“Digital has given us this amazing opportunity to completely reimagine what we do as a bank,” Angus Sullivan, Group Executive, Retail Banking Services at the CBA told KPMG in a recent meeting. “A decade ago, we thought it was about digitizing existing functionality. Now, we see digital as an opportunity to deliver greater value to our customers in many different ways. And that is leading us to entirely new business models.”

Focusing on value creation

CBA is certainly using their existing strengths to create new value for their clients. Take, for example, the bank’s recent moves in the home loan market. CBA currently serves more than 15.9 million customers and is the largest provider of home loans in Australia. That gives them unprecedented insight into what homeowners need. And it gives them unparalleled scale to impact the lives of millions.

It’s what they have done with that scale and scope that matters. Earlier this year, CBA announced a partnership with Amber, an energy retail start-up that helps homeowners tap into renewable energy when prices are low. Then they introduced a 10-year, fixed rate Green Loan at an ultra-low rate (0.99 percent pa) to help homeowners install clean energy products like battery packs. For those homeowners interested in saving money and protecting the environment, the offer is very compelling.

“The value is two-fold. First, it helps our customers save money — they can turn their expensive energy bills into an upfront capital commitment that comes at a much lower lifetime cost. But, at the same time, we’re making a real difference in terms of greening the energy supply chain,” noted Angus. “That’s a big priority for us and for our customers.” 

CBA has been making similar investments across a range of verticals central to the lives of their customers. It invested into Little Birdie, an e-commerce start-up that helps consumers find the best offers on products they need.

Technology at the core

It took stakes in More Telecom and Tangerine Telecom, two Australian high-speed (national broadband network) internet providers. It teamed up with Cogo, a carbon tracking and offset app. And it has invested into dozens of other promising ideas and technologies through its venture scaling entity 15ventures.

What has tied this all together, however, is a consistent and strong focus on improving the core through internal technology transformation, a shift towards open application programming interface (API) architecture and a world-leading Customer Engagement Engine (CEE). The CEE runs more than 400 machine learning models that ingest more than 157 billion data points to make more than 35 million decisions every day. It’s at the core of the customer experience.

“The CEE allows us to orchestrate interactions with our customers and learn what they like and what they need. It allows us to engage customers in entirely different content. Ultimately, it is what is helping us to become much more relevant, more personalized and more trusted in the lives of our customers,” Angus added.

Giving them what they want

As the bank enters into new service areas and creates new offerings, Angus remains vigilant against scope creep. Customers want services and offers that are highly relevant to their lives and their needs. What they do not want is a ‘junk yard’ app that tries to be all things to all people, so Angus is clear that every new model, offer and service must meet a high bar for relevance.

“We need to remember that people often come to our app with a different purpose in mind — they want to make a transaction or are looking to update their information, so we need to make sure anything we put in front of them is really valuable and highly relevant. And as we expand our ecosystem of partnerships, we need to be very focused on keeping things relevant,” he added.

As we expand our ecosystem of partnerships, we need to be very focused on keeping things relevant.

Angus Sullivan
Commonwealth Bank of Australia

Three keys to CBA’s success

Angus credits CBA’s progress to three key factors. First, they spend significant time and effort listening to their customers. Some of that ‘listening’ is done by the machine learning algorithms running in the CEE. But Angus is also keen on human-to-human listening. “You really learn a lot when you spend time with the customer — you find out what they really need, how we can make their lives easier and how we can help them reach their goals. That’s been hugely valuable.”

The bank’s efforts to create dynamic partnerships has also helped them move ahead. Not just by adding innovative models and services, but also by helping the business develop, innovate and co-create. “Our preference to partner with businesses that are disruptive in their industry has really helped us open up our own thinking internally,” he noted. “It’s made us a better organization internally. We do things differently as a result of our partnerships and that’s great.”

Last but not least, Angus notes the critical importance of protecting customer privacy and maintaining a high level of trust. “The expectations on banks in particular are very high when it comes to protecting customer information. We’ve got sensitive information about our customers and how they spend their money. And we’re going to make sure it’s never used for purposes other than those our customers expressly permit.” 

Deeper, more trusted relationships

While CBA is clearly leading the pack, it is becoming increasingly clear that financial institutions of all types are moving beyond processing transactions and towards delivering value. Simply put, they are reinventing themselves and what it means to be a bank and, to do that they are leveraging digital and creating ecosystems around customer needs and expectations.

“We see enormous opportunity for banks and financial institutions to evolve their offer to customers — to deliver something much more holistic than our traditional definition of banking would suggest. That’s how we’re going to build deeper, more trusted relationships with customers,” Angus added.

This article is featured in Frontiers in Finance – Resilient and relevant

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