Far from replacing the human touch, digital technology can complement it by allowing banks to have better, richer conversations with their customers, says Tom Roberts, digital and analytics director at KPMG
It sounds counter-intuitive. As the banking industry becomes more digital and customers are able to carry out more transactions online, it needs to place more of an emphasis, not less, on ensuring that its employees talk to those customers.
This doesn’t mean taking a step back in time, of course. If anything, it’s a major step forward in the way banks think and operate. Since the days of the traditional bank manager, customers have always expected to have meaningful conversations with their banks.
The difference is that today, with this increased digitalisation, the conversations banks have with their customers will become richer and more effectively supported with customer data to produce a much better experience. In an omni-channel world, customers are already enjoying this experience with online retailers such as John Lewis, Amazon and the major supermarkets – and now they’re demanding it from their banks as well.
This involves the convergence of channels. Imagine, for example, that you’re applying for a mortgage. Currently the process can often be both long and tortuous with little co-ordination between the online presence, the call centre and the branch. But imagine if it were more like the fast and easy “click and collect” model that has done so much to transform the digital and physical retail experience.
It’s a bit like putting the bank’s product into your shopping basket and then completing the checkout process. That done, imagine if you could simply click on a button on the website – as simple as you would to book a delivery from an online retailer – to make an appointment and then, when you visit the branch for a face-to-face chat and to sign the necessary documents, the bank staff had all your details in front of them. There would be no need for you to repeat information about your salary and outgoings, and the bank representative would not have to switch between databases and screens while you wait.
That’s better for the customer, for the bank and indeed the bank staff. This new, much improved situation will require staff to have much more effective interfaces that can access more information, and are easier and more intuitive to use.
Over the last few years, banks have invested in creating better online experiences for their customers, but they’ve all too frequently neglected their back-office solutions and the digital support they offer to their staff. They have also usually sought to reward key measures, such as net promoter score based on the experience a customer has in a single channel, rather than across any and all channels. This will have to change if customers are going to get the kind of service they increasingly demand from anyone seeking to supply them, whatever the sector.
Whether they’re dealing with retailers or their banks, customers are becoming more demanding at every touchpoint. The differentiator for suppliers – banks, retailers and others – will be what we at KPMG call the “Art of Conversation”. This means that customers expect to be recognised, rewarded and their needs met more exactly than ever. The fact is that consumer behaviour will become, frankly, impractical. It will be hyper-demanding, with unreasonable expectations and an uncompromising need for quality.
Customers expect to be recognised, rewarded and their needs met more exactly than ever
Like any other service provider or retailer, the better a bank is at talking to its customers on a one-to-one basis, the greater market share it will attract and the better its brand image will be. The good news is that customers seem prepared to share their data with banks and others in order to help in this process. According to the Thunderhead.com Engagement 3.0 report, 83 per cent of customers feel positive about a business that puts to good use the information and data they hold on their customers. For example, by highlighting details of products and services as well as offers that will be of benefit. While, according to research by Cisco, 69 per cent of consumers would provide personal information in exchange for more-tailored financial advice.
Of course, banks face regulatory and security burdens that retailers don’t. But regulatory changes are forcing banks to review their technology anyway. According to the latest annual banking survey by banking systems provider Temenos, more than half of those asked (53 per cent) believe that regulatory pressure would force banks to update their legacy computer systems. The effective management and sharing of customer data benefits customers, banks and regulators alike.
So regulatory requirements are not necessarily standing in the way of this vital change, but something else frequently is. Too often existing banks have taken revenues as a starting point rather than thinking more widely about their entire purpose and use. They’ve only focused on issues such as shareholder value rather than focusing on the customer, something that smaller banks and the new generation of disrupters have been able to do.
According to UK Trade & Investment, more than £342 million was invested in UK financial technology companies last year. Recent years have seen a number of small, agile disrupters starting to challenge the large, well-established banks, with products and services that meet the changing needs of customers more quickly. These include direct debit payment processor GoCardless, peer-to-peer funding platforms such as Funding Circle and companies such as Coinbase, which facilitates the use of bitcoin.
The banks are now responding to this challenge, but they need to be ready to move more quickly. According to It’s In Your Hands, a report by the British Bankers’ Association, more than 15,000 people download bank apps every day. Internet and mobile banking is now used for transactions worth £6.4 billion a week, up from £5.8 billion last year.
So, what can banks do to respond to these changes? Improving the digital interfaces for their staff is a relatively simple, straightforward step banks could take to improve their customer-service ratings. More generally they also need to be more agile and innovative. There needs to be an end to lengthy multi-stage mapping. Instead banks need to listen more to the digital needs of their customers and to respond more quickly. They need to get apps and other innovations out there, and then be ready to pivot more quickly in response to feedback from this “test and learn” approach.
They need to empower staff to help customers. Feedback loops should be faster and more efficient with staff working on the frontline more able to share their experiences with decision-makers, and to be allowed to come up with solutions. Banks need to listen to their staff as frequently and carefully as they need to listen to their customers and, as with their customers, they need to be ready to respond much more quickly.
Again digital can provide essential data here. Alongside this digital departments need to be sitting at the table when decisions are made rather than simply being asked to implement those decisions. On the one hand, the larger, long-established banks could be said to be at a disadvantage against the new, agile startups because they are less able to react quickly. But, on the other hand, they have greater volumes of data and can therefore more quickly get closer to their customers.
So it’s essential for banks that digital technology is used to support the Art of Conversation and is not seen as an alternative to human interaction with customers. Social media can obviously play role here, provided that it involves a genuine, two-way exchange and is not simply used as a “push only” advertising platform. The growth of big data, as long as it’s analysed properly and used effectively, also offers huge benefits when it comes to having better, richer conversation with customers.
The tools are there for the banks and so is the demand from customers. The next stage is to make it happen.