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Technology has prompted both clients and competitors to take a long, hard look at the prevailing business orthodoxies in the financial industry. Customers have exponentially more information than they had just a decade ago, allowing them to compare the products and services of not only your local competitors but also financial institutions from around the globe. But, how does a bank differentiate when products and services are quickly commoditized, and pricing pressures result in a race to the bottom? The answer lies in building loyalty through orchestrated experiences.

Focusing outwards

Though financial institutions have traditionally been at the forefront of technological innovation, they have primarily focused on developments—such as improved efficiency and automation of repetitive processes—that have benefitted themselves primarily instead of their customers. The result has had detrimental consequences for the customer relationship—nobody enjoys navigating the interactive voice response system and repeating themselves over and over. It’s little wonder that some people are turning to alternatives.

Fortunately, these challenges are also a source of opportunity: innovative financial institutions are trying new business models and rethinking internal processes to deliver improved customer experiences—and stand out from the crowd.

The promise of data

But delivering the ideal experience is no simple feat. It requires a level of data mastery that many institutions are struggling to attain. Though many banks have a wealth of data about customers, very few can transform it into actionable insights. Part of the problem rests with the design of the systems themselves: they were added as needs arose, and they were not designed to talk to one another.

This is why the cloud is so appealing. By embracing a cloud infrastructure, financial institutions can apply advanced analytics and AI—delivering intelligence at scale—to create individually tailored offers for each customer. And by understanding individuals across time, financial institutions can create meaningful relationships—an advantage not easily replicated by competing firms.

Creating a market of one

Imagine a business model that is truly customer-centric, giving every individual the personalized service once exclusive to ultra-high-net-worth clients. Customers would no longer receive the kinds of generic or confusing offers that have historically created distrust. Rather, they would be shown solutions that can help them navigate their own challenges, recasting the bank as a partner for their financial lives.

Financial institutions, once again, can be the cornerstone of the digital future. But it requires significant shifts in business models, company culture, and a deeper understanding of purpose. Banking originated with those who had capital serving as trusted intermediaries to help deliver the financial solutions that clients could not deliver themselves. As it turns out, that will be the future of banking, too.

Enabling innovation is Microsoft’s core mission: we understand that transformation can be challenging, but we also believe that it holds incredible promise. Our approach is to leverage technology in novel ways—enabling business agility with the tools that will define the future of customer interaction.

As your trusted technology partner, we offer both industry know-how and enterprise-grade solutions. And we can help you wherever you are on your digital transformation roadmap.

Find out more about the Microsoft perspective on the future of engagement and loyalty in banking and capital markets.