PREDICTIVE ANALYTICS TO ENSURE CUSTOMER CENTRIC BUSINESS MODELS AND AVOID MARKET SHARE LOSSES THROUGH DISRUPTION

Abstract

This publication is part of a broader examination with regards to digitalisation in the banking sector and the necessity of customer centric business models. The study also considers the importance of perpetual alignment between business models and customer needs to avoid market share losses. Furthermore, it focuses on newcomer in the market as non-/near-banks which could cause disruption. This research paper examines at the extent to which digitisation in the banking sector is needed and why customer centricity plays an important role as a competitive advantage in terms of market shares to avoid disruption. Customer data, digital ecosystems, and predictive analytics as foundation for customer centricity and trend setting will be described accordingly. This article presents recommendations for banks in terms of the foundation for customer centricity and why the use of predictive analytics is not a small project to implement. However, digitalisation in the banking sector is not only an ongoing trend, but also poses a significant challenge to most institutions. This article picks up on this and presents key challenges as well as opportunities for financial institutions to deal with it. An overview of the financial technology sector will be presented. It then takes a closer look at drivers for change, customer centricity, distribution channels, and customer needs. The link of predictive analytics and customer centricity will be outlined. The article is rounded off with a view on the future customer proposition. This article supports the wider objective of an elaboration to define a model to enable the banking industry conducting a continuous analysis of defined input factors and resulting from that changed customer behaviour to derive recommendations for action to change or keep the business model customer centric.