Donal Reddington on mass customization, crowdsourcing and digital manufacturing

Gartner highlights mass customization and customer innovation in banking

Business consultancy Gartner has issued a press release relating to a recent IT symposium which it hosted in Cannes, France.

Gartner claims that “Financial Institutions Must Focus on IT Innovation or Hibernate to Weather the Economic Downturn.” The press release quotes Alistair Newton, research vice president at Gartner, who makes a number of recommendations aimed at financial institutions. Two of the recommendations cite examples that may be of interest to readers of this site:

“Extreme but not complex innovation – Use technology to deliver a new level of personalisation for the customer. For example, one Spanish bank allows its customers to calculate exactly how much the bank profits from their custom and enables them to donate a portion of those profits to a designated charity.”

While the option to donate a share of the profit to charity is admirable, this example is interesting for a different reason – it introduces a measure of personalized transparency to the relationship between the bank and the customer. There is still a dependency on the bank to be truthful in relation to the profit figure which it derives from the customer, but this might trigger an expectation among bank customers for of a higher level of information on how profitable they are to the bank.

“Treat customers as innovators via social networks – Customers can answer most of what organisations want to know about them, whether it’s where they shop, how they feel and what and when they want to purchase. Some new financial services entrants such as the social networking start-ups, are trying to leverage customers more effectively using this technology and customers’ increasing acceptance and use of it. The next innovation step will be to bridge the gap between pure social networks and financial social networks (FSNs). FSNs are leveraging social networks to initiate a new form of financial transaction, allowing members to not only share information but to actually start lending and borrowing to each other, cutting out the middle man – in this case the bank.”

It should be remembered that customers of every bank already lend to and borrow from one another – one customer’s deposit savings are provided to another customer in the form of a loan – but this proposal suggests that the bank might become a simply an intermediary between the parties, which implies that the bank itself would not be a contracting party. Whether any bank would be willing to take this step is a subject for debate!

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