtesy

It was puzzling. Didn’t PayPal already accept both Visa and MasterCard? Yes it did, but the growth of PayPal (and now Stripe), also posed a very real risk of dis-intermediation of the card networks we both love and hate (depending on if you’re a consumer or merchant). PayPal had been promoting the use of direct bank transfers (ACH) to users by encouraging them to enroll their bank accounts for payments. That meant that while it allowed free payment transfers to friends and family, it also saved on fees when the same source of funds was used to pay merchants.

This rising trend caused a problem for the networks. The solution they came up with was to:

  1. Get PayPal to not encourage users to use bank accounts as source of funds
  2. Allow PayPal access to their mobile payment wallets

PayPal may lose a little margin on its online transactions, but it now has a real chance at speeding up adoption of physical payments, an area where PayPal was clearly lagging behind.

Why did the consumers sign up for direct bank payments when they stand lose their credit card reward points? Its simple – PayPal charged almost a 2.9% fee for payments to friends and family. So it was beneficial to set up a bank account for the payment where PayPal would charge zero fees. With that major hurdle cleared, PayPal was obviously seeing the cheaper payment sources being used for goods and services as well.

PayPal, and now Stripe, and many others, have created a nice position for themselves in the online, small business payments world. It was a pain area that wasn’t addressed by banks and the card networks for a long time (and still isn’t). So it was just a matter of time that their intimacy with the customer had to threaten the underlying, commoditized service provider (the card networks). And if PayPal decides to become a bank (or ties up with a bank like Simple and Moven did), that’ll spell trouble for banks as well.

All said and done, I see this as an agreement born out of convenience, and with a focus on short terms gains and survival. We can expect big changes soon, at least from the networks. But with the rise of Dwolla, PayPal should be on its toes too.

Ref 1: PayPal and Visa ink partnership agreement

Ref 2: PayPal Strikes Deal with MasterCard to Allow Payments in Stores


Pokemon Go beyond the initial rush?

pokemon-1555036_1280Timing is everything. Brands and businesses worldwide were quick to cash in on the Pokemon Go launch mania. Businesses jumped in with all kinds of promotions and offers as millions of people took to the streets hunting Pokemon on their mobile phones (I did too). For the most part, the promotional tactics for customer engagement by businesses can be categorized as:

  1. The lucky ones – some businesses were just plain lucky that their locations became part of the predefined Pokestops (where players come to collect virtual goodies) or Gyms (where players pit their Pokemons in battle). If you could handle the additional but distracted foot traffic, then you have the games inherent features working to your advantage. You can set up Lures for a few dollars and can make your location a hot bed of Pokemons to catch, or you could create specific promotions around the Pokemon battles if you are a gym. The possibilities for creating awesome customer engagement are endless and all that’s left is to tie these events to products and services.
  2. The not-so-lucky ones – Then we have the unlucky ones who got left out from the initial list of locations for Pokestops and Gyms. (these locations were pulled from another game and imported into Pokemon Go). These businesses who did not fall in a designated Pokestop or Gym area are relegated to running promotions the old way and hoping to catch some of the glitter associated with the hot new game. For example, Uber launched a promotion where you get free Uber rides if you catch a certain number of Pokemons in a given time. Other retailers launched similar promotions and invested in Lures at Pokestops nearby to try to get foot traffic in, and to get some brand recognition going. Still others launched offers where gamers can post pictures of Pokemon captured in their locations, while others launched Pokecrawls with series of stops to enjoy discounted drinks, catch Pokemons and meet other people. However, all said and done these customer engagement efforts didn’t really need to leverage Pokemon Go specifically. The only reason to do so was the novelty of it all. And that’s going to fade after a while.

As the novelty of the game wears off, what can the second category of businesses do to tap into this and other such developments sure to come up in the future? While its important for these brands to find a way to drive customer engagement, it’s also effort probably well spent. Thinking about this problem will help them become readier to tap into the next such launch, and perhaps create recurring events to celebrate what gamers – their customers – love. Moreover, the issues of the predetermined locations were specific to Pokemon Go so they will not always be hurdles. In the mobile and social world, its probably good to come up the hard way.

Image courtesy:


Building the Future of the API Economy


The impact of API economy is across all industries. Because APIs by their very definition are supposed to promote interaction and dialog across multiple companies, often in different industries.

In my article on American Banker Don’t Give Away The Store When Enabling APIs, I brought out the focus on ensuring that banks maintain their customer experience front end, while allowing additional channels for growth. For example, allowing travel sites, Facebook and retailers to access the bank’s services were examples which if taken too far with potential competitors could result in commoditization and loss of value (as the service providers are hidden as utility providers).

APIs are the future in today’s connected world. In this new post on American Banker titled 3 Steps to API Success, I tried to provide a simple framework to guide the development of Bank APIs with those customer experience principles in mind. Essentially, apart from going to market rapidly by opening up new channels, it is important to start building a sticky and value-adding customer experience by focusing on projecting the bank’s brand, not just the utility service itself.

The 3 steps in the framework sort of follow a road-map because they increase in complexity of course. Also read the full article on American Banker.

  1. Fill in the gaps in our customer journeys: Like any business, we often fulfill our end of the bargain, while leaving the remaining customer needs to the other players in the industry.  However, in this rapidly innovating world, the most important use cases for API banking will be driven by 3rd party applications that help customers accomplish the objectives that ultimately matter. Otherwise, this gap will be filled quickly by someone else. For example, banks provide a bank account but the space is rife with innovations around P2P payments and check sharing, spending pattern analysis, savings goals and calculators etc. Examples abound for small businesses, as well as commercial banking. Perhaps the first step could be to address these end to end journeys by enabling a 3rd party ecosystem around APIs developed for these purposes. These applications meets the objectives of low cost services provided to niche customer bases. These innovations often failed the “business case criteria” for in-house development. But they help the bank establish its brand by creating an umbrella ecosystem that is similar to how enterprise technology providers create their partner ecosystem.
  2. Moving towards an App Ecosystem model: The next level of the API model will go beyond exposing APIs to third parties towards building controlled environments where discovery, adoption, experimentation and payments will be seamless. Fidor and Mondo are 2 European banks that have laid the foundation of this model. Powered by 3rd party innovation and supported by customer experience experts from the bank, this app model brings a much tighter integration of the banks offerings and aligns them with the customers. Such a model reduces the go to market friction for partners (e.g. advertising, or fulfillment). It also ensures that the bank can market the entire package of services to customers and create conversations around their end to end needs, instead of negotiating on product features and price.
  3. Becoming a connector of value: The ultimate goal is not just to provide a service, but to anticipate customer needs, and ensure they are receiving the assistance they need as they make financial decisions. Over the years, banking has evolved naturally (like any service) from being a custodian of money, to being an agent that helps (or can help) make the right financial decisions. The API model now provides banks the right tools to make this mission come true. For example, helping the customers maintain the right balances for their upcoming payments, their IRA contributions, or just sticking  to a monthly budget for various categories of spend. As customers utilize the banks services (or the apps), this ecosystem will tend to grow stronger. In summary, for the first time, banks will be able to connect the different use cases and bring singular focus on the overall customer objectives. For example, Citi’s Price Rewind program tries to do this but relies on customer signups instead to gain access to transaction data and customer context. The Bill Payment service comes close but it needs to be integrated with the rest of the bank’s ecosystems.

Connecting individual value propositions by creating overarching customer identities and helping customers with proactive advice is what will differentiate one banking API platform from the other. And for this to take off, banks must take steps to make customers aware of the new capabilities, clarify each value proposition from the customer’s perspective, and on-board customers quickly and comprehensively. Such a model will obviously be based on ensuring privacy through various opt-in mechanisms. In summary, working backward from the customer motivations and experiences in the digital economy is key to innovate and maintain relevance.

Read more on American Banker at 3 Steps to API Success. Your thoughts and suggestions are welcome. Image taken from