Banking on a different future - Cliff Ettridge, Director With Kardo Ayoub, Elizabeth Bryant and Sally Tarbit - The Team

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Banking on a different future - Cliff Ettridge, Director With Kardo Ayoub, Elizabeth Bryant and Sally Tarbit - The Team
Banking on a different future
Cliff Ettridge, Director
With Kardo Ayoub, Elizabeth Bryant and Sally Tarbit
Let’s be clear, if you work in the banking sector
How financial services brands                       then the chances are that in 10 years’ time your
can change their experience to                      company will not exist. Fact. Either macro
                                                    factors will get you or your culture will.
survive in 2020
                                                    The future for banking – and the general
                                                    economic outlook – is a bit bleak. You guessed it;
Summary                                             this is not a happy blog, but it is not without hope.
• Six ways in which the banking industry can        We are experienced at working with financial
 enhance their customer and employee                services brands, having helped transform the
 experience to fuel innovation.                     NS&I brand; invested in the culture at RBS and
• Purpose is important, but it is nothing new.      TSB; developed payment experiences for Capita;
 Banks must look to their brand heritage and        and introduced change communications across
 make it relevant in today’s age.                   the digital function at HSBC.

• Banks face an uncertain future. The IMF           A consistent picture of what may lie ahead is
 states that the US is on the edge of               emerging from the IMF, Deloitte, PWC and S&P:
 recession. We live in a low-growth world,          the potential for recession, low growth, and a
 with historically low interest rates.              banking infrastructure and model ill-prepared
                                                    for economic shocks.
• Banks have been slow to innovate. Many
 still run on legacy systems and are unable
 to harness the power of data and the cloud.
                                                    “ Never has it been more important
• Failure to encourage a culture of innovation
 and collaboration is suppressing a quality
                                                      for banks to innovate and place
 customer experience and speed to market.             themselves on the front foot by
• Banking is not relevant. Unless banks               developing a better experience
 embrace the idea of ‘banking as a service’           for their customers.”
 they will be bypassed by customers who
 head for start-ups.

• There is still value in bricks and mortar to      When it comes to infrastructure, banks are still
 build relationships and cement credibility.        creaking. Many operate on legacy mainframe
                                                    systems that were developed in the 1980s and
                                                    run on programming languages like COBOL.
Take a walk down Upper Street in Angel              Picture railway enthusiasts running a steam
Islington, London and you might be accosted by      engine line and you can just as easily picture
someone in casual clothing asking if you’d like     what is happening inside banks. The knowledge
to try out a banking app. This is because you’ll    and expertise in place to run these systems is
be passing one of those rare things in banking;     literally dying out as talent retires. This was
a digital experimentation lab.                      brought into sharp focus when we worked with
                                                    our client Avanade to develop arguments for
I’m not going to name the bank, but they’ve set     banking to embrace the Cloud.
up a shop and given their designers and
developers free reign to develop prototypes and     Never has it been more important for banks
take them straight onto the street for immediate    to innovate and place themselves on the front
testing. It’s a glimpse into the hyper-agile and    foot by developing a better experience for their
innovative approach to customer experience that     customers. And yet, frighteningly, as PWC
banks need to adopt if they are going to survive,   reveals, just 61% of bankers say a customer-
let alone grow.                                     centric business model is “very important”
                                                    to them.

Banking on a different future                                                                           1
This could be because, as they look into the           You get the picture. It’s all a bit bad.
PESTLE of banking, they see their immediate
challenges as being best addressed by battening        But low growth is the perfect breeding ground
down the hatches:                                      for innovation. As creative thinkers, banks
                                                       should all rejoice in the opportunity to do things
• Politically, protectionism is on the rise and        differently so that they can lead us back to
 markets are looking inwards                           growth.
• Economically, forecasts suggest low growth           And patterns are changing, especially among
 with historically low interest rates                  younger audiences. Most people today have
• Socially, established markets face an aging          multiple accounts with various banks and are
 population and younger customers who                  very careful who they give their money to.
 demand more                                           A State of Pay report from Vocalink discovered
                                                       that 40% of people had a secondary current
• Technologically, digital disruption will continue,   account, with the figure rising to 48% for
 and legacy systems will fail                          customers aged between 25 and 34 years old.
• Legally, regulation and open standards are           The Federal Reserve guarantees funds to
 putting more pressure on established practices        $250,000 and central banks provide similar
 for banks
                                                       guarantees; this is one reason for multiple
• Environmentally, banks must face up to the           accounts, but banking customers today are also
 impact of climate change and how this affects         looking to tick quite a few other boxes. Values,
 their portfolios.                                     image, reputation, sustainable policies and, most
                                                       important of all, ease and helpfulness of
It’s not good news. As Deloitte points out:            channels and the usefulness of apps is driving
“Economists forecast the probability of a US           further selection.
recession in the coming year at 25 percent,
similar to last year. Most other G-7 countries,        People expect their bank to act as their personal
such as Japan, Germany, Italy, and the United          financial advisor and life coach. They expect
Kingdom, are in a similar situation or worse.”         features such as price comparisons based on
The low growth ‘Japanification’ of economies           the bills they pay and to be told where they can
looks set to take hold.                                save and make more of their money.

                                                       As The Team’s head of Experience Design,
“ As creative thinkers, banks                          Kardo Ayoub says: “Different banks have
                                                       managed to do different things well and have
  should all rejoice in the                            unique and compelling features, but soon
  opportunity to do things                             someone will come along offering all these
                                                       useful features under one roof and challenge
  differently so that they can                         everyone else in the market. Banks have to
  lead us back to growth.”                             get more creative when it comes to customer
                                                       experience.”

Comparatively, US banks are in a relatively            Creative? Banks? Historically, creativity has not
stable position, while European banks are              exactly been fertile territory for banks but that
still rationalising and reducing headcount.            has to change, and here is how.
And Chinese banks – the biggest in the world –
are operating in a market where too many
global hopes are pinned. It only takes one
unforeseen incident – such as coronavirus –
to hit confidence.

Banking on a different future                                                                               2
Every PESTLE needs a MORTAR, so here are six        a progressive way. The black horse has a
ways in which the banking industry can enhance      familiar, emotional attachment but has been
their customer and employee experience to fuel      re-interpreted in a way that resonates for
innovation.                                         today and tomorrow.”

Express your Mission; embrace Openness;             Openness
build Relationships; a Technology culture
to Anticipate; and be a brand that is Relevant      You can’t do it alone, and regulation is going to
and enjoyable.                                      enforce changes to ways in which brands
                                                    improve experiences. Kardo says: “The brands
Mission                                             that will be successful are the ones that learn
                                                    to work in exciting ways with other brands.
Everyone is talking about purpose and it’s easy     Customers don’t care about the artificial walls
to get sucked in. But remember, it is not as if     created by organisations. They just care about
banks have lacked purpose before. Looking           seamless services.”
forward is essential, but so is looking back.
In these current times, heritage matters – even     Service as a mindset will be something that
for youngsters. As The Team’s NS&I consultancy      banks have to embrace, as well as Banking as a
lead Sally Tarbit puts it: “Even for youngsters,    Service (BaaS). SolarisBank is a prime example
they like to know that, as a brand, you have        of a financial services brand that has both
experience to draw on. There is countless           embraced the idea of service and has seen the
research that heritage and gaining reassurance      importance of repositioning itself in the market:
from the past is even more important in times       it makes clear that it is a technology company
of political, social and economic change.           that happens to have a banking licence. As a
If a brand has done something for a long time,      result, SolarisBank is perfectly positioned to
made mistakes and knows what works, that’s          integrate banking into other services, meaning
important. But it’s vital they see a brand that’s   that your bank could also be your utility provider,
looking forward while drawing on strength from      your local council, or your preferred social
the past.”                                          media provider.

The purpose for NS&I is simple and clear: ‘to       This explains why Facebook Pay is consolidating
inspire a stronger savings culture. We believe      payments across all of its apps. It recognises
everyone should have the opportunity to save        that a banking experience needs to be integrated
confidently.’ The Team worked hard with the         across a customer’s common touchpoints.
organisation to understand how to bring that
purpose to life in unique and compelling ways.      We know integrated online experiences matter.
That started by increasing access to saving         As Business Insider points out, when broken
products by creating an online bank that was        down by generation mobile use is high:
attractive to new customers and still accessible
for the older established customers.                • 97% of millennials (up from 92% in 2017)
                                                    • 91% of Gen Xers (up from 86%)
As Sally says: “The challenge is how you bring
the brand to life in a relevant and progressive     • 79% of Baby Boomers (up from 69%)
way, so that it doesn’t look outdated and dusty.
This is especially important for NS&I, who had      Critically for the banks themselves, 64% of
a very rich heritage but still needed to signal     mobile banking users said that they would
their progressiveness. We have spent time           research a bank's mobile capabilities before
looking at how people are relating to brand         opening an account, and 61% say they would
missions in these changing times. Lloyds is an      change banks if their bank offered a poor mobile
obvious example where semiotics (signs and          banking experience.
symbols) are being used to nod to heritage in

Banking on a different future                                                                           3
That need for empathy requires brands to recruit
Relationships                                        employees and encourage behaviours that
But before we rush online, bricks and mortar         enable the correct judgment calls to be made.
are not dead. Paying in cheques may be dead          It is why, in 2019, TSB worked with The Team
but speaking to people is not. One of the ironies    to develop a partner value proposition built
of AI is that we may start to see jobs return        on allowing employees to make the decisions
from outsourcing markets to home shores so           that matter at source – in the branch and on
that more nuanced advice can be given by             the phone.
contact centre workers closer to the markets
where customers reside.                              Technology culture
Steve Morgan at FinExtra is not alone in thinking    Infrastructure in too many banks is still
that in order for banks to offer advisory services   appalling. There is a need to modernise legacy
moving forward, they will have to start to open      systems and start to focus on how data can
up micro-branches all over the country.              begin to unlock better service. This means
                                                     banks will have to eventually move to the cloud.
At The Team, we believe banks must connect           Blockchain will also allow multiple players to
with their communities in order to remain            access banking services and this is the tech that
relevant. That means having a presence, which        will have to be deployed.
is a challenge for digital start-ups. Research
suggests that customers of all ages like the         To realise this opportunity, banking tech teams
security and credibility that bricks and mortar      themselves must become as agile as their cloud
suggest. Cyber security is a hot topic, but the      providers. In 2017, HSBC was releasing 200,000
emotional connection to security is just as          code updates a year – Google and Amazon were
important. As my own daughter said to me             releasing a similar number every day.
recently: “I love Monzo and I love that it’s easy
to use, but there is something reassuring about      The Team worked with HSBC as it moved to a
knowing that I can walk into my HSBC if              true Agile/DevOps culture. The transformation
something goes wrong.”                               to a new culture was recognised with a
                                                     NASSCOM award in India. Our work focused on
But the experience in branch needs to change.        communicating a new culture and mindset as
As Accenture pointed out in 2017, the branch         employees shifted to new models of working and
needs to go digital, but more than that the branch   into new DevOps teams. Crucially, it has resulted
needs to recruit employees who can provide           in HSBC embracing new cloud solutions –
empathy and trusted advice. Banks, more than         PayMe has just been built on Microsoft Azure.
ever, need to employ people who can connect          As head of IT Ops Dave O’Brien told Fujitsu:
with customers and advise them on their              “We now have 30 production services live in the
financial wellness, rather than employees who        cloud. And, from quarterly releases that took us
are just good at getting the transactions done.      nine months — three months to design, three
This is going to be a huge brand differentiator.     months to build and three months to implement
We have seen RBS and NatWest push                    — we are now doing daily and weekly releases.”
Moneysense and First Direct is promoting
financial wellness in their latest advertising       It is culture that unlocks these changes.
but, importantly, it needs to be at the heart of     Elizabeth Bryant, Employee Engagement
the proposition.                                     consultant at The Team, explains: “Research
                                                     consistently shows the link between engagement
For NS&I, it is right there in the purpose of        approaches and productivity. Gallup recently
savings. As Sally adds: “Saving is about good        pointed to engaged employees delivering a 20%
financial admin and the mental, physical and         increase in profitability. There are many factors
material wellbeing that brings. Saving, no matter    at work here, but how a brand engages with its
how small, is infinitely better than a life built    employees is one of those. It’s why we believe
on credit.”                                          great brands get built on the inside.”

Banking on a different future                                                                        4
They recognised that people love positive
Anticipate                                           imagery to encourage savings. If a customer’s
This section could have easily been entitled         savings account is called ‘Trip to Hawaii’ then
‘Artificial Intelligence’, as brands must learn to   it is more likely to grow than if it’s just called
anticipate and use predictive analytics across       savings.
retail and investment banking.
                                                     The ability to name the account also offers up
Bizarrely, AI can fill the gap left by the           lots of rich opportunities to introduce customers
dehumanisation of banking. At the end of the         to other providers – learn to surf; read about the
day, banking is all about money and customers        Pacific; the right holiday insurance. It’s a value
want reassurance, access and trust. Whether          exchange that suddenly matters.
it is retail or investment, they want to feel okay
about parting with it and where it has gone.         Right now, The Team are doing this with NS&I,
Building and facilitating that into the process      capitalising on understanding human behaviours
when humans are being removed from the               and serving content in ‘nudges’ that encourage
transactional process is essential. AI needs         customers to make decisions that will add value
to anticipate what is happening to customers’        to them.
money and suggest simple decisions that they
can take.                                            As Sally concludes: “The future of banking is
                                                     all about joined-up experiences. It is about
                                                     embracing open banking standards and looking
Relevant and enjoyable                               at how you can put customers first and get
At our best, as people we all value human            behind one strong purpose. For NS&I it’s all
relationships. We want authentic experiences         about building a nation of savers; for high street
and we want them to be enjoyable, whether we         banks it is about giving people access to
are talking about leisure activities or banking.     seamless and responsible services. Define that
                                                     purpose and organise experiences around that.”
The thing banks need to ask is how they can
design experiences that are enjoyable. Monzo
recently learned from Strava and Apple’s             “ The future of banking is all
‘memories’ notifications. Where Strava sends
riders and runners details of their last year’s
                                                       about joined-up experiences.
exercise and Apple photo memories, Monzo               It is about embracing open
served up customers’ year in spending –
where they shopped, what they bought the
                                                       banking standards and
most, where they liked to eat, and what they           looking at how you can
liked to buy. Presented as a trip down memory
lane, it was also a subtle nudge on how to
                                                       put customers first and get
reconsider spending.                                   behind one strong purpose.”
Kardo says: “We live in the Experience age;
customers are more demanding than ever and
expect smooth and stress-free experiences,
especially when it comes to their money.”

Josh Reich and Shamir Karkal, two MBA
students at Carnegie Mellon University, tapped
into behavioural economics when considering
what would motivate customers.

Banking on a different future                                                                             5
Creative Thinking.
Designed to Inspire.

                         Rachel Canty
                         New Business Development
                         RachelCanty@theteam.co.uk

                         Kardo Ayoub
                         Experience Design Director
                         KardoAyoub@theteam.co.uk

                         Liz Bryant
                         Consultant
                         LizBryant@theteam.co.uk

  hello@theteam.co.uk    Cliff Ettridge
                         Director
                         CliffEttridge@theteam.co.uk
  +44 (0) 20 7043 0240
                         Sally Tarbit
                         Director
  theteam.co.uk          SallyTarbit@theteam.co.uk
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