Future of Banking: Talk is Cheap

In an industry where discussion about the future is never lacking, it is time to stop talking and make the commitment and investment necessary to improve the basics of the customer experience across all channels.

By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking Report

Over the past year, I have had the opportunity to write extensively on the future of banking. Many of these articles and research reports have centered on using advanced analytics to provide an improved customer experience and the importance of changing many of the pillars of the legacy banking organization to better serve the consumer (back office systems, a siloed structure, physical branches, etc.). The majority of these writings were well received, with almost uniform agreement on what is needed for financial institutions to succeed in the future.

As I prepared for a recent presentation, I realized that many of the talking points I was going to use were not too dissimilar to what was discussed within the banking industry in the 1980s. Then I wondered, why is there so much inaction on such important keys to success that so many banking executives agree upon? For that matter, why should the consumer believe we will make banking better for them when we have failed on so many fronts for the last 30 years?

It has been said that when a word is deprived of its dimension of action, the word is changed into idle chatter and into an alienating “blah”. Further, it has been said that words without action will end up costing more in the long run. I believe that this is a lesson that banking needs to learn.

Some of the most important improvements to banking that we have discussed for decades with limited progress include:

Customer Relationship Management (CRM)

While the terminology and acronym may have changed over the past 30 years, the importance of using customer data to improve the personalization and contextuality of marketing communications, product development and offers, and the overall customer experience has been at the forefront of banking’s “to do list” since the advent of the modern computer. Having access to a treasure trove of data, from basic demographics to account ownership and behaviors, banks and credit unions have more insight into their customers than virtually any other industry.

So why, after decades of discussing the importance of customer relationship management, 1:1 marketing, and the removal of silos can’t most financial institutions know that I have a small business account if I walk into a branch with a question about my personal banking relationship? For that matter, why do insights around my mortgage loan and credit cards also reside in separate silos and not part of an overarching 360 degree view of my relationship? Without this overarching view, consumers are forced to start from scratch each time they want to expand their relationship at most institutions, providing information that already resides on the organization’s database.

Potentially more important, as the banking industry seeks to replicate the digital experience of such consumer-centric organizations such as Uber, Apple, Facebook, Amazon and others, banking is usually unable to leverage the insights on customers for the benefit of these same customers. Where Uber can provide a ‘contextual commerce‘ experience, including a digital hotel keys to the hotel I am being driven to, and restaurant suggestions around my destination (along with integrating the payment process), many legacy financial organizations can’t provide more than historical transaction data on a mobile device.

Despite the almost universal agreement that the banking industry needs to improve the use of data to deliver an enhanced consumer experience, and the decreasing cost of technology to deliver on this promise, advanced analytics remains a low priority according the Digital Banking Report, State of Financial Marketing. In addition, while banking organizations indicate they want to deliver real-time insights to customers, less than 20% of the industry currently has this capability according to the Digital Banking Report, The Power of Personalization in Banking ...

To read the rest of the article on committing to doing the basics for being a digital bank,  go to the complete article here ...

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