Bankers are spending a lot of time these days trying to predict what the bank of the future will look like. And while that’s a worthy endeavor, it may not be the real issue.
If I were to prophecy what the client experience should be in the bank of the future it might be something like, “When I go into a branch or log onto my banking app, I want secure and instant recognition. I want to see my important information. And, when I add a new product, it should be done immediately and available anytime I want it. No more questions asked. Opening an account or adding a product should only take one click!”
The real work on the bank of the future, as you can see, goes far beyond branch design; it’s about the data, the connected systems and operational processes. Recently I applied for a checking account at a new bank. The account opening took about half an hour as I watched the representative input various pieces of information multiple times. I asked her if it wouldn’t be great if all she had to do was swipe my driver’s license and populate all the forms with the data in the bar code or on the magnetic strip. She looked perplexed and asked if that could really be done.
Clearly, NOT the bank of the future. Here is my list of attributes that should be incorporated into the bank of the future:
Customer-centric. Historically, banks have created and provided products and services they felt their customers needed. In the future, the products and services will need to have personalization attributes that will enable the banker and client to customize the relationship, to better define the needs of the client and their “ecosystem,” which is a term I use to describe the customer and those close to the customer that the bank ought to be aware of.
For example, you should be able to use CRM or your CIF to identify relationships of value associated with the client, but can you use transaction data, associated with products, such as debit or credit cards, to better refine offerings to the client and their ecosystem? Taking it to the next level, can you also use this data to create predictive analytics that will help you serve the client products and services they may not have thought about, similar to how Amazon will send you suggestions on new books to order based on past transactions? In the fight for wallet-share, banks should be able to exploit the relationships their clients have in order to attract new customers. These could be spouses, children, parents and so on.
Simplicity. Banks have spent a great deal of time focused on growth – getting bigger, doing more, offering more, becoming more risk averse – and in some cases, not taking the time to look at becoming leaner or more efficient. Many chief risk officers today will tell you that they list process risk as a focus item. Bankers have tended to add to process over the years rather than simplify process. Today, however, we are seeing an increase in demand for process reengineering initiatives with a number of banks. Unfortunately, in many institutions, the underlying systems that bankers have to work with don’t support simplicity.
On Demand. The future relationship is one where the bank, its products and services are available when the customer needs them, 7 X 24 X 365. We all agree it’s not practical for branches to be open 7 X 24, but the alternate channels ought to be always available. And generally they are today but without the full product set that you can obtain in the branch. Remote channels must become more robust.
In many cases, simple reviews of processes and standard operating procedures will highlight opportunities. For example, I recently worked with one bank to redesign their Online Account Opening (OAO) to provide a consistent look and feel across five product lines. During the initial evaluation we discovered that the OAO application was terminated if the person was 50 miles from the nearest branch. Why? Was someone 49 miles away a better client then someone at 51 miles? Nobody had a good answer. By removing this zip code check, the bank saw a large spike in OAO events which led to greater revenues and kept these customers from finding another bank. Quite often the solutions are there but it sometimes takes a third party to analyze the data and processes and ask tough questions like, why!
Security. We all expect our bank to secure our transactions and protect our data. Fraud is at an all-time high because of our current outdated methods of gaining entry to banking transactions, online or in the branch. Having been involved in the security side of payments and identity protection for many years, I suggest the best solution is biometric authentication. Not the finger print scanner for your iPhone but heavy-duty solutions, such as retinal authentication, which uses over 2,000 reference points, or handprint, which combines the print with capillary pattern analysis and is used in many Japanese ATMs.
Why don’t we use biometrics more in North America? First it’s expensive. Second, which standard or methodology do you bet on? And third, you’re likely going to upset your customers. After all, since banks are underwriting many of the losses associated with fraud, why do the customers care?
When examining points one and two, costs and complexity, I suggest that banks work in competitive cooperation, such as in a consortium that can develop solutions where they share in the cost and implementation, similar to Electronic Bill Presentment and Payment (EBPP), in Canada. Early in 2001, this e-bill payment service was offered across Canada to consumers who do their banking online through all the e-route consortium members – Canadian Imperial Bank of Commerce, Mouvement des caisses Desjardins, National Bank of Canada, Royal Bank of Canada, Scotia Bank and the TD Bank Financial Group including Canada Trust. The net result, banks collectively worked together to develop a solution that they all benefited from, as well as their customers and partners, at a fraction of the cost and time had they done this work independently. This model could serve as a benchmark for the build out of important systems that benefit customers and bankers alike.
When considering the third point, and upsetting customers, most organizations focus on the security associated with biometrics, perhaps the value proposition is not the security at all, but rather the convenience. Perhaps the jumping-off point is with higher value and higher risk transactions, requiring biometrics to perform the transaction so that eventually others will want to participate – an if-you-build-it-they-will-come scenario. With full biometric capabilities you may not need your card and you won’t need your PIN. That’s convenience.
So if these attributes ring true one might have an elevator pitch, like, “At our bank we are focused on you the customer, we provide simple, secure, convenient and personalized products and services that help you with all your banking needs.”
The future of banking is as much about the customer relationship, as the channel or the branch. The biggest hurdle will be associated with the underlying infrastructure required – consolidated systems, single or simplified sources of data and so on. It’s tough to think beyond three to five years, but the changes most banks want in three to five years may take another three to five years of underlying infrastructure effort, otherwise we will continue to build patch-work solutions. Finally the banks that really begin to align to the customer instead of the product will have an upper hand, especially as we begin to explore the generational divide.