It is funny how we preach that the individual customer will be the focus of any banking service in the future, with adaptive and personalized products tailored to actual needs and preferences. That the knowledge about the individual will unlock not just their money but their loyalty and a cost-effective business on the side of the bank.
But let’s be honest here. A big part of this goal had been achieved in the very beginning of the success story of the institution bank. In society everybody knew each other; literally their credibility. Banks have always been information hubs of highest quality: But with the organizational blow-up into multinational ecosystems and global entities this knowledge got lost in the dealing with the masses and one-size-fits-all solutions. The system needed to be based on rules and parameters not on personal relationships and the intuition of the banker.
This reveals the tension between reality, feasibility and ideal. This is the situation.
Yesterday, an acquaintance of mine, a wealthy elderly woman of society, told me how outraged she was about the behavior of her bank. They sent her a letter stating that her income does not meet the requirements to have unlimited credit on her Master Card – even though she clearly has the necessary funds. With a stiff lip she went straight to the competitor, which of course was very understanding and very happy to accept her as a new customer.
How can we systematically mass-handle individual cases? Is this really still a contradiction on the verge of AI and Big Data? I don’t think so.
And FinTech vividly demonstrates it. They are successful because they do offer more flexible, adaptive, quick and easy solutions, which on top of it all are cheaper.
The only reason banks have not completely lost their turf is the fact that also the customers are slow with technology. But this can be a misleading feeling of safety as the younger generation is much quicker to adopt what is working and spills it over to older generations.
In ten years the traditional bank customer will have died out, and the traditional bank with them. The only way forward for these institutions is to truly reform their processes and leverage the things they still have over all the other actors in the industry: trust and relations. With this trust, the access to the individual’s information and the personal contact they will be able to build a system that combines these assets with the new ways, the knowledge and experiences that FinTechs are currently making. Especially when it comes to turning themselves into HighTech Companies. This, and only this, will make banks future proof.
Let go of the present, understand the core of the issue by building on the past and learn from the new actors to ensure your future. Banks need to find their way back to the role of economic leaders otherwise the current leaders like Google, Apple or Amazon will one day swoop in and take it all away with the launching of a single app.
Update 20 March 2018
“I don’t really worry about big financial institutions. Some of them have tried to do the things that we have done, and it’s a little bit laughable in how it’s executed because they don’t really understand what the consumer wants or how they want it.”
Joanne Bradford, CMO of SoFi – Quote from Feb. 26, 2018, issue of Adweek magazine