Customer centricity, focusing on the right customers that drive most profits, is one of the strategies embraced as a mission by the most successful Silicon Valley companies. One of our clients, Dimex Capital from Mexico, came to Silicon Valley to learn how to enter new younger markets – a challenge that is hard to overcome without going customer-centric and working closely with customers who have the most lifetime value.
Dimex is a leading lending institution in Mexico, having over 100 branches and employing 1600 sales contractors around the country. Dimex’ target consumer is above 55 years old, though the company aims to start engaging millennials who are family-related to their current consumers.
To help Dimex achieve that, we partnered them with several well-established finance companies like Western Union and Wells Fargo as well as startups offering innovative products in the fintech space. The 5-day Silicon Valley immersion program, featured visits to prominent innovation labs and several workshops focusing on the long-term evolution of the banking industry.
Customer centricity was one of the dominant themes for over a dozen meetings with disruptive fintech startups. The term, although overused in the professional press, comes down to transforming all communications in such a way that they are measurable and predictable and help create a seamless experience for an end consumer.
To build consumer-centric processes, financial institutions need to employ identity management software, big data apps that analyze consumer behavior, open banking apps and generally learn to get products to market faster, test and pivot without the fear of failure. Dimex was able to quickly find partners among Silicon Valley startups, offering solutions in these areas.
Data security and online fraud were two big pain points for Dimex. We connected them with two startups that are revolutionizing digital identity management. At Identity Mind Global, Dimex executives learned what electronic DNA is and how they can develop a platform that analyzes and evaluates data in real time. “A person takes a selfie, and the app has some innovative security technology to say if a person is a real or not”, explained Joana Carrasqueira, Silicon Valley Innovation Center program manager. Identity Mind Global provides a one-platform solution, capable of reducing transactional fraud by 60%.
Dimex also explored open banking possibilities with Token, a San Francisco-based startup building the payments ecosystem of the future. “The company is creating a standardized API layer to simplify integration between different FinTech solutions and open banking APIs provided by banks; bringing them to one standard across the industry”, said Andy Zhulenev, VP of Silicon Valley Innovation Center. Token’s solution is working at the transaction level providing a much more advanced security model than traditional payment systems.
A visit to Alphrank, a data science-as-a-service startup, revealed how Dimex can communicate better with millennials. Alpharank measures offline word of mouth to understand how customers influence each other’s behavior. Their technology uses social contagion science, creating analytics from historical transaction/purchase data. The solution helps companies like Dimex figure out a strategy on how to target millennials – which communication channels they use and which products they are willing to buy. For example, Alphrank’s data shows that instant messaging is one of the best ways to target younger audiences.
Digital transformation and a pivotal approach to new products were also on the table. A meeting with Western Union inspired Dimex to become more agile and test new products more quickly. “The key takeaway was don’t be the best, try to be the fastest and take your product to the market even if it’s not finished and get feedback from as many focus groups as possible. Then improve the product over time”, said Joana, who was at Western Union’s presentation.
UL, a global safety science company that has a lab in San Jose, presented a view on how a traditional business can go through a major digital transformation. Their story revealed how to start an innovation lab inside a legacy company, describing the priorities, processes and product selection.
The underbanked population is another pain point for Dimex. To find a solution, we connected them to Juvo, a financial identity startup headquartered in San Francisco. “This is a company that has taken lending decisions to the level of being an API call”, says Zhulenev. The company partners with telecom operators in providing short-term funding to subscribers who are using prepaid plans and run out of funds on their accounts. The systems integrates with banks and assess each individual customer’s credit scores until the sim card has been reloaded. As a result, Juvo provides financial services to the underbanked population who, although they may not have a bank account, are still able to develop their credit history and learn about their options to borrow money.
The banking industry is marching towards complete digitization, says Andy Zhulenev. The Dimex program concluded with his workshop on the future of banking. He predicts that consumer banking soon will be likely to exist in a form of a couple of personal finance management applications. In commercial banking, future banks will need to have access to digital information about the customer to be able to do digital credit scoring automatically. Product centricity remains on the other side of the coin – as the industry is moving apace towards digital, companies focus more on relationships with consumers rather than products.
The Dimex group came away with a set of valuable insights for their growth strategy. “We understood the culture here in Silicon Valley, and I think we can implement that kind of culture at our company”, said Christian Cortes, VP of Strategic Planning and Innovation. Dimex has a lot of potential to grow and advance in areas such as data management, automation, analytics, and identity management, using advice from Silicon Valley startups bridging the gap between customer-centric and product-centric companies.