Customer Processes and their application to Mobile Devices

Seminar Paper, 2009

26 Pages, Grade: 2,0


Table of Contents


Table of Figures

1 Introduction

2 Challenges to the Banking Business
2.1 Customer’s (basic) needs
2.2 Changes in global markets

3 Customer-centricity for Business Processes
3.1 Customer-centricity
3.2 Customer Buying Cycle & Customer Processes
3.3 The customer-centric business process

4 Customer Process mapped to a Mobile Device

5 Boundaries & Challenges
5.1 Opportunities
5.2 Boundaries, challenges and disadvantages

6 Conclusion



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Table of Figures

Figure 1: Maslow's Hierarchy of Needs

Figure 2: The Johari Window in Retail Banking

Figure 3: The Customer Buying Cycle

Figure 4: A Business Portal with added value

Figure 5: Customer-centric Business Portal

1 Introduction

Consumers have become more sensitive for a permanent accessibility of mobile and wireless services. During the previous years, GSM, HSCSD, GPRS, UMTS Bluetooth and WLAN are state of the art technologies for mobile information service provision. Clients carry their mobile device around, and hence can receive services via wireless communication channels; they can be “technically” reached anywhere, anytime. Increasing mobility and the acceptance of mobile devices lead to a huge market in the information service sector. The number of accessible services grows in short frequency.1.

People in the age of 16 to 40 years are the main target group for mobile devices and a mobile device application2 ; one of the most important customer groups in the future. This customer group is characterized inter alia by a high degree of flexibility, adaptability to changes, low customer loyalty and demand for global information via internet.

The importance of this customer group and new technological opportunities create new challenges for the world’s financial industry. Besides this, there is the necessity to create new business processes from a customer perspective and to get even closer to the customer and his needs.3

The main question is how a financial application must be specified to meet the customer’s requirements in light of numerous variations of software and different providers of mobile devices. Furthermore, it should be discussed, how additional customer value can be created by such an application.4 Besides the complexity from a wide range of various mobile devices itself, solutions have to follow the principle of customer-centricity.5

In order to clarify and demonstrate how a client process should be designed to meet the high demands of the mobile devices by the new group of customers, the change from a seller's market to a buyer's dominated market and the focus on the customer’s need6 will be discussed.

Afterwards, the issues customer-centricity and customer processes, which are the main elements of a customer-oriented process, and why thinking and acting in customer-oriented process structures is of relevance are discussed.

Having theses to aspects in mind, an exemplary customer-oriented process will be described and visualized. This process has been designed under considering the target group’s characteristic: flexibility, reachability, safety, self-actualization, and usability.

The discussion of customer processes and their application to mobile devices leads to advantages and disadvantages of such applications. Innovations in this area may move banks closer to the customer, but does this corresponds to the actual customer requirements? Discussions and numerous jurisdictions regarding privacy and security of mobile broadcasting technologies lead to a different impression.

2 Challenges to the Banking Business

The following chapter focuses on the one hand on the customer’s needs and resulting challenges in designing business processes. On the other hand, changes in global markets and their influence on the process design in the financial industry are discussed.

2.1 Customer’s (basic) needs

For a better understanding of the customer’s needs Maslow’s Hierarchy of needs is used. This psychological theory was proposed by Abraham Maslow in his paper “A Theory of Human Motivation” in 1943.7 The current prioritization of self-actualization of individuals shows the high relevance of this theory. For the following discussion about the designing a customer-oriented process, it is elementary to get an understanding for the different fields of the “hierarchy of needs”.

The figure below shows the different specifications for defining the customer’s needs. A customer process for the financial industry must meet the basic needs (at the bottom of the pyramid) as well as the new aspects of a high flexibility and a high level of information, result from the new opportunities of rapidly growing global networks and the World Wide Web. While discussing the designed process, the aspects safety, the self-actualization, usability, and reachability will be considered as well.8

The aspect “safety” is pointed out because the need for security especially in relation to the financial industry is important to take into account; e.g. due to the increasing number of scandals regarding private data, fraud and loss of credit card data and banking information through professional hackers.9

The second category to be considered is “self-actualization”. Maslow believes that human beings have an intrinsic desire to grow and develop and move towards self- actualization.10 Therefore, an individual has to overcome or satisfy previous basic needs. Customer process, and hence a mobile application, have to meet the customer needs, particularly the elements of self-actualization, for long-term success.

The flexibility of the target group (cp. Introduction) has significant influence on the design of a customer- oriented business process with respect to customer’s needs and has to be considered during the design of such an application as well.

2.2 Changes in global markets

Not only recently, but increasingly in the last years, significant changes in the market environment have taken place. The so called “seller market”, where suppliers dominated with new their product, has nowadays changed to a more and more customer-dominated market.11

Competition for customers is an attribute of nearly all global markets. Providers have to face a target group of customers with a very high level of information about equivalent providers and products.12 Consequently, nowadays suppliers and especially financial institutes cannot wait for customers to buy their products and services, maybe with the exception of niche players. There are nearly unlimited opportunities for gathering information and changing providers. Besides this, changes in the market, which are an additional challenge for the banking industry, occur: In general, banking products and services can be treated like commodities. They are easy to copy and sold by other market players, and hence at the first sight, differentiation seems to be possible only via the price.13 In order to avoid this trap, banks have to focus on the customer and his needs and have to put him in the center of their process.

Not only the World Wide Web enables the customer to search for compatible suppliers anywhere and anytime, but there are various distribution channels for important and less important information, beside the internet. For example, televisions stations, which are enabled for receiving and distributing news all around the world through modern satellite techniques or the newspaper publishing companies with reporters at any current focal point, sometimes before something happens.

Worldwide operating companies, with subsidiaries, representative offices, and production facilities in different countries are also a consequence of changing markets. Indeed, suppliers and service providers establish subsidiaries close to their customers, e.g. in China, CEE or India.

As described above, global markets have changed by the influence of internet and globalization. Due to the fact that opportunities are almost unlimited for customers, providers have to react to the new flexibility of potential customer groups. Financial services providers have to face the challenge of globalization and the resulting consumer power. Therefore, services with a high value of self­actualization for individuals have to be developed. They are useful in many situations independent of the actual situation and environment of the individual.14 But first of all, this new understanding of process modeling must be adopted by the companies. There must be a different mind-set in product development and management to reach the new customer expectations. To achieve the requirements of the theory of customer-centricity, companies must change their thinking and acting in dealing with their clients.

One way to fulfill the expectations of customer-centricity, created under the aspect of flexibility, are applications for mobile devices. However, it is not enough to integrate “nice mobile phone tools” in existing offers.15 As a result, the main challenge for the financial industry is to meet the relevant customer needs. Eventually, as a first step, banks have to rethink their segmentation into customer groups. The most present used criteria for building customer groups, as age, income and wealth status, are not accurate enough.

Having built this basic understanding about why and how changes in the financial, but also in almost all other industries, are important and needed, the following chapter will discuss the topics customer- centricity and how customer processes can be linked to the business process in the financial sector.

3 Customer-centricity for Business Processes

As discussed in the previous chapter, customer and their needs become more and more important in selling the (right) products and services not only in banking business. This chapter focuses on customer processes and their alignment with the business processes. At the beginning customer-centricity and customer processes will be described. Afterwards, the requirement of customer processes and how a business process can or should support the customer process is discussed.

3.1 Customer-centricity

In general, banks nowadays, think they “deliver [their customer] great service"16 in e.g. not only assessing the relative profitability of customers and segments, but also serving potential lifetime profitability during their whole life.17 But do they really focus on their customers? Are they really customer-oriented? Most players believe in customer-centricity as servicing customers fast and continuously and supporting them with suitable products and services.18

It is common sense that having a well designed customer relationship management (CRM) system supports serving the customers and putting them into the centre; but even though a lot of money has been spent for highly sophisticated CRM systems, no significant achievement have been made e.g. in form of penetration or cross-selling rate.19 Furthermore, Booz Allen Hamilton20 states that an ongoing dialogue between customer and bank has to be established. By emphasizing this interaction institutes will build a base of knowledge and trust between banks and their customers. One approach creating these “interactive relationships” is the cognitive and psychological social science concept by Joseph Luft and Harry Ingham21, the so called “Johari Window”; focusing on a the “give-and-take basis” to create a more value added basis for both customers and banks.

It deals with human relations and describes the (inter)personal communication between two individuals in four quadrants: Quadrant I (OPEN) refers to behavior and motivation, which is know by us and by others. Quadrant II (BLIND to customer) represents information which we are unaware of. Quadrant III (HIDDEN by customer) contains all information, feelings, etc. that we “hide” from others. Quadrant IV (UNKNOWN) is neither known to us, nor to others.22

illustration not visible in this excerpt

Figure 2: The Johari Window in Retail Banking23

Banks using this tool should widen the information HIDDEN and only known to the customer (such as life stage, wealth goals, preferred mode of interaction) by sharing some of their information in the BLIND area.24

First direct, a divisions of HSBC Bank, for example uses text messages to the customer’s mobile phone to inform them if their account balance is close to their overdraft limit to avoid overdraft penalties.

By this service, first direct shows their customers that they care about them.25 This concept on generating trust and by providing relevant information to the customer will improve “the guesses made by CRM algorithms”. Banks will sell products more effectively and will be rewarded with a greater share of the customer’s wallet. To the customer on the other side, a more suitable and tailored product and service range will be offered meeting his or her needs more adequate.26

In practice this means to align the business model and the business strategy with the customer life-cycle in order to obtain a holistic partnership with the customer. Furthermore, a partially or event generated marketing should be replaced by a more life-cycle and requirement-oriented advisory system.27 The message behind this concept is simple: A customer should be seen a strategic partner whose trust and respect has to be gained by the banks. Putting the customer or his life-cycle in the center of its attention, banks should be more eloquent in serving their customer’s basic needs effectively.

Having in mind the mentioned challenges in chapter 2 for banks regarding the replaceability of their products and services, it is obviously that focusing on the customer’s needs and building customer-centric processes is of importance. If institutes do not want to differentiate themselves only via the price of their services, they have to work on these topics in a sustainable way and build on customer loyalty and satisfaction.28

3.2 Customer Buying Cycle & Customer Processes

Many banks already focus on customers, they use CRM or other tools “guessing” their needs29 or trying to see the customer throughout lifetime profitability thinking when offering their products to him30. Unlike, for example, the consumer industry, banks do not draw the added value of their services to the customer; customers are willing to pay more for goods when they recognize the added value, for image

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Figure 2: The Johari Window in Retail Banking

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reason or just because they feel the vendor takes care about them.31 The mixture of partnership, trust and added value can be seen in customer processes. It is defined as a process a customer passes through to satisfy his needs.32

Specifically, the Customer Buying Cycle (CBC) can be used to point out and understand the customer’s needs, expectations, and requirements (see figure 3).33 It describes a holistic view of the customer’s consumption cycle in a chronological flow. It consists of the four steps: research and information gathering, evaluation, acquisition or purchase, and after-sales.34 The CBC will be the basis for a customer process where in each step the expectation of the customer’s needs will be derived from.35 The customer is seen as the starting and the end point of the value chain to meet his desired outcome.

The customer process focuses during each phase on individual requirements of the customer and helps banks to find out which services and products are needed in serving the needs of their customers best and completely.36

Taking a closer look on the frequency of customer processes, it is important to mention that “real” customer processes are undergone by a customer relative rarely during their lives. The acquisition of a house is an obvious example. For a customer it is therefore important that he will be assisted as good as possible by someone being more experienced with this process and offering requiered information one- stop.37 Having met this requirement, it is likely that the customer need/process will be fulfilled. For the further discussion and the design of the customer process, referring to the target group of 16 to 40 years old humans, it will be assumed that some business process, especially those focusing on their needs “flexibility”, “usability”, “reachability”, “safety”, and “self-actualization” can be performed more than once. One reason might be that they are, compared to the acquisition of a new house, less cost-intensive.

Identifying customer processes is necessary to generate a stronger relationship between banks and their customers. Financial institutes have to move from the normally product-oriented driven process to these customer processes in order to create an added value for the customer; business processes should not, as they have been in the past, focus on only improving efficiency and guarantee a good quality service.38

Chen and Popovich39 get to the point regarding the need of customer centricity and customer processes by underlining “that retaining customers is more profitable than building new relationships”. Furthermore, they found out an increase in customer retention of only 5 percent will result in an average customer lifetime value of 35 to 95 percent.

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Figure 3: The Customer Buying Cycle


1 Cp. Kronsteiner, R. (2004), p. 1.

2 Cp. Müller, D.K. (2008), p. 291-298.

3 Cp. Sheth, J.N./ Sisodia, R.S. (2006), p. 97.

4 Cp. Carlson, R.C./ Wilmot, W.W. (2006), p. 10.

5 Cp. Schultz, D./ Schultz, H. (2003).

6 Customer’s needs and customer needs are used adequately.

7 Cp. Simons, J.A. et al. (1987), p. 44.

8 Chapter 5 shows a solution for these problems, developed at the Wilhelm-Schickard-Institut für Informatik at the Eberhard Karls University Tübingen. Cp. Borchert, B. (2008).

9 Cp. Simons, J.A. et al. (1987).

10 Cp. Cameron, E./ Green, M. (2004), p. 37.

11 Cp. Fleisch, E. (2001), p. 18.

12 Cp. Beck, B. (2008), p. 345-350.

13 Cp. Heinrich, B. (2002), p. 79.

14 Cp. Kronsteiner, R. (2004), p. 3.

15 Cp. Nuance Communications Inc. (2005).

16 Cp. Fiserv (2006), p. 1.

17 Cp. Fiserv (2006), p. 1.

18 Cp. Heckl, D./ Moormann, J. (2007), p. 68.

19 Cp. Booz Allen Hamilton (2003), p. 1.

20 Cp. Booz Allen Hamilton (2003), p. 1.

21 Cp. Luft, J. (1982), p. 1.

22 Cp. Luft, J. (1982), p. 1.

23 Cp. Booz Allen Hamilton (2003), p. 2.

24 Cp. Booz Allen Hamilton (2003), p. 2.

25 Cp. GFT (2006), p. 6.

26 Cp. Booz Allen Hamilton (2003), p. 2.

27 Cp. Booz Allen Hamilton (2003), p. 2-3.

28 Cp. Heinrich, B. (2002), p. 79f.

29 Cp. Booz Allen Hamilton (2003), p. 2.

30 Cp. Fiserv (2006), p. 1.

31 Cp. GFT (2006), p. 5.

32 Cp. Bach, V./ Österle, H. (Ed.) (2000), p. 3f.

33 Cp. Meyer, M./ Schumacher, J. (2004), p. 38.

34 Cp. Meyer, M./ Schumacher, J. (2004), p. 37-38.

35 Cp. Dohmen, A. et al. (2009), p. 3.

36 Cp. Behara, R.S. et al. (2002), p. 604f.

37 Cp. Bach, V./ Österle, H. (Ed.) (2000), p. 7-8.

38 Cp. Bolton, M. (2004), p. 46.

39 Cp. Chen, IJ./ Popovich, K. (2003), p. 681.

Excerpt out of 26 pages


Customer Processes and their application to Mobile Devices
Frankfurt School of Finance & Management
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ISBN (eBook)
ISBN (Book)
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Customer Orientation, Customer-centricity
Quote paper
Christian Marx (Author)Uwe Fischer (Author), 2009, Customer Processes and their application to Mobile Devices, Munich, GRIN Verlag,


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