I spent three days in Miami at Net Finance, a conference dedicated to providing insight into the digital financial services space. On the final day, Marc Andrews of IBM mentioned that as he was preparing his remarks for his talk that day, he noticed that although many are talking much about the disruptive power of digital, not a lot had changed in the last two years.
There continues to be margin pressure for banks that are delivering traditional products. Banks still have plans to deliver enhanced mobile and online capabilities – and many still are seeing mobile and online as two separate channels. Location based services are still on the agenda although not many are making headway here. Finally, delivering PFM (Personal Financial Management) features online or on mobile have not really come to fruition, although the industry does still do a lot of talking about it. Clearly, while progress towards a digital future is being made, the industry is struggling to make some of the great leaps that have been promised.
I believe that this struggle is amplified by the industry’s focus on making the digital banking experience fast and easy, and less on making the experience one that is helpful, personalized, and engaging. Jaime Punishill, Head of Digital Marketing and Channel Management at TIAA-CREF, made a very compelling argument that while financial services firms often do a wonderful job of creating emotion in person (he showed a great video of a client “clap out” at their headquarters which you should ask him to see), they fail miserably in the digital space. David Sosna, CEO of Personetics (leading provider of personalized guidance solutions) discussed a number of ways that personalized messaging could improve engagement. David pointed out that personalization is really about value creation for the consumer. For instance, 40% of the things that consumers do are not decisions, they are habits. Therefore, how can we help our customers create habits that benefit them, through our communications? Banks are good at marketing messages, but less so at providing the motivations and timeliness that would help make the sale and benefit the customer (you got a large deposit, here are CD rates). The technology is here, today, to make this type of engagement possible.
Stress on Omnichannel
Omnichannel is another buzzword that reverberated throughout the meeting rooms. Gareth Gaston, EVP of Omnichannel at US Bank, made some great comments during his talk. He said that “omnichannel is not just digital done better.” It really has three components; ensuring single channel excellence, having multi-channel consistency, and ensuring that sequential channel use (pathways to a goal) are working. A myth is that customers want to do everything everywhere, but the reality is that consumers use certain channels for certain tasks and, in fact, sometimes you have concurrent channel use (using mobile while in branch).All that said, Gaston pointed out that there are still hurdles that impede true omnichannel success. The biggest of these are the silos that bankers find themselves in. Everybody in the bank wakes up wanting to be customer centric, but silos make the view of customer centricity different. In another continuing theme, retailer success with omnichannel was held up as an example. Travel involves online, kiosks, mobile app, yet no one in travel ever utters the word omnichannel, it just happens. Retail - web for research often ties pricing and availability to local store, visit the store, mobile app can help you find item in store, mobile allows ratings reviews on products you look at in store. These are both sequential and concurrent channel experiences. Buy online ship to home, buy online ship to store - could we deliver a replacement card by drone?
What do banks need to do?
Banks need to figure out how to deliver new innovative digital services, beyond what they are doing today. They also need to figure out how to deliver their core banking services anywhere, anytime, but in a way that delights consumers. Then they’ll need to look outside these services to find relevant areas where they can create value. The goal should be to be a consumer’s everyday bank, making consumers resilient (by helping them manage their cash flow and providing risk protection), providing them with the assets to take advantage of future opportunities (savings, loans, investments) and ensuring that they can go about their daily activities with ease and confidence (payments and other tactical transactions).
In order to understand this better, let’s take the current cab service system. Being used to NYC Taxis and Uber, I was shocked to find a poor taxi system in Miami. Not only were the cabs dirty, the drivers typically didn’t know where to go. Furthermore, in half of my trips, it took an average of 20 minutes for them to arrive to pick me up. The real issue was payment. Since I was traveling, I wanted to use my corporate card. In 7 out of 8 rides, the driver pushed back on my credit card use cash. What’s more, the payment infrastructure varied from Square (although not always with the square reader), to the built-in system from the cab company (although the consumer interface didn’t always work), to an old fashioned manual imprinter. One time, I was unable to get a receipt because the machine didn’t work and the driver had no paper. There was also the uncomfortableness of deciding on a tip. By removing all of the payment friction, Uber has greatly improved the customer experience. This friction exists in many places where transactions are big and small. Looking for these friction points, and reducing their impact, is a key to financial service innovation.