Rabobank keynote at PegaWorld iNspire 2023: Rabobank: Revolutionizing Customer Experience with Low Code and AI

“Surprise” and “delight” – words customers don’t always associate with banking – are Rabobank’s modus operandi. Rabobank’s one-to-one, personalized approach to banking relies on Pega Customer Decision Hub™ to help the bank really know its customers – and present them the right offer at just the right moment. Join Finnbar Hage, Rabobank’s Chief Digital Officer, for an insider’s look at how Rabobank empowers employees to build valuable, personalized customer relationships using low code and AI.

Transcript:

Raphael de Souza:
Finbar, how are you today?

Finbar Hage:
I'm fine. Good morning.

Raphael de Souza:
Good morning. Good morning. How did you find a Hackathon last night?

Finbar Hage:
Relatively short because as you know, I had no voice until somewhere last night.

Raphael de Souza:
That's true.

Finbar Hage:
But I visited, it looked fantastic. Yeah.

Raphael de Souza:
I was expecting to see you throwing shapes and all that, but no, it's all good.

Finbar Hage:
I did in the dark.

Raphael de Souza:
Oh, you did you? Amazing. Amazing. So Finbar, look, I'm sure this wonderful crowd would love to know more about your background. Well, Rabobank's background and your role, if you don't mind.

Finbar Hage:
Yeah, we've seen a bit in the video also, but happy to provide some background. But first it's important to understand that Rabobank is not a typical kind of bank. Yes, we started over 125 years ago, but we started as a cooperative bank set up for farmers and workmen who couldn't get a loan through the traditional banking system. And we've taken that up over the last century to becoming one of the largest food and agri business banks in the world. And apart from that, we've grown into an all finance bank in our home market of the Netherlands. We currently have somewhere around 9 million customers in our database. To put that into some perspective, that is more than half of the Dutch population. So all in all, a bit different.
But most importantly, after all those years, we are still that cooperative bank. And that means for us that all of those customers are also our members and can be our members. And we value a very close personal relationship we have with those members and those customers. And if you then look at my role in servicing those customers, those members that made us different in the past and still drive our business today, and I guess I'm sort of like the chief relationship officer maybe. I have to make sure that the way we connected in that personal way when we started can still happen today, be it in person, in a branch, via a call center on the phone, or through the website, or the app, or even in a simple email or on social media.

Raphael de Souza:
So I'd like to dig into that a bit more. The video mentions next best action. So if we look at this big picture of your approach, what are the outcomes you're expecting from this approach?

Finbar Hage:
Yeah, well, we talked a bit about that close and personal relationship that is so important. For us, it's part of the DNA of who we are. So it's for us crucial to take that into this new and digital age and keep that going. And we think that Rabobank, as you saw, is almost fully digital and almost 99% of all customer interaction is now digital interaction. Then when you start thinking about a marketing approach, it's logical, it's essential really, that it's a digital first approach and to keep that personal connection going.
And that's why we as a couple of years ago, five, we determined last night, we forgot, teamed up with our partner Accenture to build our MarTech landscape that would allow us to use our data and transform that into relevant and personalized messages for the customer. So we now use the decentralized marketing brain and it allows us to analyze data from a large variety of sources and then predict that best time, offer and place for that particular customer and make that connection. So for us, that is like making the transition from 125 years ago into this new and digital age and keeping it personal and relevant.

Raphael de Souza:
Okay. Look, I think that's incredible. It really is. But how did you actually do that and what does it mean? What does it actually mean for the customer?

Finbar Hage:
Well, we are now able to do that because we have succeeded in connecting all of our channels to the Pega Customer Decision Hub. Not always easy, but now this acts as our centralized marketing brain, and that means that today we can start feeding that brain the different data points such as the customer profiles, behavioral data or event data along with the potential offers and the assets. And we use this then to determine what message is best suited for each particular client. And this is actually all done by the marketing department through the use of Pega Ops Manager, which they use is the offer creation tool. And the cool thing about that is that the marketing people can use their own marketing terminology in operating this. So they can set the target segments, define the behavioral groups without the need for any specific Pega coding knowledge. And then we take that input and we make that into the 4 million a day next best [inaudible 00:05:16] that you saw and the 1.5 billion a year.

Raphael de Souza:
1.5 billion a year.

Finbar Hage:
Yeah.

Raphael de Souza:
Goodness me. Okay, well that's amazing. How does that influence this MarTech landscape?

Finbar Hage:
Well, did I click one too far? Might have.

Raphael de Souza:
Possibly.

Finbar Hage:
You have to know there's no back button on the clickers. So that's for the insight. Actually, I did click on the right one. So we were going to the example, pick it up from here. Now, if you look at how this works out in reality, then if you take a simple example like in the home insurance market, and not too sexy, but super important because when people tend to move houses, they're not super likely to think about all the other necessities and stuff around that such as home insurance. And what we found is that there could be some serious risk under there. For instance, when there's a situation under insurance.
And we created this campaign, in this case on the mobile app where we actually alerted people to, "Hey, there might be a change to your circumstances, please check and if applicable, change it because it will benefit you." And there you see, because you then create this positive atmosphere and be super relevant, the conversations are incredible. We've seen consistent over 20% conversion rate on this one. And conversion meaning that people do check their insurance and do adjust their insurance. And we would've never gotten this in any other channel or with any other approach, I say.

Raphael de Souza:
I think that's a very good example, but what type of results are you seeing with, well, overall with your MarTech process?

Finbar Hage:
Yeah. Well, our approach is basically to drive conversion and increase customer satisfaction by creating those relevant interactions with the customers. And we talked a bit about the bank now being almost fully digital and 98.7% of interactions digital. And that's an effect, but it's also the basis. But much more important what we're seeing is that there's been a huge increase in the amount of interactions per customer, per year. Customers now are engaging 25 times more per year than they used to in the past. And that of course is a fantastic foundation. And when you then see that conversion on what we're putting out there is up by 208%, that adds up quite nicely to what is super important and that is the customer lifetime value because the customer lifetime value for our customers in the Pega groups is up by 4.7%. And that's quite a lot over the lifetime and over the numbers that we're talking about.
And the bonus, and that's a nice one, is that the cost to serve for these groups has also gone down pretty significantly with 2.4% because people being more informed, being more engaged with us as a bank, they have less questions. So I [inaudible 00:08:30] know super happy driving, much more interaction of higher quality and we end up with lower cost.

Raphael de Souza:
Those are very impressive results. Very, very impressive results. But you mentioned digitizing operations and moving to that one-to-one marketing approach. And I did say this earlier, I think, look, it's never an easy feat. So let's get a bit dirty here. How did this actually happen? What steps did you take? Break that down for me a bit more.

Finbar Hage:
Yep, I'll try. Well, we found that the client first marketing is really a different way of thinking and working for the organization and the marketeer. So actually it did take quite a while for us to get where we are, especially if you're a bit impatient, which happens sometimes. But it is a different way of thinking. And let me illustrate that by giving an example of our mobile app. The Rabobank mobile app has 3.4 million daily active users. And to put that into some perspective, again, within the Netherlands, that is just a tiny bit less than YouTube has on a daily active base. So from a marketing perspective, that is a unique source of data and opportunities really. But with that unique source, there also comes a reality because as a financial institution, people only buy things, new things every couple of times, every couple of years. So a couple of times in their lifetime, and they do so at very specific moments, so-called life events and we saw they can even change per minute probably.
But life events like buying your first house, having a first child or less happy, getting a divorce, those are the moments where things change. And also the financial environment changes. So now you get this new challenge for the marketeer and the organization of being relevant and present for those 3.4 million people every day and having this antenna saying, "Okay, this is the moment for the life event. This is where we have to be there with exactly that right offer because this is the new phase for us and the client," and that is more complicated than we're used to.

Raphael de Souza:
So I mean, for the sake of the audience, I'd like to dig into that a bit more, if you don't mind lifting the lid. How do we navigate such a reality?

Finbar Hage:
Sure. Yup. To be honest, I think organizations and the marketing people in it, and probably other people as well, but they're still really, really pressed on pushing offers to the customer, sending out a message and pray for the click, as we used to say. And in the end, we have to start thinking more customer-centric, or as our marketing head would say, more customer driven even. Because in the end, it's the customer who decides what is relevant and not the marketing person. But we have an issue because we now have artificial intelligence suggesting tons of messages that could be relevant for that customer, but the customer is still in charge. He or she will decide where the click will be.
And that leaves a marketeer with hundreds of thousands of potential offers to manage, constantly trying to optimize for that relevancy every day, and that key moment within that life event and potentially the new relationship with the customer. And this is why we need the help of tools like Pega customer decision. Without it, it's almost impossible to determine the right time, channel and the message and capture both attention, relevant attention and the new products.

Raphael de Souza:
So when we look at this big picture in banking as well as in other industries, how do you say or what's your perspective on how we can take advantage of AI and digital technology?

Finbar Hage:
Well, I'm visiting the Innovation Hub this afternoon and after the first keynote, I have a list of things to look at.

Raphael de Souza:
Excellent.

Finbar Hage:
But all in general, what you see is with the continuing of the involvement of mobile, mobile applications, so mobile technology, but certainly also with the rise of generative AI. And I think it was last week, had the launch of the Apple Vision. What you're seeing is experiences get more and more personal and they're really tailored to you. And of course, customers were already used to being tailored to in a speedy, convenient, and relevant way by Netflix, Uber, you name them. But now you get this more and more personal space and it's difficult, but super attractive to try and get into that space. So in banking and of course all other sectors, I guess marketers will need to start taking advantage of these new technologies to build those personal connections and deeper the relationships because if they don't, to be honest, I think you will start losing loyalty and see churn increasing. We think truly relevant customer interaction can only be achieved through hyper-personalization.

Raphael de Souza:
Do you know I agree with that statement, but what do you think is behind that? What's the rationale behind all that?

Finbar Hage:
Yeah. Well, it's like the technology of the Pega Customer Decision Hub. It allows organizations such as ours to also create our brands and our brand experience on our own channels as opposed to needing third party channels or mass media. And for us, that's leading to an explosion of content and possibilities because we think that that one-to-one marketing in this way is the most powerful way to build your brand loyalty over a longer period of time. And in the end, that's what you're looking for as an organization and as a marketer. So yeah, we think you can only attract and retain the attention of a customer if you truly cater to their situation and have those tailored interactions with each and every one of them. So we are not there yet, but it's getting kind of close and with the new possibilities, we think that with AI we can make this happen.

Raphael de Souza:
Honestly, I wish we had more time to get into so many more things, but we're nearing the end of our conversation. But a couple more questions. What is next for Rabobank if we look into the future?

Finbar Hage:
Yeah. Well, as you noticed, we're really, really happy with what we've achieved so far. And it's not boasting at all because we had a long route, but it's working in the way we imagined and now we can imagine even more. We're massively connecting with our customers, our members of the corporation, again, in almost the same personal way as we used to do when we started, but we're not done yet. We want to scale the MarTech capability that we have and scale from, it was in the video, I think. We want to scale from 1.5 billion interactions to 2.5 relevant and personal interactions as judged by the customer, not just by the marketer. So we see the MarTech capabilities that we have really as this customer-centric growth machine, if you like. This will be for us, the new personal, new the personal relevant, just like we had when we started.

Raphael de Souza:
Finbar, I've really enjoyed this conversation and I'm sure the crowd have as well. I wish you every success in the continuation of your journey and just wanted to say thank you, Finbar.

Finbar Hage:
Thank you.