The IDC report, The Prime Strategies of Customer Centricity for Asia/Pacific Financial Services Industry, says customer-centric strategies should include ecosystem, influence, and context.
Handojo Triyanto, lead for Customer Centricity at IDC Financial Insights Asia/Pacific, noted that a lot of financial institutions are implementing ecosystem and context strategies, but neglecting influence strategies because of their short-term business focus.
He suggests these institutions implement influence strategies to increase their impact in the long term.
What FSIs are buying
IDC estimates the software spending for customer-centricity in 2021 will account for 27% of the total software spending of Asia/Pacific's financial services industry and will be the highest in 2021 compared with other LOBs (excluding LOB operations) at about US$ 5.1 billion.
Since LOB operations include customer-facing processes and have an impact on customer satisfaction, this LOB should be included in the analysis. Software spending with the included LOB operations will then account 62% (about US$11.7 billion) of the total software spending of Asia/Pacific's financial services industry.
Customer-centricity is forecasted to have an 11% compound annual growth rate (CAGR) from 2019 to 2024. Six countries are forecasted to have more than 9% growth rates for customer-centricity software spending: China (with the highest growth at a CAGR of 21.8% for 2019–2024), followed by New Zealand, Vietnam, India, Indonesia, and Singapore.
This depicts the significant roles of data processing and management have in IT – accounting for more than 30% of the technology spending. Likewise, the trend also shows that data processing and management have high growth rates.
Currently, customer relationship management (CRM) applications spend is forecast to grow at a CAGR of 13.5% in 2020–2024. IDC estimates CRM (software) spending reached US$ 1.3 billion in 2019 (excluding outsourcing spending) in the Asia/Pacific financial services industry.
When implementing customer-centric strategies:
Understand and consider each strategy – Financial institutions should understand and consider all three strategies for their business as these three create strong and long-term competitive advantages for their respective institutions.
Select partners carefully – When it comes to partnerships in the ecosystem strategy, financial institutions must consider their partners carefully. In IDC's research about the Future of Trust, partner selection is crucial to developing a trusted ecosystem. Realize the advantages of influence strategy – Although influence strategies are quite difficult to justify in quantitative measures, they are important for long-term businesses.
