Introduction--Out with the Old, In with the New
Ten years ago, when the author began this research project, the online medium was still considered a novelty by those inside the banking industry and, in spite of research and statistical evidence, insiders chose to avoid the channel altogether and made every excuse not to consider it at all.
Banks have been slow to adopt technology. The notion of the ATM took quite a long time to gain acceptance, until customer demand and the treat of losing business to competitors who adopted the ATM cause most banks to reluctantly adopt the technology,
And even when banks seek to leverage technology as a competitive advantage, it's done with an eye toward operational efficiency and cost savings - not out of consideration of the needs of the customer. The author cites an experience in "video banking" that was developed by banks without so much as asking the customer whether it was needed or desired - and naturally, it was a costly and colossal failure.
Those who oppose technology were delighted, and cited this as proof that the customers prefer traditional banking, fact-to-face, with physical artifacts. But neither is this conclusion based on any input from the customer - merely assumptions, in a vacuum - and as such, it is equally incorrect.
Technology itself is not the problem but failure to consider the customer. Had they done their basic homework on customer behavior, they would have recognized the need of the consumer, realized which aspects of the concept were flawed, and possibly achieved a success. But this was not done, and is seldom done for any channel in the financial services industry, and this is the root of the problem.
Build Relationships through Technology
Traditionally, "relationships" are considered to be exclusive to face-to-face encounters: banks sought to herd their high-value customers to "personal bankers" or "financial advisors" in a physical branch to establish and cement a personal relationship between bank and customer.
However, the new technology is countering that, especially for the younger generation, who is more likely to find and trust information received via electronic means, to forge relationships with people - and with brands - whom they have never encountered in "real" life.
While banks care presently able to avoid the electronic channel, as the older and wealthier clients are often technical novices, they will eventually need to adapt. The "young" customers will age, and amass wealth, and will demand to be served through their channel of choice, and will seek to forge and maintain relationships electronically.
Banks are no longer in a position of power to offer (or deny) access to financial services, but must cater to the needs and desires of empowered consumers. The products are largely commoditized, rates are standard, and competition is aggressive.
As such, the notion of customer experience is becoming the key differentiating factor in financial services. And as individuals are conducting an increasing amount of their business through electronic channels, the customer experience will be built in that channel - specifically, the best branch experience will not substitute for a poor online experience for customers who will seldom,. If ever, visit a physical office.
About This Book
The early chapters of this book focus on changes in customer behavior that will have a significant impact for the banking industry. The second part discusses channel improvements and provides some basic concepts for improving customer service. And finally, there is consideration of future possibilities that may seem a bit like science fiction, but are reasonable given present trends.
It's suggested that the reader keep an open mind, recognizing there have been more changes in the industry in the past decade than in the preceding century, and will shake the foundations of a venerable and stodgy industry. So even if you work within an organization that is reluctant to make changes proactively, the information in this book that will help you to prepare to make changes reactively, in desperate pursuit of the customers you will lose to more responsive competitors in the financial services industry.