Bad habits can be hard to ditch. Some are ingrained over years, while some pop up overnight before anyone realizes the repercussions. Regardless, once they’re developed they can be hard to overcome, personally and in business contexts.
Disruption has forced the banking industry to quit some long-term bad habits cold turkey, and whittle away at others. Things are changing – but for better or worse? Though banks have no choice but to move forward, the speed of change doesn’t always allow for proper research. Habitual behaviour can be established quickly and if banks do not take an active role in shaping the new industry culture, it may become a culture of bad habits. Instead of waiting for disruption to force the issue, banks should take hold now and stop dumb mistakes before they become ingrained, network-wide issues.
Often mistakes are made not because a bad option is chosen, but because tools are misunderstood, neglected and misused. Here we look at some of the foolish oversights we see happening in banks, with some suggestions for alternatives:
1. Dumb data
Personalization is the new buzzword, and data is the key. Banks have been collecting consumer data, but they are not using it. Customers are willing to share personal preferences and information if there is a benefit and they know their privacy is protected. So why isn’t this happening? The main issue, according to a study by IBM, is that the quality of the data is not high enough to achieve the kind of customization that consumers are looking for. The data is there, but it’s not robust enough to do more than create curated ads, which are already starting to annoy customers.
How to get data smart
Banks need to ask better questions. Strategic research with an emphasis on psychology, neuroscience and human behavior can help banks get into the hearts and minds of their customers. Only by asking the right questions can banks create a quality base of consumer data that can then provide curated service that will deliver on customers’ needs. We’re looking to neuroscience in concert with augmented and virtual reality to lead the way in consumer research, and recently conducted a study with CZ Bank using this technology with excellent results.
2. What leadership?
You can’t open your email without reading an article about customer experience these days. Customer experience has been a hallmark of our work with clients like CZ Bank and Regions, but we think someone is getting lost in the story: employees. Customer service is never more important than when things go wrong, and in that case it is a live human being who has to resolve the issue. Will your staff deliver, or will they become another reason for the customer to switch banks? In this competitive environment, overlooking employee engagement means you will lose your best staff to the competition and those who stay will underperform. According to Achievers’ HR blog, Engage, 20 percent of lost business in banking is due to poor customer service, and absenteeism is costing banks $84 billion a year. If those aren’t convincing reasons to improve, we don’t know what is.
How to be a smart boss
We advocate for an employee engagement program whenever we transform a bank experience, but not only to on-board new technology or processes. We believe in involving front-line staff, administrative staff and branch managers right from the start of any new initiative. They are, after all, the people who are in daily contact with your customers and know which aspects of the bank make them happy, angry or irritated. Our work with Interior Savings, Regions, TD and CZ Bank have all involved employee feedback, which has helped us determine what processes have become irrelevant, what customers are struggling to understand, and what tools front-line staff need to do a better job. Employee engagement needs to be thought out, and to culminate in a properly executed program that brings a sense of pride and attachment to the organization.
3. Dumping on digital
With all the excitement around digital solutions, processes and services are being hastily converted to digital without thorough analysis. The costs of digital integration are high, and yet some banks are adding every possible tech innovation. In spite of what some people say, we do not believe digital solutions are the answer to every problem. For example, we do not believe physical branches are ever going to disappear entirely. Online retailers such as Amazon are opening physical stores for a reason: human beings are physical, tactile, social animals who like interaction. Dumping everything onto digital without proper analysis will create new pain points, and in the process may cost banks a bundle.
Being digitally wise
Before leaping into a new tech solution, banks need to look at their customer journey and address their most pressing concerns first and foremost. It may seem exciting to have a digital greeter who knows everyone by name, but if customers are being frustrated by loan application forms perhaps the investment is better spent on a tablet system that takes them through the application process. Banks need to ensure their online and mobile banking platforms are performing excellently before adding bells and whistles that don’t add value where customers really want it.
4. Thinking your customers are dumb
Banks will need to face up to this fact sooner or later: in the age of information you must never underestimate the knowledge, intelligence and cynicism of consumers. Banks are more than ever hard pressed to convince consumers to buy into a brand position that is not authentically delivered. Say you are about customer service? Then you need to deliver. Slapping on a slogan and putting out a slick advertising campaign is going to be worthless if you do not live up to your own promises. Customers are telling banks loud and clear they want transparent, smart advice – not a sales pitch that isn’t in their best interests.
Consumers want information that will help them improve their financial intelligence. We think this is an extraordinary opportunity for banks to add financial education as a service, or a variety of services. Imagine a learning hub sponsored by the bank for entrepreneurs where they can access services such as accounting or learn how to do it themselves. Interactive touch screens offering fun, financial savvy quizzes in the waiting area of physical branches are already success stories for some banks, and we have implemented solutions like this in recent designs. The future of personalization would make it possible to send alerts that advise customers about financial issues and suggest remedies in real time. As banks look to new revenue streams, we think financial education is a direction banks need to explore, and the best news is that it’s a win-win for banks and their customers.
Disruption has resulted in industry-wide changes that make customers happy, but it has also stirred up anxiety in traditional institutions. Decisions may be made hastily, while other important facets of the business may go neglected. The take-away is that we need to take deep breaths and not allow anxiety to drive decision-making. Looking at what will bring real value to an organization, taking only the best of new innovative approaches, and remembering to nurture current assets will ensure bad habits are weeded out early.