In my first article in this series we introduced the need for an architectural approach and foundation to digitisation, transformation and the delivery of exceptional customer experience within the financial services industry. We will now take a closer look at how to set the vision and shape the strategic direction such that customers want to use your products and services, and employees feel highly engaged within your organisation.

Across nearly all industries, a brand's value is increasingly dependent on the delivery of exceptional customer experiences.

In fact, services-oriented industries are those with the most burning need to create superb experiences that surround the direct (transactional) engagement.

Whether they’re in wealth management, business asset financing, general retail banking, insurance, or anything in-between, financial services firms will only remain relevant by continually delighting their customers. For this reason, embedding experience design into every facet of their services has become the mantra for any forward-thinking financial services organisation.

But – with often millions of customers to look after – so many financial organisations are struggling to translate these lofty ideals into tangible reality.

As noted by this Open Group paper titled ‘Roads to a digital customer experience’ new technologies "are rendering obsolete the traditional frameworks and models that companies have been using to capture and design customer journeys and customer experiences”.

The Answer? Start with the architectual building blocks.

It’s only by developing the right architectures, processes, and systems that the organisation’s customer experience vision can find solid footing. By taking an Enterprise Architecture (EA) approach to experience design, the vision becomes a defined set of behaviours, incentives, and operational processes.

Ultimately, this spawns a new culture of customer-centricity that delivers meaningful enhancements to customers’ experiences. Empowered by new technologies and unshackled from outdated ways-of-working, staff are given the tools to execute on the customer experience vision.

EA enables the organisation to build a clear roadmap to transition from its current state, to its desired target state – by looking through the lenses of Business, Information, Data, Applications, and Technology (BIDAT).

By developing the roadmap in the context of these five domains, the organisation can pinpoint exactly how EA can facilitate the organisation’s goals of delivering exceptional customer experiences.

It unearths the complex inter-relationships within the organisation that impact customer experience, supports those that are responsible for designing and implementing the change.

For instance, EA helps firms understand where their customers’ data is housed, helps to eliminate duplications of this content, or identify overlapping systems that are trying to achieve the same objectives.

Ensure the brand and vision are guidine behaviour

As the financial services organisation moves from a product focus, to a customer experience focus, it becomes imperative to look at the internal company culture – and eliminate the ways-of-working, cultures and habits that are no longer competitive.

This requires all areas of the organisation to come together and agree on the vision, and the definition of the target state that everyone will work towards.

By taking a transformative, almost ‘entrepreneurial’ approach to one’s operations, it becomes possible to start optimising and digitising processes, and decluttering wherever inefficiencies exist.

At a foundational level, EA enables the organisation to clearly delineate and distinguish between one’s functions, processes and capabilities.

EA enables the organisation’s leadership to link roles to processes, generate useful process guides, and define the training needs analysis for those various roles. Not only does this give individuals clear career paths; it also reduces the costs of producing training material (now that roles and processes are clarified and standardised).

In my previous article, I discussed the need for enterprise architecture building blocks as the basis for creating and delivering outstanding customer service. We will now turn to the disruptive forces that plague the financial services industry.

In its paper 'Disrupting beliefs: a new approach to business-model innovation' McKinsey's starting point is that "every industry is built around long-standing, often implicit, beliefs about how to make money”.

In retail banking for example, these beliefs include industry concepts like ‘share of wallet’, ‘cross-sell opportunities’, ‘acquisition costs’, and ‘lifecycle value’, among many others.

“[These beliefs] are often considered inviolable, “ continues the McKinsey paper, “until someone comes along to violate them. Almost always, it’s an attacker from outside the industry.”

Nowhere is this more apt than in financial services. Attackers from other industries are certainly threatening to invade the hallowed turf once reserved exclusively for banks, insurers, investment and trading providers, and others.

In retail banking, for example, these disruptive forces include the likes of:

Although the Zachman Framework applies to enterprises, the Framework itself is generic. It is a comprehensive, logical structure for the descriptive representations (i.e. models, or design artefacts) of any complex object, and does not prescribe any particular method, representation technique, or automated tool.

The framework’s strength is that it provides a method of thinking about an enterprise in an organised way, so that it can be described and analysed. It also enables the individuals involved in producing enterprise information systems to focus on selected aspects of the system, without losing sight of the overall enterprise context. In designing and building complex systems, such as enterprise systems, there are simply too many details and relationships to consider simultaneously."

• Mobile wallets (such as M-Pesa)
• New payments solutions (like Apple Pay or Square)
• Cryptocurrencies (such a bitcoin)
• Social lending (eg The Lending Club or Prosper)
• Personal financial management tools (like Moven)
• Crowdfunding (eg KickStarter)
• Non-banks offering financial services (like Virgin or Discovery)

Other areas of financial services are certainly not immune to change as well. In the insurance realm, for example, disruptions like:

• Usage-based vehicle insurance using GPS and accelerometers in smartphones or sensors
• Online insurance aggregators and marketplaces
• Other industries encroaching (eg insurance bundled offers from cellular providers or retailers)
• Peer-to-peer insurance networks
• Autonomous, self-driving vehicles in the not-too-distant future.

For incumbents, this presents a worrying reality: newer and more agile attackers won’t have the internal cost structural issues, the legacy infrastructure and higher head-counts – meaning these cost-efficiencies can be passed down to the consumer.

The entrance of new disruptors proves that most of these "beliefs", embedded into the anatomy of a bank, often prevent the bank from meeting the modern customers’ expectations.

This is not simply about technological advancement. The harsh reality is that financial companies have fallen out of touch with customer needs. These disruptors have arrived to serve an unmet need.

In the era of the modern-day customer, more demanding and empowered than that of decades ago, should banks still be rolling out vanilla services like cheque accounts, credit cards, and rewards programmes?

Should banks still be classifying customers into vast segments based primarily on monthly income? Should they still be quantifying affordability and risk in the same way? Should they still seek to derive their non-interest income from monthly fees and transaction fees?

The entrance of new disruptors proves that most of these practices, embedded into the anatomy of a bank, often prevent the bank from meeting the modern customers’ expectations.

For another perspective on the needs and expectations of digital customers, we can look at The Open Group’s ‘ROADS principles’. These can be summarised as follows:

• Real Time: The customer can commence or progress a journey at any time, with responses and updates tailored in real-time to meet the customer’s evolving needs.
• On Demand: The service provider has the flexibility to adapt and adjust the services delivered to the customer on demand.
• All-Online: The customer is able to accomplish all activities and transactions associated with the journey online. An offline channel need only be used if absolutely required to handle a physical product or service.
• Do-It-Yourself: The customer is provided with the capability, and has the choice, to complete the activities and transactions associated with the journey alone. Interaction with a service provider representative is not required.
• Social: The journey is tightly integrated with digital social media, so at any stage of the journey the customer is able to access social media for advice, recommendations and feedback.

Financial companies’ general inability to respond to these demands can often be linked back to fundamental architectures and tools.

These are the outdated architectures that are unable to conduct impact assessments, not able to fully leverage resources and technical capabilities, and not able to find meaning in the masses of customer data and documentation stored inside their four walls.

We can define this as the concept of Big Data: teasing out the learnings from the masses of structured and unstructured customer data streamed from various sources and systems - with the goal of creating customer-specific engagement tactics.

To fully understand the needs of the modern customer, it's important to focus on the customer journey as a whole. In my next article I introduce The Open Group's Customer Experience Reference Model.

Making Sense of the Customer Journey

To survive the onslaught from advancing attackers to the financial services industry, we advocate ‘outside-in thinking’ – working backwards from the customer frontline (designing the experiences that customers will love) – and then plotting the internal processes that support the customer experience vision.

This systems-thinking approach uncovers the optimal roles and relationships within the organisation, the metrics on which to evaluate success, and maps the reinforcing loops that will accelerate change and enhance value delivery. Keeping EA at the centre of the reengineering process ensures a sharp focus on the information that’s required to make these new processes successful.

Organisations can now understand where underlying data is housed, how it can be best integrated between systems and across functions, and how information should be delivered to those team members that are tasked with supporting customers. This is brought to bear in business capability maps, causal loop diagrams, process models, value-chain diagramming, and the like.

The leading financial services firms of tomorrow will take these insights to invest in architectures and systems that creates superior customer experiences. Ultimately, this is the only approach that can help financial companies stay relevant in the face of new and disruptive threats.

It goes without saying that customer experience is felt at the various digital and traditional touchpoints with which customers engage. But ‘touchpoints’ in the truest sense of the word incorporates any engagement that the consumer has with the financial services brand, products, services, or staff.

A number of models seek to define these customer touchpoints. The Open Group's Customer Experience Reference Model, for example, notes that any organisation needs to look beyond itself, and take a wider view of the broader ecosystem when understanding the customer journey.

To measure progress, the Customer Experience Reference Model suggests defining a set of key performance indicators. Depending on the organisation and its strategy, these could take a multitude of forms – including Net Promoter Scores, click-through rates, churn rates, average revenue per customer, cart abandonment rates, valency indexes, conversion rates, and much more.

Scenario: customer journey in the Insurance sector

Insurance policies traditionally involve reams of paper, reliance on customers to enter information accurately, and high back-office administration costs. They are typically updated on an annual basis, and do not reflect an accurate assessment of risk.As a result of the inefficiencies in the system, insurance tends to be a very expensive item in household budgets.But in the next few years, insurers will start consolidating feeds from connected devices within cars, geolocation data from smartphones, smart keys, as well as wearables (like smartwatches) and even ‘digestibles’.Known in technology circles as the Internet of Things, this example shows how an insurer can far more accurately assess and mitigate risk - by tracking everything from driving behaviour, to cardiovascular activity, smoking habits, or whether or not a person has locked their house.By developing customer insights at this level of detailed granularity, insurers are able to package accurate, personalised insurance premiums (rather than segmenting customers into broad risk groups, as they do today). Of course, customers who want to benefit from preferential, personalised rates, will sacrifice some level of personal privacy.This leads us to the ethics of tracking intimate customer details for use in designing such personalised and fluid insurance policies - which dynamically adjust based on customer behaviour (for example, a trip overseas to a country with high crime statistics many cause a temporary increase in one’s premium).

Unleashing Digital Transformation through EA

My previous article examined the customer journey as key to understanding customer needs. This, however, means nothing if the organisation cannot be sustained.

When considering the financial services enterprise of the future, it’s not enough to simply aim for excellent customer service. Unless this generates higher levels of profitability, better customer retention or improved customer acquisition, any customer service effort is going to be in vain.

• Should banks still be classifying customers into vast segments based primarily on monthly income?
• Should they still be quantifying affordability and risk in the same way?
• Should they still seek to derive their non-interest income from monthly fees and transaction fees?

These three questions above – relating to a financial services company’s business goals – should be guiding forces for the architecture team, as they create the optimal design for the future.

In essence, the firm’s architecture needs to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the most profitable opportunities at any given time.

"The firm's architecture nees to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the profitable opportunities at any given time"

As financial companies come under increasing threat from new competitors, narrowing the focus to certain services, or markets, is a way of maintaining profitable leadership positions in certain areas – while exiting over-traded, hyper-competitive or unprofitable markets.

However, this is no longer a static, consistent landscape. To succeed, financial services firms should be “striving for continuous improvement and renewal”, as a recent Backbase/Efma Report describes.

From an EA perspective, this means one’s technology and application architecture must support the rapid and continuous delivery of new services and features to customers.

“The innovation planning cycle is far too slow for today’s high-speed digital banking environment,” notes the report, adding: “Today’s big digital players in other industries test and learn as part of an iterative process. They’re agile and experiment in real-time with their own customer base. The decision-making process is much faster and the rollout is fast … very fast!”

Across the breadth of architecture realms - from business, information, data, applications and technology - one’s EA frameworks should be designed with rapid prototyping and delivery in mind. By doing so, financial companies are able to capture new windows of profitable opportunity, react faster to changing customer demands, and produce new services in a cost-effective manner.

This could come in the form of instant home loan approvals, new services for wearable technology, or a concerted focus on a niche insurance segment. The specific opportunities depend on the company in question and where they are at a given point in time.

In short, having the architecture to unleash digital transformation, opens up new value streams for the bank and increasing satisfaction and loyalty for the customer.

EA Insights Enable Competitive Advantage

The final McKinsey “timeless tests” looks at how to anchor customer centricity within the organisation, and align governance approaches and staff incentives to fit with the new customer service ethos.

From an Enterprise Architecture perspective, this is reflected in the maturity from ‘EA execution’ to ‘EA leadership’. The concluding article in our series on change management in EA highlights the the hallmarks of a mature-state EA practice – the state of EA leadership.

EA helps to create the structures that will thrust customer-centricity to the forefront of all business decision-making. Specifically, it can support the organisation’s customer experience vision in the areas of:

• Mandate and governance
• Strategy
• Performance management
• Organisational transformation

But the reality is that so few firms ultimately realise the value of EA in their customer experience and digital transformation ambitions. Another of our series – on what catastrophes often cause the EA practice to implode – addresses the common reasons for this.

Because so few organisations fully leverage the power of EA, those financial services firms that do get it right, have a tremendous competitive advantage over their peers – who continue struggle away in disjointed silos, bondaged in unnecessary red tape.

Addressing these final two McKinsey tests requires a relentless focus on customer insights; and then ensuring the voice of the customer be heard when structuring, integrating or re-designing all business processes.

"Without EA at the core of these endeavours, the organisation's leadership cannot take full advantage of these rich sources of insights."

Without EA at the core of these endeavours, the organisation's leadership cannot take full advantage of these rich sources of insights. More specifically, they wouldn’t have the architectural work products to improve resource allocation, reduce decision-making biases, assess strategic alternatives, manage change and complexity, or chart the innovation journey.

In this way, EA provides deeper insights into the unintended consequences of certain potential decisions – like company restructuring or deciding to enter a new market.

To conclude, the McKinsey tests represent the important questions that financial services organisations need to ask themselves as they seek to put the customer at the heart of their digital transformation initiatives.

And, as we’ve teased out in this series, having the fundamental architecture to support these goals, and prepare for an uncertain and volatile future, is an absolute prerequisite for success.