A new era in banking: The rise of the Omni-Banking Client

Customer segmentation has been a hallmark of service delivery in the traditional banking landscape. Over time, banks have segmented their customers into different categories such as personal, SME, corporate, private banking among others. Each segment developed its own set of products and services that targeted the specific needs of its customers. Mature banks also offered segment-based channels, depicting the unique customer journeys. However, this approach to segmentation is increasingly being threatened by changing customer profiles.  

Take Ali for instance, a person of many facets where his banking needs span across different segments. He comes to the branch as a personal banking customer to perform his daily transactions. Now as an entrepreneur, he deals with SME banking services, while being a director of a large company he is also regarded as a Corporate client and finally investing in stocks and bonds also puts him in private banking services. As a result, Ali is being treated by his bank like 4 different customers, hence being offered 4 different ways of interacting, transacting, relating etc. Clearly the bank is far from understanding Ali’s different personas and his need to be recognized as a valuable multi-segment client of the bank, so frustrating. Consequently, for Ali (and a growing number of) numerous customers like him, the experience with banks is incoherent and impersonal. Journeys are contradicting among the various segments offering a disconnected experience. 

The Omni-Banking Client (OBC) 

Imagine the rise of a new banking segment - Introducing the Omni-Banking Client (OBC), a new subcategory for people like Ali. These are customers who cannot be fitted into conventional banking segments because of their diverse and overlapping financial requirements. Such clients need banks which do not function as traditional (siloed) institutions but provide a complete view of their financials across all personas, seeing them as truly multi-segment – and then offering consolidated positioning across the credit profile, product & services which are harmonious across segments, merged channel experiences and default pricing advantage across the broader relationship. 

Adapting to OBC

A paradigm shift is necessary for banks to effectively serve OBCs. OBC segment is fast growing, and banks would love to increase the population within this segment, as it provides a deeper wallet share of the customer and decreases risk (as the bank gets to know the customer better and from several different perspectives). Serving this new segment requires banks to develop propositions with the customer truly at the center of its thinking. This transition implies using technologies that help them understand the financial landscape of each individual client comprehensively. They must therefore strive to fashion a coherent approach for OBC where its offerings are not merely packaged together but are truly interrelated and intuitive as well.  

Examples of major banks that have already started the transition can illustrate how practical this approach is and its clear merits. For instance, some banks are using advanced analytics and AI to offer personalized advice and solutions that cut across traditional segment boundaries. These banks also offer credit decisions across multiple personas of the customer, regardless of the segment which initiated the origination of the service.  

These existing CRM and personalized banking models provide a basis for this change. However, these models also have their limitations particularly regarding their capacity to respond dynamically to the evolving financial needs of customers such as OBCs.   

Conclusion 

In my opinion, the OBCs will stay on the rise and will soon become the most profitable segment opportunity. This is not just a prediction but a necessity for the future of banking. Hence, it is important to reconsider conventional banking models for meeting the evolving demands from OBCs.  

The ultimate future of banking is hyper-personalization. A future where banking is no longer about segments, but about individual experiences, tailored to each customer's unique financial journey. As we move towards this future, banks that recognize and adapt to the needs of the OBC will be at the forefront of this transformative era in banking. OBC segment is offering a turning point which requires a change of strategy to include a more cohesive, personalized and client-oriented thought process. We look forward to an era where customer segmentation is not key but providing tailored banking experiences becomes paramount for each individual client’s precise needs (segment of one, by default).  

This could be the start of a new direction in banking. 

* This post has been written and shared on LinkedIn Pulse by Zubair Ahmed on December 5, 2023. See the post here.