Digital Customer Experience is the tip of the iceberg in Digital transformation, what lies beneath is the business in millions

Digital transformation across any business primarily targets achieving superior customer experience. Customer experience supported by business functions such as better Insight driven customer service, data driven operational efficiency, efficient warehouse and product maintenance, scalable support systems etc. Many often believe that the simultaneous orchestration of all the said business functions together is necessary to strike the right chords of delivering superior customer experience. While seamless superior customer experience still remains to be the golden jewel that every business wants to achieve, it is only the tip of the iceberg. The business functions that need transformation to achieve this end of customer experience stand strong underneath the iceberg.

It is extremely difficult and practically impossible to synchronize all the business functions together simultaneously to achieve this transformation. It is ideal to break the pieces of puzzle into a hierarchical order of influence over achieving the optimal performance in their respective functions. For e.g. in a retail baking customer journey identifying the services that the customer has already opted for and offering the cross/up sell assistance which is emerging from customer’s interest is the need of the hour. Developing a customer context stands as a precursor to formulate any customer journey. In developing this customer context sources of data such as product/service data, customer data, support, click stream etc. should be intertwined together. In order to reach the right customer context it is empirical to incorporate the accumulation of data from the inception of customer’s journey with the bank. Ideally onboarding processes position as the first interface between the customer and the bank. The era of the involvement of underwriters during the accumulation of documents from customers is long gone. Banks are relying on scanning documents such as pdfs, images, text both structured and unstructured to digitize this process. The accurate digitization of this on boarding process supports the organization to realize huge savings in the OPEX costs for banks.

In most scenarios customers often see the advancements in the Banks as shown in their front offices. In order to achieve these advancements there is an impeccable handshake of physical functions performed in back office through human interventions. The future of banking is entirely about digitally enabled customer experience. This enablement requires empowering every business function and process to be empowered with the strategy and technology to be ready for the transformation as a Digital Bank. 

The digital empowerment of enabling digital boarding processes is the primary step of the Digital bank transformation. The ability to extract information from any and every form of legalized KYC document resolves the down time of processing applications coming in for a retail bank. Legacy Banks systems already encompass credit risk, compliance etc. automation engines. The information extracted can be pushed down stream to manage insurance policies for expiry, premium payment, renewal or converting the existing policy into other services from the retail banks. 

Are red ocean strategies the dead ocean strategies in the information age?

Organizations that thrive on competing in existing market space and beating the competition that exists are categorically red ocean strategy believers. They believe in getting their hands dirty, struggle and propagate their business. In doing so they try to exploit the available demand by either creating greater value to customers at higher costs or by creating reasonable value at lower costs. In business terms, exploiting the available demand through value cost trade off. The choice of differentiation is two pronged which are directly related to the cost and the service.

Microsoft is the best example to define a red ocean believer. All the factors as discussed above are addressed by Microsoft Windows and Microsoft Office. They have succeeded in the 20^th century. They made huge profits. However it has to be noted that between 2001 and 2014 the market cap raised by a meagre 3 percent ^(Source).

Organizations that consider differentiation while being two pronged will mainly deal with differentiation in service and low cost are blue ocean believers. The differentiation is optimized by saving costs through eliminating and reducing the services that the current industry thrives on and by raising the buyer value through creating elements that industry has never offered. The value innovation that arises from this approach is the blue ocean strategy. In laymen terms, organizations that create an uncontested market space and thus making the available competition irrelevant while capturing the new demand are blue ocean believers.

Apple is the best example to define a blue ocean believer. Since the Macintosh, Apple has been feeding the market with innovative products in those areas that are not maximally tapped by a given market. Macintosh, iPod, iPhone, iPad to name a few. Apple has still considered the value it delivers to its customers while saving costs on industrially varied offerings. Apple’s market cap has improved 75 fold in the period between 2001 and 2014 as its sales and profits improved ^(Source).

In a similar sense, in the current information age (Digital world) considering the network effect of internet of things it is imperative to say identifying the blue ocean strategies are the viable livelihoods for any organization irrespective of the service and business they render. In the current world limiting and fighting for the current market cap is irrelevant because of the pace at which the nomadic customer is willing to move to a future market. This statement is further strengthened by the recent development in retail market in China.

Alibaba, the Chinese ecommerce giant (US$231 billion) started in 1999 as a business to business portal to connect Chinese manufacturers with overseas buyers ^(Source). The company now provides consumer to consumer, business to consumer, business to business sales services through web portals. It has payment gateway, shopping and cloud computing services to sustain its business model. In 2014 on China’s singles day Alibaba reported a sale of more than $9 billion in one day by bringing all its strengths together ^(Source).

The details as listed above makes it a red ocean believer increasingly because it has exploited the current market and by offering value to customers at a differential cost. However, Alibaba sprung up as a blue ocean strategy believer in a manner no one could have ever imagined. Alibaba used the digital strengths it has developed from its e commerce customers like contextualizing, personalizing, customizing and by reaching them at the right time and through right channel etc., Alibaba has entered in to Banking domain. Alibaba has ventured into the Wealth and Investment Banking division and has captured US$100 billion in assets in the second year since its launch. Tencent another online giant is building a financial network based on a huge online platform ^(Source).

Blue ocean strategy has been enticing for the thought leaders, innovators and mere leaders. With the evolution of the Digital world the mechanism of reaching the nomadic customer is neutralized. This neutralization as seen with Alibaba and Tencent will bring in business offerings that are capitalized not only by the industry’s competitors but also by those competitors who are ahead in the Digital strategy from other industries.