OREANDA-NEWS. April 05, 2016. The digital transformation has reached the world of finance. mBank has seized its opportunity and is busy stirring up the financial sector with its offering of personalized online services.

What does “VIP” stand for in the banking industry today? “Very in-panic president” might be more apt than the version that initially springs to mind.

Indeed, executives at traditional financial institutions can see troubled times ahead. Accustomed to success, financial bosses are feeling the heat as low interest rates destroy the lucrative source of business that private investors have provided for years. Cost pressure is increasing. More and more banks are merging or thinning out their network of branches.

And they are also facing unprecedented competition from financially robust global players whose core business consists of digitalizing the consumer experience. Apple, Google, and co. are turning their attention increasingly to the lucrative financial sector.

At the same time, tech-savvy market entrants – operating in what is known as the financial technology or “fintech” sector – are sweeping through the market with clever ideas and innovative business models. Need a credit approval? Need it in minutes? No problem. At a traditional bank, that process can take days. Can we help you secure a great internet deal online? Immediately? Yes we can! Online payment service PayPal already serves around 173 million active customers in over 200 countries.

PayPal and other online high-flyers like it trump their established competitors by offering the benefits of speed and technology over barriers such as appointment-only service and counter closing times. And they strike a positive chord with the younger generation in particular. According to a study conducted in the United States by Accenture last year, 18% of millennials switched from their primary banks in the previous 12 months – compared with only three percent of people over 55.

Traditional banks have sensed the threat, says Susanne Raimar from SAP Solution Management for Banking. Online and mobile banking is now part of their standard repertoire, too. “Banks are already making their organizations more efficient. But it is equally important to offer a new customer experience with a personalized customer message. SAP is supporting them with solutions specifically tailored to the needs of the banking industry.”

Overall, says Raimar, the traditional financial institutions are definitely capable of reinventing themselves. Because, thanks to years of doing business with their clients, they are sitting on a treasure trove that ‒ in the information age ‒ is worth an absolute fortune: customer data. The only question is how they will make use of it to their advantage.

A glance in the direction of Poland might be helpful. Because, there, mBank is running a master class in how to create, build, and monetize customer trust. Poland’s fourth-largest retail bank is also the country’s number-one online bank. Fifty seven percent of its customers attended a higher education institution, and 41% are in the 25-34 age group.

Many of the bank’s customers use their credit cards for financial transactions. This in itself means that mBank knows a great deal about its customers’ consumer behavior and buying habits. In Poland, most people expect to be able to access services via their smartphones. The lifestyle benefits this facilitates means that consumers are happy to make their data available. And mBank, with its reputation as one of the pioneers of mobile banking in Eastern Europe, is happy to encourage this trend.

Like many other financial institutions, mBank collects and maintains all of its information in a customer relationship management (CRM) system. But it is not satisfied with just sending a standard advertising mailing to all its customers once a month.

Instead, it draws up customer profiles so that it can send customers details of offerings that are likely to add additional value for them. These could include an off-the-peg product, a tailored service, or a service that goes beyond the realm of traditional banking business. For instance, if someone has just been given a mortgage to buy a house, that person might also be interested in details of a good kitchen showroom; particularly if the showroom offers special offers to mBank customers. Using these business networks will play an important role for banks in the future.

Raising the Treasure

To enable it to understand its customers even better, and react quickly to their requirements, mBank deploys SAP Predictive Analytics. With the help of scoring models and sophisticated algorithms, this solution enables the bank to anticipate individual customer purchases and to plan and execute targeted campaigns for entire customer groups.

“SAP Predictive Analytics has allowed mBank to discover individual customer preferences and identify the next best activity for our marketing efforts. Now we are able to initiate more direct conversations, resulting in a better understanding of our clients on a personal level,” says mBank manager Bartosz Witorzenc, who is responsible for strategic initiatives.

mBank opted for SAP some time ago because its analytics solution was more robust, more effective, and faster than rival products. What’s more, the SAP product could be integrated almost seamlessly into the bank’s existing IT landscape. And the wisdom of this decision is tangible: Last year, mBank reported an increase of 400% in the response rate for its – now more focused – marketing campaigns. The bank also signed a significantly larger number of insurance and loan agreements.

The SAP solution is also optimizing mBank’s bonus program, “mDeals,” which rewards participants with reduced-price movie tickets and discount vouchers for drugstore products. Because mBank knows the purchase history of every program member, it knows what his or her preferences are and – thanks to SAP Predictive Analytics – it can implement insight-driven, personalized discount campaigns quickly.

The Polish bank is also extending its multichannel strategy ‒ by modernizing the representative offices in the major cities where mBank concentrates its consulting services for business clients. The bank is also introducing- no matter where a client is located.

Another component of the strategy is the bank’s new presence in heavily frequented retail zones such as shopping malls. Here, mBank is banking on shoppers’ “spend mentality” to help it sell its products. Successfully, as it turns out; because customers are flocking to the bank’s trendy “Light Branches” – fitted with video screens, smartphone-charging stations, touch screens, bar stools, specialty coffee machines, and kids’ play areas – to sign up for checking accounts and other basic banking products. mBank’s Light Branches and its smaller mobile stands provide an attractive high-tech atmosphere for doing standard banking business.

Banking will be a multi-faceted business in the future. But only those who embrace the opportunities offered by the digital transformation with an open mind will remain relevant for the generations to come.

Award-Winning Innovation

Polish online bank mBank – in which Germany’s Commerzbank holds a majority stake of almost 70% – employs some 6,000 employees, has approximately 5 million customers, and operates in the Czech Republic and Slovakia as well as in Poland. Its consistently online-centric strategy has already garnered the bank several awards, including Forrester Research’s “best online bank in Europe 2014” award (third prize worldwide) and the Gartner “Most Innovative Application of Digital Technology to Grow the Business” award.