Stop Automating the Old Model. Start Architecting the New One.

Trust and relationships were historically the foundations of financial services. But in modern times this has gradually eroded. If you’re one of the lucky few to fall into the high net worth bracket, you continue to partially benefit from this relationship-based service. For everyone else, service comes in whatever the lowest cost way of transacting with you is. 

If you need to take care of one simple job, say reviewing your balance and recent transaction history, you’ll be ok. Digital banking apps, voice IVR’s and even ATM machines provide this service in a convenient way. But generally, this is only a means to an end. And this is where the friction comes in. In a bid to rationalise cost, once do-it-all bankers with local processing centres, have split into a proliferation of departments using multiple systems that rarely talk to each other. 

Let’s bring this to life with a real example. My son wanted to do the simple balance request on his children’s account. But he forgot his pin number and didn’t have mobile banking. So I called customer service to reset his pin, but they couldn’t do it over the phone as I didn’t have a pin sentry device to authenticate myself. So I ordered said device, which took around 5 days to come. Needing to resolve this faster, I drove 30 minutes to my nearest branch (another cost cutting move - and in fairness partly driven by changing consumer demands - is the reduction in local branches) and they had one of these devices and were able to order me a new pin, which also took several days to arrive in the post. The impact - my son didn’t know his balance, so didn’t know if he could buy some new football boots. This delay impacted his gratification, a merchant didn’t get a sale and we probably created at least a few hundreds of pounds worth of admin for the bank in the process. 

This is a simple example of bankers no longer having the ability to do simple tasks. It’s the result of years of individual silos building their own good ideas but not thinking through, and delivering, the end to end experience required. Automation was the trend 10 years ago but given these silos, it simply fragmented the experience further - and forgot about the edge cases.

This is changing - rapidly. I have my own accounts with more modern ‘fintech’ providers - and if I forget my pin it’s available instantly in app. And this is the threat to legacy institutions (and I reference banks above but the same applies to Insurance, Wealth Management and so on). And these fintechs are growing at a rapid rate, and adding new product lines at the same time. The incremental nature of this change may not be felt by traditional banks yet, but it will be. When you think that a high percentage of deposits are not earning any interest today, and the fintechs come along and take this, it will have significant impacts on revenue. 

The imperative is to move away from silos and start to think about full persona experiences. For example the request for a pin number is a common one - so just make it a single touch process. What else should a retail banker be able to do at the touch of a button? Next, make the experience channel agnostic. Yes there will be certain risk controls but otherwise open it up. And finally, keep going until the persona can take care of everything. This might sound old school but there's no better way of building trust and AI makes it possible to infinitely scale now...so harness this moment before it's too late.