During a recent conversation with colleagues from the Financial Services sector, one person challenged: “Is there really anything new and innovative for banking technology, or have we already seen it all?” The lively discussion led to a far more interesting and important question:
“Where are banks finding the inspiration and tools to drive customer-focused innovation?”
Here are my thoughts on Financial Service Industry (FSI) innovation and how bankers are increasingly taking cues from consumer tech and smart retailers as they practice the art of banking. I see opportunity for bankers to capitalize on changing consumer views of risk and what constitutes a good customer experience.
What’s New in Bank Technology?
I’m hearing a lot lately about exciting new technologies driving innovation in banking. There are conferences dedicated to the topic, analyst reports and whitepapers being published, webinar series and more. If you Google “technology innovation in the financial services industry,” you get more than 200 million results.
A sampling of intriguing hits includes mobile technology that reportedly can save the banking industry US$ 1.5 billion annually, Digital Shadows footprint based cyber-attack protection technology, Virtual Piggy that can support gaming and other social micro-transactions, and my favorites (because they both include awesome dogs) are Simple.com with a cool and intuitive way to save and pay and FloatMoney that helps build interest free credit by shopping (okay, the shopping part is good too).
I could go on and on with this list, but as readers of my CMSWire article series know, I really do prefer to start with the customer motivation and let the technology discussion drive from there. While it’s important to consider new external technology forces impacting a market, I like to think first about the desired customer impact, not the technology. So what are banker customer concerns that present opportunities for technology response these days? Here’s my take on what a banker “bucket list” might include:
- Deal with the loss of customer confidence that came with economic market upheaval
- Capture and retain clients who have changing attitudes and expectations for online and omni-channel communication
- Satisfy customers who come armed with their own new technology like mobile, BYOD and social apps
Read on for some artful approaches banks are taking to “check off” the list.
Banks are reimagining how to create and sustain customer relationships
In order to drive customer-focused innovation, banks are reimagining how to create effective customer relationships in today’s environment. For the mega banks, and the banks who inherited customer accounts from them during the market turmoil, dealing with customer confidence means restoring positive experiences.
These experiences in the past were often represented by personal relationships and interactions with key bank branch personnel. Now, innovative technology, much of it inspired by consumer and retail examples, can be used to achieve these objectives.
For example, case management technology is a perfect approach to preserve the personal service that attracted many bank customers in the first place and at the same time bring down cost to serve. What was perhaps once performed by a representative with a personal relationship with the customer can now be assisted with case management apps that bridge channel, information and process gaps.
With this assist applied to account opening and customer onboarding, it becomes possible to “know your customer” not only for compliance but also to intelligently suggest appropriately targeted product options, much like consumer retailers do. This also reduces the transaction costs involved and saves the lost opportunity cost.
Case management also enables knowledge workers to innovate, that is, to perform work in their own unique ways to best respond to managing error exceptions as well as unusual circumstances. This is one of the distinctive elements of this technology — the concept that the process participants are at times involved in defining specific actions for a case and at other times involved in responding to actions taken in a case.
Rather than modeling the entire business process ahead of time, you have an environment that supports access to information and progression through tasks as needed to achieve the goal. While this is not the same as the unique personal interactions that banks once had with their customers, it does enable more personalized and personal service to occur. The added advantage is that these interactions are now less costly and more streamlined because they are no longer bogged down in a paper chase or manual efforts. Thus fees and rates can be more competitive without sacrificing profitability.
Banks are creating value through online experience
Changing customer expectations for online banking require that customer experience needs to be consistent and coordinated across channels and yet adapted to specific channel characteristics. It also means that internal processes and interactions must be enabled to support this new omni-channel world.
One of the most impressive examples I am familiar with is Wells Fargo who has 275,000 team members using the latest in Web Experience Management (WEM) technology with responsive design, enabling the enterprise to be agile and adaptive to the consumer at the moment they want to engage. This is all about increased productivity and access to information that in turn improves the end customer experience.
Another cool example is what mBank is doing with Accenture. mBank is a Polish direct bank that originally launched as a greenfield venture. mBank is trying something new that has foundations in gamification and clever deal offers that mimic the best of Groupon and Pinterest.
“By making the site, for lack of a better word, fun, mBank has changed the relationship between bank and customer. This is important in almost any B2C environment and more important when the traditional customer/business relationship in banking has always been vaguely adversarial”.
Banks are combining technology in new ways around the customer experience
Banks have always been concerned with how to satisfy their different customer demographic segments. Today’s changing customer demographics mean increased challenges to ensure a satisfying experience, and I’m seeing some interesting responses.
Social and mobile dynamics figure prominently in this. A recent CEB TowerGroup study found that 42% percent of banking executive respondents now believe that a key value driver of social technology is competitive advantage over others in their industry, while 25% of respondents also think social offers important functionality. Further, 65% rank social networking as a top technology for near-term investment, while 56% rank mobile banking as a key technology for investment.
One of my favorite examples has banks innovating by combining new technology with existing technology; ATMs with human teller video chat. NBC news recently highlighted Interactive Teller technology from NCR that is being used to remotely control the ATM and all of its functions.
What’s interesting is that the machine can work like any other ATM unless the customer pushes a button to request a human teller. The customer can use all the self-serve menus as normal, but they have the option to call the teller if needed. According to the NBC report, analysts believe it’s critical that customers decide when they want to do a totally self-service transaction and when they want some help.
Banks are also experimenting with integrating social and mobile applications and smartphones into the ATM experience. With this, a customer approaches an ATM and launches the application. After the app loads, the customer enters the four digit PIN number tied to their bank account on the smartphone touchscreen. Then once the pin is accepted, the app brings up all bank accounts related to the customer’s account and transactions can proceed.
Which came first, the customer or the technology?
It’s clear that banks are doing some interesting and artful things with technology these days, and to my mind the truly important “bucket list” innovations are focused around the customer and their experience.
Early in my career there was a time when I worked closely with the GE Research & Development Center around new and exciting distributed data processing technologies for banking and commercial industrial use. I was very proud of the work, but when friends would ask what I did at GE, I always said, “I do the quality check to make sure light bulbs really turn off when you close the refrigerator door.” (Okay it seemed funnier back then.) My friends would smile and change the subject, commenting that I must be doing bleeding edge innovative research that required secrecy.
The truth was I didn’t think my work would make any sense or be very interesting to them. In retrospect, I should have shared more; not about the technology itself, but about the intended applications and benefits for my business customers and their data-dependent consumers.
Fast forward to today and I am much more likely to talk about what I do, but always in the context of what I think it means to my customers. Sure I do get the occasional blank stare and at times responses like, “Blah bah blah, that’s so boring…” but I also often hear, “That’s so cool and tell me more.” Of course maybe my circle of friends has changed.
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