We need an unbanky bank
Rory Yates
Exco | Chief Strategy Officer | Adaptability, Responsibility, Transformation, Technology, Leadership
I'm not talking about the Unexpected Bank (which comes to mind when reading this headline), a campaign I was briefly involved in with the amazing creative leadership of Miles Bingham (and my now wife Jessica in account leadership). In this ad campaign merely getting decent customer service is highlighted as differentiator, which in fact it sadly still is in banking. What I am talking about in this article is related though; it's about the fact that we really haven't moved on very far at all from my initial days (early 2000's) in digitising banking, with the likes of Dave Wallace, Paul Loberman, Jeff Scott, Matt Webb to name a few.
When we started making new banking services back in 2000 we had just moved on from the buzz of entering a new millennium, excitement and optimism ruled, and then all of the internet build out activity started struggling following the dotcom bubble bursting - showering us all in misinformed direction. And we defaulted to some really bad behaviour, which made a bad situation even worse. We were already heading the wrong way with a lot of the services that we were putting online, because we were trying to merely make what we did offline work online. And until I convinced my colleagues at the then Abbey National to invest in a thing called User Centred Design (UCD), which may as well have been called Space Chickens or Deep Sea Bagels back then, we really had no idea how we could make it work. And we had no permission to do it differently either - no evidence to support a new direction. When all the excitement went with a loud bang (along with a load of investor capital) the era of the "negative business case" kicked in. Where we merely justified an "online" thing by being cheaper than the offline equivalent - call / foot fall reduction etc. A bit like the failing of email (since it's conception in 1976), because it was just sold as cheaper then a letter or DM, which meant we still aren't even properly using this capability even now. It should have been a relationship channel, like all of them should have become.
I often tell this story about when I was building these digital services and I went into my bank to get car loan (my Uni mates Nick and Dan had got themselves "cool" cars). I ended up sitting in the branch in my home town with the Bank Manager (remember those). He started by saying "Are you Robert Yates' son?", I answered "Yes, why?". He said, "I spoke to your Father only two days ago. And I understand you're doing well out of Uni?". I was a bit surprised at this line of questioning tbh, but I replied "I'm doing okay, thanks". He then went on to say he didn't want to give me the loan, he could and it would even make his sales targets for the month, but he didn't think it was the best thing for me to do. He advised me to continue to earn money and progress for a bit longer, he believed more debt on top of my student loan wouldn't be a good idea at this stage. Some months later he was proved correct, and I am grateful he took this stance with me. And this is the point, we didn't ask what the relationship was between the bank and its different customers. We simply looked at volume (negative business cases) to justify a new channel. Which was statements, money movement, payments etc. All useful, but unfortunately this missed an opportunity. If I applied for a loan today, I would go online and get one, but how much of my real circumstance would it take into consideration? From those early days I see little progress, the services are still very transactional, and the relationship with the now abstract concept of money (or for most of us debt) and financial services businesses still seems to be missing.
When all the excitement went with a loud bang (along with a load of investor capital) the era of the "negative business case" kicked in.
Even the start-ups around now show few examples of really shifting the dial. They are just banks built slightly better for digital, with a few notable exceptions - but those largely focus on making something that was very complex and frankly like jumping into the abyss extraordinarily simple e.g. Transferwise. What is now happening is that our financial lives are fragmenting. The ecosystem has opened up. And trust in the larger incumbent banks remains low (dropping significantly in 2008), with a lot of studies suggesting the people still don't feel that banks act in their or societies best interests. So surely the step forward now is to finally re-imagine banks around relationships. A larger knowledge of customers (which banks are uniquely placed to have) coupled with an equal ability to act on that knowledge, but with services delivered in an ecosystem driver or modular producer business model. One which embraces open banking (properly), but extends this into many other aspects of our daily lives.
When I think of a banks original purpose, I think of keeping my most valued possessions safe, then I think of keeping my money and financial future safe. Today our most valuable asset for much of us is arguably our data. Our data binds us to the digital ecosystem, and as a result of the 2.0 era we give it away far too much. We have traded our time to be endlessly entertained whilst socialising with large numbers of people, and we give the likes of Amazon our data for convenience - we just click and it appears. I believe we are now entering a new era where security, trust and our personal data are back in focus. Evidenced by things like the Contract for the web (principle 5 in particular), and the fact that it's obviously very important to people. Banks could play a huge role in this and at the same time form deep meaningful relationships with their customers and between their customers and their most valuable assets.
We seem to be caught in a trap. And I think that mindset and clear vision remains the issue. I also think that the true enterprise design strategy for banks in transformations to date has never been clearly defined. Merely making bets on which part of banking to play more in is not enough of a strategy to move forward effectively. We need to reimagine what a banks role is, what the relationships with its customers could be, and move iteratively and fast towards this. A lot of examples only point at marginal CX improvement, we have loads to go at here, and the competitive benefits of doings this are significant. I've been harping on about this for a long time, along with many of my industry friends, but I finally see a real opportunity to make this happen - do you?
VUCA organisational change that works | AI & Digital Transformation | People Transformation | Change Leadership Development | People Risk Analytics & Management | Cross-Culture Change | Strategy Decoding
4 å¹´Great article, Rory, like every bank customer I can relate! You're maybe a little harsh on algorithms, though - there's no reason they can't be based around more human and emotionally-resonant factors, take into account contextual weightings, values, lifecycles etc. Are they ever going to be as good as the bank manager you encountered as a young pup? My guess would be never, my certainty: not yet. But could an algorithm be as good as yer average bank manager? Based on my expeirence with algorithms in areas like behaviour change, education and recruiting, I'd say hell, yes! Imagine we built algorithms focused on what customers value, what feels good and reassuring to them, what makes their lives feel easier? Not going to be the same for everyone, but psychometric demongraphics are coming along...and like any disruptive technology, the good scaled is the annihilator of the unscalable excellent. So I don't think we're caught in a trap so much as at the foot of the ladder out.
Digital Transformation | Innovation | Strategy | Product Management | Fintech | Consulting
4 年Rory - this is a great article. We too often seem to be scratching the surface of the possible. Banks know that by continuing to think in short term "marginal CX improvements" and matching new features rolled out by challengers, this can be a safe defensive strategy, retaining existing customers, keeping them interested and avoiding their heads being turned. It's a great time though to play more attack than defence. Never has it been more appropriate for bank leadership to roll out that famous Walter Gretzky's quote––we all know it, even if we wrongly attribute it to his son Wayne!––"Skate to where the puck is going, not where it has been". Looking ahead rather than behind can enable banks to capture even bigger opportunities and reap significantly greater competitive benefits.
Data & AI Transformation ? NED | Advisor | Consultant
4 å¹´I've often wondered whether Banks can be the true guardians of our data, and you can argue that they are very well placed and could be trusted to do that role. Sadly I don't think they can organise themselves in a way to make this shift - too heavy and entrenched in existing P&L lines to change.
Global Practice Head - Corporate & Commercial Banking | Domain & Consulting
4 å¹´I wonder where GAFA will draw line w.r.t data privacy & personalised offer. For banks, it's a dream, as of today, to monetise data, but even the eco system is quite broken in terms of data on consumer, as banks still don't have details on what a consumer bought, so will merchants will come together with Banks or merchants will go other way & use open banking to bridge that data gap.
Strategic Global Partner Executive | IAOP Certified - Trustee, Advisory Board
4 å¹´I believe this pandemic has created the breakpoint that could stimulate and advance the needed cultural changes. I have had an amazing remote experience renewing my mortgage. Change is possible.