Why aren’t Digital First banks there yet?

Myth or reality?

Those of us who have used banks for a few decades have seen banks evolve. However in all my professional pursuits globally, I am yet to encounter a bank that thinks digital first. Banks have started to gradually invest in digital, and surely digital has become another popular channel; but it’s still not the primary channel for customer engagement and service. Can it be? Yes, it surely can, but it needs disruptive thinking and relationship focus.

Digital one-on-one relationships

“At its core, banking is not simply about profit, but about personal relationships.” – Felix Rohatyn, American investment banker

While we disrupt business models, transformation businesses — workflows evolve and relationships are often taken to the next level. But sometimes the next level is not always the right level. As part of the transformation we may take out manual interventions and automate more processes — but what about the human touch that was bringing me to bank there in the first place?

I believe parts of the answers are already there, but they don’t work in concert. At my bank in New York, I have a customer relationship executive. I don’t know the person’s name, and I have never heard from him in the last three years. When I first opened my account eight years ago, I got a very energetic relationship executive. He used to email me often, if I needed services I used to just email him to give him a heads up, plus one year he organized to get me two free U.S. Open tickets to see the women’s semifinal. But then I changed jobs, I moved from Lower Manhattan to Midtown, and so my relationship executive also changed. Since then I never hear from him or her.

In the personal banking sector, relationships are very important. These are some of the areas that banks and financial services companies need to look at:

1. Assign a customer relationship manager to each account, irrespective of balance. Ask the customer to rate the relationship manager every six months. Any score less than a 6 needs to be investigated and if possible corrective action needs to be taken.
2. Look for ways to implement social media to energize a more increasing millennial customer base. Due to regulations imposed on bank and other financial institutions, it is quite natural that social media has not penetrated much in the applications of these industries. What if your relationship manager was on your Facebook, Twitter and LinkedIn following your life movements and providing some helpful advice along the way? That would a way for us to mimic the one-on-one relationships that my parents had with their tellers or bankers 30 years ago.
3. Aspire for a pleasant experience. As with the grumpy neighborhood uncle who never responds to your banter, there are customers who want to be left alone. Recognize that — put in override indicators which suppress frequent “so called intrusive” communication. I have implemented marketing cloud in various companies and in each of these initiatives — the overarching goal was to take every last penny from each customer (it was not written that way, but it felt like that sometimes). Do not sell or have financial motivations behind all communication. It’s like the college friend who always phoned you when he needed some money. Remember how annoying that was?
4. Changing incentive structures for staff is key. The sales department’s job is to sell and so their biggest incentive is selling. I get that, but not for customer relations and the front office staff. Many industries are moving to a lifetime value model for a customer, and I do not see why financial institutions cannot continue down the same path to a limited extent.
5. Embrace technology and all channels. Implement customer service chat, co-browsing for troubleshooting, web-to-case, chat-to-case, social-to-case options so that we are actively listening for grievances across all channels. Knowledge management and self-service should be a critical part of your solution. We are now serious multi-taskers and self-helpers and so during our next quarterly sales review meeting, we may just decide to open the bank app, change our address, update preferences, deposit a check or dispute a credit card transaction — all without our bosses getting to know it.
6. Artificial intelligence and robotics will eventually replace the teller, a la driverless cars. Service robots with natural language processing, self-supervised learning, mobility and navigation will rewrite these digital relationships.

On a technology front, make sure implementation of a CRM, MDM, marketing cloud are all part of your road map. Products such as Salesforce that I have helped implement would allow for not only these basics but also for more social interactions.

Content and platforms

Decades ago, people had binders for their bank papers and statements. My parents securely stored these under lock and key in steel cabinets. Then came PDF statements, at first unsecured and then password protected. I had a folder in my email where I used to set them aside. Now in the last few years, those PDF statements are grossly ignored. I am getting these statements from all my banks, mortgage banks, credit card companies, 401k processors and financial advisors. All these statements, core content for any bank, is ignored by me, the customer. To me a truth about a single point in time is no good to me. If I need to refer to a transaction, say, to dispute it — then I just log on to my account. It has all the history I need. Sometimes I even question the reason why my statements have to be segmented in months? The bank probably closes its books at the end of each month, but does Twitter give you a statement of all your activities from the last month? That would sound ridiculous, and I am with you. But if you consider financial activity as just another activity in your life, you don’t want them to be singled out and treated differently.

On the content front, here are a few things banks should look at:

1. Think mobile first as part of cross-platform strategy. Like any other professional media companies, bank should also follow a mobile first strategy as more and more of their customers are going to browse content on smartphones than ever before. Implement a mobile first approach for sharing content, such as transaction history, stock/bond portfolios, communication letters and exception alerts all displayed gracefully on the customer’s phone.
2. Re-think the actual content. Question the usefulness of emailing monthly statements? In the digital instant economy, are statements yesterday’s stale news? Also consider sending dashboards to the customers — with top level KPIs and trends. In this case, less is more. The more information you send, the less likely the customer would make use of it. I would say start with 3 KPIs. Alerts are important and effective tools to keep the customer informed. But one size does not fit all. Allow the customer to decide what alerts he/she wants to receive. Make the information easy to understand, use less acronyms and allow customers to go on their digital account and customize what they want in their dashboards.
3. Break content silos. This is easier said than one. A CEO of a media conglomerate once said to me at an award ceremony, “Content belongs to the company, not the brand.” This too is very important for financial institutions where silos still exist and content (often duplicate) is sent to customers multiple times. Is it too much to ask if the customer wants a consolidated dashboard of all accounts and types in one statement, or be provided information/alerts in a consolidated way?
4. Follow the customer is the mantra that digital publishers use to engage customers and I see no reason why this should differ here. Dashboards and alerts should be smart and nimble enough to understand when and where to send information. For example if the relationship manager knows the customer is in Hawaii on her honeymoon — that is not the best time to bother them with account alerts and low balance notification. Discounted tickets to an event the bank is sponsoring at that location would be an excellent idea. In certain cases, the customer would not mind a congratulatory wedding card from their bank relationship manager in the post. I still cherish a birthday card from my dentist every year. I always wonder — why does the bank not bother?

On the technology front, implement headless content APIs which will allow content to be rendered seamlessly to any current/future platform without too much development and testing.

Identity, access and security

Due to the secure nature of the financial industry, access to your information can be a grave issue and can impede utilization of the digital account by the customer. Plus each bank has its own set of password rules making it really difficult to remember all passwords. Embarrassingly, I am a frequent “forgot password” user!

Here are some things banks need to consider:

1. Anytime, anywhere digital banking. Single sign-on solution needs to be implemented across the bank’s all properties. It is annoying to go to the retail banking site from the same bank’s credit card site and having to sign in again, at the worst with a different password.
2. Account recovery & security. The word needs a better password key solution and account recovery model, maybe one that can be used by multiple players. Well there are pros and cons to this and I do not have a silver bullet to recommend. Maybe financial institutions being the more secure of the content space can show us the way. Biometric authentication across multiple platforms is the key but we have to keep simplicity in mind too. Banks could implement finger print readers, retina scanners, hand geometry readers, voice recognition, facial recognition, social captcha (a la Facebook style which asks you to name a friend shown on a picture). It is probably not practical to implement all of the above but having a road map, but implementing one or two of these in different physical or virtual scenarios is not impossible.
3. Identity verification is key to any access control procedure. Companies like Truilo has bank grade identification product for over 3 billion people in 40 countries via 145 data sources. Identity reputation is also critical in this digital world. Companies like Traity measures people’s reputation based on social media footprint and global 360 feedback. Many new immigrants who struggle to open bank accounts for a lack of credit history will benefit from these reputation platforms if they are implemented by the banks.
4. Innovation in fraud detection with companies like BioCatch, which monitors over 2 billion sessions a month for fraud by using more than 500 unique metrics to authenticate user behavior to protect consumer and sensitive data. It protects against new account fraud, account takeovers due to malware, account sharing and also detects harmful bots.
5. With the rise of blockchain technology ad bitcoin assets, securing them also becomes a challenge. Consider companies like Elliptic which provides security and compliance to this asset class.
6. Drastic innovation (Not to be too sci-fi about it): Won’t it be fun if you could use your virtual reality device and use augmented reality to walk into your bank, talk to a virtual teller and get your transactions done? All bits of the technology exists — this just needs executive willpower, willingness to innovate, not dismiss wacky ideas and ability to think & invest beyond the standard silos.

Master data

These days any discussion about transformation and disruption is incomplete without a discussion around data. All the other pieces of the puzzle that we spoke about earlier is dependent on clean data. Clean data around PII (personally identifiable information — name, address, email, preference data, explicit demographic data, social metadata and derived preference data). We need to mine as much data as possible without compromising customer’s privacy threshold. And then use the data in as much personalized offerings as possible.

Insights and analytics also play a key role in understanding the customer’s behavior and preferences.

Here are the key factors to consider for data:

1. Invest in data quality: Data should be predictable, clean and free of duplicates. Data silos need to be broken down and need to talk to each other to create maximum value add to the consumer. Banks need to have a Master Data Management (MDM) strategy in which Record of Origin (ROO) and Record of Reference (ROR) need to be clearly defined. It is impractical to bring all the data into one source and so the best start would be to consider a “co-existent” data architecture model.
2. Data security is primordial and therefore it needs to be treated to utmost care along with best of breed access methodologies.
3. Customer intelligence will become the most important predictor of revenue projections and profitability.

Thoughts?

What are your thoughts? Do you have good first hand examples in this industry worth sharing? Or things that have not gone down that well?