MBA Perspectives is an exclusive AMA series examining customer experience design.
Banking has come a long way from its roots in 2000 BC when merchants were using grain as currency for loans (Davies 1994). During the Italian Renaissance, the banking process became more sophisticated as services such as deposits and withdrawals were added (Varadarajan 2014). With the continued modernization of commerce, the industry progressed at an exponential rate. This progress eventually tapered off when the 2008 Financial Crisis hit, effectively tarnishing consumer trust in financial institutions. In the aftermath, it was apparent that in order for banks to remain profitable, a new model was needed – one that focused specifically on the experience of the customer.
For the average person, the traditional banking customer journey involves going to a conveniently located branch, waiting in line, talking to an oftentimes less-than-friendly teller, accessing personal accounts, and walking out wondering if any of this could have been avoided. Enter Financial Technology (Fintech).
Over the past decade, the banking customer experience has seen numerous technical disruptions that have moved a vast majority of services away from the branch and into an online platform. With the ability to perform stock trades, transfer funds, make mobile payments, as well as budget in real time, the physical branch has ceased to be the obligatory passage point of personal banking.
The question, then, is: how can banks leverage their longstanding foothold in the industry when innovative services offered by Fintech now exist? The answer: by enhancing the customer experience. Banks currently see Fintech as a threat, but they need to realize that this is not about their eventual replacement; rather this is about recognizing the opportunity to create an intimate, social, and personalized customer experience.
1. Integrate Apps and Humans into an Intimate Customer Experience:
A historically crucial component of any customer experience is social interaction with employees. There is an obvious comfort in knowing that banks have human capital on hand. An employee can provide expert information vocally and in-person. An opportunity therefore presents itself in constructing the next phase of digital banking.
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Apps make banking easy by electronically facilitating financial transactions, such as direct deposits and mortgage payments. Wouldn’t it be great if an app could also link the customer with a human professional available 24/7 to address any and all banking needs? Offering this connection is something that Meuter et al. (2005) call “hand-holding,” and they identify it as a key factor in shaping the customer experience with self-service technologies such as a banking app.
Now imagine if Siri could check account balances, or pay off credit cards, or facilitate the transfer of funds from parent to child. Improvements in artificial intelligence allow apps to capably handle natural language queries and connect a multitude of services (Popper 2016). Essentially, bank customers could have a conversation and build an intimate social experience as if they were actually talking to a bank teller or financial advisor. Such an advancement would restore and ultimately enhance the social aspect that is the core of the banking customer experience.
2. Design a Personalized Digital Customer Experience:
Further, what if financial technology could retain information about a customer’s personal interests and combine that with purchasing pattern data to create a personalized digital experience? If a customer has budgeted wisely, and an app is aware of this, it could suggest tickets to the customer’s favourite hockey team’s next game or an upcoming concert as a reward for responsible spending. Such an innovation could create an exciting partnership between financing and fun, with the traditional role of the financial advisor being taken to socially cognisant new heights.
3. Achieve an Automated Customer Experience:
Lastly, banks could utilize Fintech to improve the customer experience through machine learning. This would allow for the prediction and anticipation of customer issues before they occur. Banks could then proactively identify improvement opportunities throughout the customer lifecycle such as reducing service fees in high transaction periods, such as holidays, or improving services that customers desire, like text message e-transfers.
Fintech can and will revolutionize banking. Financial institutions should be eager to lead the industry into its exciting next phases. Siri could fund RRSPs, contribute to RESPs, or pay off a line of credit – the four walls of a branch cannot contain the endless opportunities that lie ahead. Move over, paperless ATMs, the future of the banking experience is here to stay!
I often examined the applicability of customer centricity notions (i.e., satisfaction, loyalty, relationships, engagement, CX, etc.) in various eclectic domains, e.g., “healthy relationships” (healthcare), “philanthropic relationships” (giving), “sustainable relationships” (ecology), etc. One domain that I’ve avoided, with great trepidation, has been politics. This is partly due to the maturity of the field and all that has been written and said about the topic from applied and scientific perspectives
Davies, Glyn (1994), A History of Money: From Ancient Times to the Present Day, Cardiff: University of Wales Press.
Meuter, Matthew L., Mary Jo Bitner, Amy L. Ostrom, and Steven W. Brown (2005), “Choosing Among Alternative Service Delivery Modes: An Investigation of Customer Trial Self-Service Technologies,” Journal of Marketing, 69, 61-83.
Popper, Ben (2016), “The Creators of Siri Just Showed Off Their Next AI Assistant, Viv, and it’s Incredible,” (accessed October 12, 2016), [available at http://www.theverge.com/2016/5/9/11639992/viv-digital-assistant-ai-artificial-intelligence-siri]
Varadarajan, Arun (2014), “Banks Must Embrace a Customer-Centric Model,” (accessed October 10, 2016), [available at http://www.banktech.com/data-and-analytics/banks-must-embrace-a-customer-centric-model/a/d-id/1296933?]
The AMA is pleased to partner with Professor Markus Giesler (Big Design Lab) and his MBA students. Ethan Morantz, Miglena Armutlu, Cody Greer, and Vishal Pua are members of the Customer Experience Design class of 2016.
What? Financial technology (Fintech) is disrupting the banking industry.
So What? Traditional services are becoming obsolete and the bank branch is no longer essential to financial transactions.
Now What? Banks need to integrate Fintech and embrace innovation, such as app and human integration, which can provide customers with an intimate experience.