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Big Tech Lessons from FinTech to Utilities

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Mark Wilkinson's picture
SVP Products, Ibex Digital

Helping utilities and their customer experience teams transform customer journeys,  decode customer insights  and enhance revenues for nearly 15 years.  At Ibex, I lead the teams delivering...

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  • Aug 1, 2022
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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.

Discussions
Julian Jackson's picture
Julian Jackson on Aug 5, 2022

Firstly, thank you for responding to my article. I found your discussion above very interesting. Obviously with Big Data we are looking at predictive maintenance: for example, by using AI a utility could predict the failure of a component and replace it before it failed, unlike normal procedure today, which is wait for something to break, then fix it, with of course the losses that it entails.

I was wondering if that could be extended to home consumers?  You mentioned above about suggesting replacing poorly performing appliances. That would seem a consumer benefit to me, with the proviso that some people cannot afford it.  Could Fintech also apply to government or local programs to support the financially most needy customers?

Mark Wilkinson's picture
Mark Wilkinson on Aug 5, 2022

Julian - thanks for sparking some conversation on our teams.  It's been a recurring topic for me and Jon.  You make a great point about consumer facing engagement.  If we think in terms of smart meters and IoT, the utility as access to an amazing array of data that inform personalization strategies.  Combined with billing and payment history and demographic data, imagine the ability to recommend strategies for energy efficiency that capture more customer attention and actual behavior change.  

I think of the use case of customers whose energy use data indicates appliances or HVAC systems performing poorly.  Their billing data may indicate at-risk for large bills or other payment complications.  Utilities could easily promote outreach to the customer about energy saving appliances, special rebates or payment options, and even payment assistance plans sponsored by government programs to support a genuine savings and change of behavior for energy efficiency.  Best of all, every element of that type of customer engagement is already supported by modest tech implementations, not even Big Tech.  The trick seems to be thinking about customer data and outreach more broadly and having the tools to assemble the data for enriched customer insights.  Other industries have already made those tools widely available and inexpensive, so Utilities have very few obstacles to leaping into a more modern customer experience.  

Love to hear other use cases or challenges in this area.  I just don't believe any of the obstacles can't be overcome with (mostly) off the shelf tools and tech.

Jesse Nyokabi's picture
Jesse Nyokabi on Aug 17, 2022

Big Data and Artificial Intelligence are opening a paradigm shift in predictive maintenance: for example, by using AI a utility could predict the failure of a component and replace it before it failed, unlike normal procedure today, which is to wait for something to break, then fix it, with of course the losses that it entails. This would save big time for utilities.
 

Mark Wilkinson's picture
Mark Wilkinson on Aug 17, 2022

Great point, Jesse, and you open the door to a broader conversation about AI and IoT across the utility infrastructure.  The continued migration to smarter gear in the infrastructure ecosystem seems inevitable, albeit expensive in the extreme.  I wonder what the cost/benefit analysis says about the gap between pulling a working but aging device out of operation versus the actual cost of a loss between failure and replacement.  And, how would improved monitoring increase the value and decrease the losses in favor of that predictive upgrade process?  Anyone doing any useful research in that area?

Paul Korzeniowski's picture
Paul Korzeniowski on Aug 22, 2022

"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."

 

Good point. In the past, technology was limited because of what the underlying systems could do. As they have become more and more powerful, new capabilities emerged. Utilities can now collect more information about how customers are interacting with their services than ever before. The question becomes: how can use that data to improve the business? Increasingly, the possibilities are only limited by management's imagination. 

Mark Wilkinson's picture
Thank Mark for the Post!
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