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
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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