By James Eardley, Global Director, Industry Marketing, SAP Hybris
“Toto, I’ve a feeling we’re not in Kansas anymore.”
Everyone is familiar with those ominous words spoken by Dorothy in the Wizard of Oz. Just as Dorothy was transported by a tornado, digitalization has taken retail banking by storm, and delivered it to a place where the landscape seems shiny and new. While not Oz, we certainly aren’t in Kansas anymore, either.
In the digital era, although everything seems exciting, it’s more than a bit scary for bankers. Fintechs are re-imagining what banking can be, and unlike banks, they are unencumbered by legacy, regulations, and in most cases, even the need to make money. They threaten the status quo, and for incumbent bankers who, it must be said, tend to see the glass as half empty, it’s a frightening time. Lions and tigers and bears, oh my!
One constant in retail banking: customer needs
While the outward appearance of banking has changed, consumer needs haven’t. At its core, banking is a means to an end, which hopefully makes the customer’s life better and more secure. Whether it’s a loan to buy a house or car, a place to save money, or for short term day-to-day living, customers still need to access, exchange, and use money.
Regardless of fintechs, my belief is that banks are best positioned to provide those means, but must play to their strengths, and not be distracted by lions, tigers and bears, or the latest Fintech.
So where does technology fit into all of this?
What technology can’t do for banks
Technology alone cannot replace the value of a personalized customer relationship, but it can make the process more efficient and more convenient. It can also make the information look “cooler,” but how hip you are is not the deciding factor. If you provide your customer personalized, meaningful, and helpful services, I can guarantee customers would rather talk to you than hope an app knows them well enough to assist them.
Look at it this way: If you were handed a few hundred million, would you personally oversee the management and storage of it? No. You would likely have someone else do your banking for you, and that’s the point. Banking is a means to an end, and not an end in itself.
What technology can do for banks
Technology can help you understand your customers and their intentions so that you can form and maintain personal relationships with them. While developing an individual relationship with each and every customer might seem like a tall order, and not be as exciting as the latest technology, personalized relationships are the best – and I would argue the only – defense against customer defection.
Focusing on relationships might be a leap of faith for bankers, but it’s up to them to swallow their fear and cut through the noise to provide the kind of services that their customers require. The recent Finextra report Engaging the Unengaged Customer noted that 63% of bank customers would appreciate personal banker services, and 59% said these services would add value.
When all the sparkle and shine wears off new fintechs, consumers will still need a financial institution they look to and trust. Banks can be that trusted partner if they realize they’ve had the tools all along, they just need to use them.
How banks can stay on the yellow brick road
Banks can’t win over (or keep) loyal customers if they are constantly in reaction mode, trying to answer to each and every new financial technology product that emerges. It’s like the game “Whack a Mole;” they may be able to hit one or a hundred and one, but there’s always another popping up, demanding attention.
I believe incumbent banks are best positioned to provide great personalized relationships when they simply act like banks. For Dorothy, the yellow brick road was the road home. When it comes to the retail banking industry, the road to success begins with engaging customers, not as numbers, but as people. Next, they need to stop trying to sell at every opportunity and instead become a trusted partner for their customers.
Bankers can click their heels together three times, but unlike Dorothy, will never be transported back to Kansas. We’ve reached a point of no return in the financial services industry, and banks have to remember their original purpose: Personalized relationships that add value and help customers meet their financial needs.
Want to learn more about how banks can improve customer relationships? Download the report ‘Engaging the Unengaged Customer’ for free here.
This story also appeared on The Future of Customer Engagement and Commerce.