My daughter just turned 10. Like many kids her age, she has been bitten by the "High School Musical" bug. So, I recently logged onto a popular virtual store to pick up the movie's DVD for her birthday. As I was making the purchase, I accepted the offer to click to chat with a service rep who-armed with my account information-let me know that several members of the "High School Musical" cast would soon be visiting a bookstore in my neighborhood. She offered to sell me tickets, and to arrange for my daughter and her friends to have dessert at a nearby coffeehouse before the show. Within seconds, my $27 purchase had grown to a $167 commerce experience. In other words, what began as a simple transaction quickly converted to what we call a commerce interaction in which both sides realized more value.

I'm sharing this story because it underscores how a company can capitalize on fundamental shifts in consumer expectations. At the heart of my transaction lies the understanding of the service provider that I wasn't just buying a DVD. Instead, I was creating a memorable birthday experience for my daughter, and the service provider helped to enable that experience. In effect, the service provider was clairvoyant to my intention, which went well beyond purchasing a DVD.

Changing consumer behavior primarily revolves around the expectation that the physical sales and service experience - whether with a bank, a retailer, or a service provider-should mimic the online experience.

Consumers expect immediate access to relevant expertise. Whether in a bank branch or at Home Depot, shoppers expect to have the subject matter expert there to help. They also want to collaborate with like-minded individuals. If I'm shopping for a 1972 Gibson Les Paul guitar, I want to communicate with others that also investigated this guitar. Finally, shoppers want a business to be tuned-in to historical buying patterns, and able to offer recommendations.

Even in today's volatile economic climate, banks have the greatest opportunity to build relationships and connect with consumers. And, with the financial upheaval still unfolding, banks can no longer rely on deposits, loans, and CDs as the primary vehicles for economic growth and development. Rather, they need to diversify their services to meet and anticipate rapidly changing consumer demands. Banks need to create a sense of essential relevance in commerce. By taking a page from retailers, banks can deploy similar strategies to continue to be relevant, similar to the transformation of the retail industry with the advent of In sum, the average incremental gains from connected commerce for the top 20 U.S. banks are estimated at more than $100 million yearly by 2015.

As consumers increasingly turn to the Internet and mobile devices to make purchases and payments, banks will face customer attrition and revenue decline. Yet banks can offset these losses by evolving from being payment providers, to being a uniting factor among consumers, merchants, advertisers, product manufacturers, and payment providers.

Here are some specific recommendations for banking technologists to use connected commerce effectively: provide superior commercial services with greater transparency, security, speed and flexibility; use relationships with, and access to, merchants and consumers to provide new revenue sources to the merchants and value-added services to consumers; help consumers make sense of their spending patterns and provide guidance and recommendations; in collaboration with the merchant, provide advertisers and product manufacturers with access to consumers at or near the point of sale so that advertisers and manufacturers can offer real-time, targeted promotions gleaned from the customers' profiles and transactions; manage loyalty programs to lower the cost of running these programs for merchants and to improve ease of use and benefit accumulation for consumers.

The end result is greater relevance to the customer. When this happens, there is a direct connection to higher customer retention, higher margins, and new cross-selling opportunities.


James S. Greene, Vice President, Financial Services Practice Cisco Internet Business Solutions Group

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