14: The BANK 2.0 Roadmap
The author suggests twelve key questions that might help identify whether a financial service company is positioned for the future:
- Did you invest more than twice as much on branch-related activities than was invested in Internet and mobile?
- Is the majority of your marketing team working on traditional advertising through traditional channels as opposed to new media marketing?
- Did your marketing budget for traditional media exceed that of interactive media last year?
- Is the executive in charge of branch offices hold a more senior position than the one in charge of internet operations?
- Do you have an "innovation team" taht has the authority to launch and manage proof-of-concept customer initiatives?
- Do you have a working plan to phase out checks for retail customers?
- Is your customer-facing staff forbidden to use social media (Facebook and Twitter) during working hours?
- Are your C-level executives and top-level executives in marketing and customer service active participants of social media?
- Can your customers transfer funds, pay bills, and make P2P payments using mobile phones?
- Can you approve a personal loan application for an existing customer in real time, instantly?
- Do you know what percentage of your Web site visitors click on "login" versus other links on the home page?
- Can you track, in real time, which products are being provisioned and serviced via separate channels?
The author suggests there are a lot more questions that could be asked, though they would probably be redundant. Chances are if your organization is getting these things right, they are on the right track, and if they aren't, chances are they're failing in other respects as well.
Technology
One key capability banks must seek to achieve is straight-through processing, which describes a goal of being able to provision or service any product in an automated fashion - an application or transaction request should be received, approved, and processed electronically without any stops along the way. Processing anything on paper, or holding up an application for human review and approval are to be eliminated.
Banks must also seek to migrate business processes away from legacy systems that are "black boxes" that do not communicate and share data with other systems. Customer data should be warehoused in a common location that is shared by all applications, and all channels, in real time.
Communication with customers, both as individuals and in groups, should leverage social networking as well as other communication channels. And just as all account data should be warehoused in a single location, so should all information that has been communicated be centrally warehoused and available to all employees with customer contact.
All employees with customer contact, both in the contact center and marketing department, should have access to customer dashboards that aggregate all customer information into an interface that is easy to use and navigate. There should be no need for an employee to have to access multiple systems to gain information about a single customer's accounts.
All application processes should share data, such that the bank does not need to ask redundant questions on an application form to collect data that is already in the system.
Banks should aggressively pursue biometric and voice recognition systems that will enable customers to authenticate themselves without having to present physical artifacts, and communicate in plain language rather than having to learn to navigate a voice menu system.
Channel Management
Channel management can be a technical concern, but it is also an operational one: it requires breaking the organization out of "silos" and orchestrating the interaction between a customer and the multiple products they use through the multiple channels they access them.
Channels will continue to evolve and emerge, and there needs to be oversight to ensure coordination, and facilitate the accommodation of new channels (your organization should not scurry to form a new team every time a new channel emerges) nor should there be separate teams for separate channels that operate at odds with one another. (EN: I'm not entirely sure I agree with this suggestion, especially for emerging technologies.)
Of key importance is considering the experience of the customer across all channels - such that using a credit card at a merchant, using the same card at a Web site, checking a balance at a kiosk, viewing a statement online, and making a payment at an ATM are activities that dovetail into a seamless experience of owning and using a credit card.
Organizational Impact
Traditional banks were organized around the notion of product and channel, but must re-engineer themselves to suit the notion of customer needs. For example, the notion that the customer would need to call two different numbers for a credit card and a debit card, and deal with entirely separate employees in entirely separate facilities is no longer acceptable - not is it acceptable for the customer to send an e-mail as a follow-up to a phone call and have it received by a different department or employee who has no knowledge of the conversation history.
As such, there will need to be changes to the organization. Given the previous example, it's clear that the staff that handle e-mails and the staff that handle phone calls need to be merged, and representatives should be cross-trained to service both debit and credit cards. Arguably, a bank could keep the staff and facilities separate and use information systems to share data, but such redundancies may be economically inefficient. The ultimate goal, in terms of call center staff, is to give the customer a single point-of-contact for all his accounts, rather than having to call different numbers or be transferred among various departments.
Marketing organizations will also need a thorough restructuring. Not only must they transition from push-based campaigns through traditional media to more needs-oriented and individualized marketing in the digital channels, but their objectives will need to change from product-specific campaigns to needs-related ones that have a goal of improving and extending customer relationships rather than merely a short-term campaign to sell a specific product.
It's stressed that the common approach, to attempt to adapt traditional marketing campaigns to work in the new channels, is a common practice, and highly inadvisable. A few examples are given of marketers attempt to apply direct-mail marketing tactics to e-mail, magazine advertising theories to Web site banner ads, and television commercial tactics to rich-media Web site introductions. As a result, users have installed spam blockers, developed "banner blindness", and seek out a "mute or "stop" button (or close the window) the second video begins to play. Simply stated, traditional marketers do not understand the new media, and their attempts often do more harm than good.
There's also some notion that "experience" is unique to the online channel, because experience implies interaction and the involvement. While a person can have an emotional reaction to a television or radio ad, they are merely reacting, not participating in an experience. (EN: A good point, but then, it would stand to reason that any interactive situation would contribute to experience - a phone call, an office visit, an ATM transaction - so the notion still seems ill defined.)
In this sense, marketing also needs to move beyond pushing product, and become engaged in improving interactive experiences, and seek to identify and serve customer needs in the context of existing transactions. (EN: This tends to address improving relations with existing customers, gaining products per household and share of wallet, but overlooks new customer acquisition. The author really hasn't provided a solution for that, and I tend to suspect that the "old" marketing approach is still necessary to bring in new business.)
The role of branch offices must change. While routine transactions and low-involvement acquisitions will be better serviced through other channels, customers looking for a higher level of service, generally because a product is complex or unfamiliar to them (their first mortgage, balancing their portfolio, etc.), will continue to seek service from a "live" person at a branch office. And as noted earlier, such service will be sought out by the low-value and inexperienced customer who does not yet (but may in future) represent a high profit margin.
Regaining Customer Trust
Given the current financial crisis and the unfortunate way that banks chose to behave (handing out massive bonuses to executives who ran the firms into the ground after receiving "emergency bailout" money from the taxpayers), banks are suffering from a tremendous PR problem that is equally important to address. Not only does public outrage result in increased legislative and regulatory scrutiny, but the members of the outraged public are also customers - who have lost faith in the financial institutions.
The significance of losing faith is not to be underestimated: the trust that consumers placed in banks made them more tolerant of complicated procedures and poor customer service, and more willing to give their bank more authority, and raise fewer questions, in the management of their assets. Loss of trust means that customers will be more demanding, harder to placate, and less likely to rely on reputation and tradition in the face of competition from smaller firms.
To be fair, the author concedes that banks are not sole to blame. The financial crisis was largely created by government's facilitation, and even encouragement, of subprime lending, and it's noted that banks that attempted to repay TARP loans promptly found that the regulators were unwilling to accept early payment, while meanwhile feeding the media frenzy and public panic to suit their political agendas.
But regardless of the facts, public opinion has suffered, and customers are less likely to trust that banks act in their best interests, and are less reluctant to shop for better service nd better returns, even if it means giving their business to smaller firms with less familiar brand names.
Conclusion
The notion of "Bank 2.0" is about change. Even if you disagree with some of the ideas and predictions, there should be no doubt that the industry has undergone significant change in recent years, that additional change will be coming, and it will happen more quickly and have an even more dramatic impact ... and that those institutions who position themselves to adapt quickly will have a significant advantage over others that do not.
Specifically, change may be driven by changes in the environmental factors such as technology, but technology is merely a means to an end. It is ultimately the needs and desires of the customer that will influence the degree to which these factors impact demand, and must be accommodated by supply, in the market for financial services. Hence being attuned to customer needs is of primary importance.