Big Tech Lessons from FinTech to Utilities
- Aug 1, 2022 1:34 pm GMT
A recent post on Energy Central highlighted some of the FinTech that could benefit the utility industry, which sparked a conversation with my friend and colleague, Jon Lunitz. Jon manages a FinTech solution portfolio at ibex, and we regularly compare notes on new developments in FinTech and Utility industries. We talked about the similarities that Big Tech has influenced on customer behavior and expectations in the Financial and Utility industries. Jon has written extensively on the topic, and had a lot of interesting insights with value to Utility executives, so I excerpted this exchange from our most recent call.
Mark Wilkinson: You saw the article on Energy Central from Julian Jackson about FinTech benefits for utility companies, right?
Jon Lunitz: Yes, I thought it was interesting. I like and appreciate the thesis that FinTech has made strides in areas of technology and process that can support decision making in new areas, especially utilities. Certainly, the Internet of Things has been a massive evolution in FinTech, which can be applied to Utility operations and extending the data and insights about customer behavior.
Mark Wilkinson: Agreed. I especially appreciated the CIS connection, as utilities have historically had primarily a billing relationship with their customers, so it has always been critical to get that part of the customer information correct. But, CIS solutions really have a big leap forward ahead of them as they assimilate that energy use and billing data combined with other customer information to create a more highly personalized and intuitive engagement with their customers.
Jon Lunitz. That’s actually an area where innovation in FinTEch and Big Tech has the opportunity to revitalize customer engagement for both financial services and utilities. Big Tech companies have demonstrated enormous skill at utilizing data to build advantages for their customers. Think of Amazon and Netflix and their ability to serve up product recommendations and curated content lists that customers intuitively enjoy. Those algorithms demonstrate that those big tech services understand their customers by the affinity of choices that customers find useful or interesting. It’s really easy for Amazon or Netflix to measure that affinity because if customers buy the products or watch the content, the algorithm gets smarter.
I’ve written a lot about how financial institutions can do a much better job of leveraging customer data to the benefit of their customers. The value would be offering more personalize products to customers at just the right moment when customers need them. Firms might offer traditional banking products such as a new mortgage to refinance at a lower rate, or perhaps renters insurance when then notice a change of address or a change in the housing portion of their expenses. The point is that by leveraging the data, these traditional institutions who have not always been continuously relevant to their customers can improve the relationships and stay top of mind with them across a more dynamic customer lifecycle.
Mark Wilkinson: We see the same issues with customer engagement and new products and services with utility companies, as well. We use “Beyond the Meter” to describe that category of new offers for utility customers, but the engagement is the same. If the industry could leverage data and technology more effectively, it becomes much easier to anticipate customer needs and demonstrate that they understand those customer expectations more reliably.
If utility Big Data and AI systems could identify costly bill overruns because of inefficient systems like major appliances or HVAC systems, then they have the perfect opportunity to engage customers with tips on restoring energy efficiency or replacing aging machines. Not everyone can afford to replace those things, but that same information enables the utility to suggest a low cost repair and protection plan for appliances or HVAC systems to keep them in better working order. It’s just a matter of the utility finding new ways of looking at the data and connecting it with new client outcomes.
Jon Lunitz: Exactly, that’s precisely the way that traditional financial institutions have improved the customer acceptance of new products and services like credit protection, identity theft protection services, and new FinTech apps or services for their homes and businesses. Leveraging existing data, merging it with new sources of data and getting a new perspective on the customer experience to remain relevant, timely and highly personalized pays big dividends in the financial performance and in the customer experience.
Mark Wilkinson: You wrote about the competitive threat that big banks perceive from those Big Tech firms like Google and Apple. It struck me that there are a lot of parallels between that threat to Financial firms and similar challenges with Utilities.
Jon Lunitz: Jamie Dimon , the CEO of JPMorgan Chase, called Big Tech an “enormous competitive threat” to banks in a recent shareholder letter. He described the way in which those companies put the customer at the center of virtually every operation of their business and the incredible affinity customers feel for those brands. I advise our bank and fintech partners to take a similar approach where they can. Certainly, if traditional banks want to continue to have lots of customers in the future, they will have to be relevant to their customers in similar fashion. It’s not their fault that Big Tech has understood customer well and really raised customers’ expectations, but it is the new reality that virtually every company faces. Banks need to do a better job of customer-centricity or risk losing customers to start-ups that do a better job of engagement. Customers might not even replace all of the services of a traditional bank, but those new more customer centric companies will take market share for new and different services, which could leave legacy banking institutions with a much smaller role to play.
Mark Wilkinson: We hear the same concerns in the utility industry. I have been reading about disruption in the MDU space related to EV charging and Solar installations. Building owners and managers have plans to install solar panels on their properties and use the electricity to reduce customer expenses, or sell directly to customer, or power EV charging for their renters as a way to build multiple lines of business to their customers. That’s a direct threat to utilities in the sale of electricity and can even have harmful implications on general operations and local infrastructure. But, customers may not even consider the utility in that equation if they perceive that the budling owner better understands their needs for lower cost electric or free EV charging. It’s a small example now, but that emerging tech is only getting more disruptive.
I think to your point, while Big Tech instigated a lot of this data evolution that ultimately raised customer expectations for on-demand support and very high personalization, the technology those firms created also makes it much easier for virtually every industry to better connect with their customers.
Jon Lunitz: That’s right, and it’s not just the technology but more importantly the playbooks. Financial services firms don’t necessarily feel compelled to devote massive resources to coming up with the next big customer engagement innovation. They can partner with technology partners and advisors to implement the winning strategies from other firms and industries and leap ahead to catch up with those innovations. Virtually every company can put digital CX and customer information at the center of their decision making without having to invent their own technology or playbooks for CX success. Those Big Tech firms may have started us all down this slippery slope but doing so has also provided a lot of insights and tools for every firm to get ahead with customer engagement.
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