Digital banking with a purpose

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Remember the Zune? In 2006, Microsoft thought it would be a good idea to release an iPod copycat. The Zune player was serviceable enough. But, six years later - despite a litany of features including FM radio, video display, RGB output and wireless song transfer - the company killed the product.

It just goes to show that building a technology just for technology’s sake is a bad idea, and often doomed to fail. Although the pace of innovation continues, for customers, features don’t always mean fulfilment. You can see that much even in the world of finance.

Mobile payments have not yet taken over because, in large part, payment cards work just fine. In many parts of the world, they are chip-enabled and have wireless capability. The ability to pay wirelessly with a phone, then, is of relatively little consumer convenience.

Add in cryptocurrency. Whilst the likes of Bitcoin hold immense promise, thus far they don’t seem to speak to the pain points that consumers and merchants actually experience, and remain too complex for both sides to adopt.

Customer experience is critical for any industry, none more so than banking. Now that millions of customers are interacting more with their banks through mobile apps and websites, institutions are accelerating branch closure programmes. Replacing human interaction places a premium on getting the digital experience right.

But too often, experience and human desire take a back seat to development teams’ own goals. Open Banking could, and will, change all this. The last few months have seen a flurry of tech activity around the banking community. 

Europe’s Payment Services Directive (PSD2) mandates an Access To Account (XS2A) stipulation. Essentially, this requires that banks make their customers’ data available to third-party apps and services through developer APIs, even if they are competitors, if customers consent. 

To this day, big banks’ online services frequently fail to live up to the kinds of offerings consumer should expect from their financial partner - like active cashflow advice, spending recommendations and expert tips.

Connecting with the community

Soon, XS2A will mean that alternative app and website makers, with permission, can crunch customers’ banking data to offer much better insight in to their financial performance.

Now, ordinary consumers may think this actually sounds like technology for technology’s sake, just like Zune. But it is hard to prove the value of a product until it is out in the market. The outcome of Open Banking initiatives, which many banks actually pushed against rather than encouraged to launch, will represent real consumer convenience.

Over the next few months, we are likely to see a wave of new apps and services, licensed to connect to bank accounts, launch, promising consumers the Earth, claiming to meet purported consumer demand. But will they really provide consumer convenience, or will they simply try to cash in on just the latest available technology?

I think the only way to be sure you are building a product that really aligns with a customer goal is to really understand your customers. Of course, we know this from every other business tutorial - idea validation is critical. But, when it comes to finance, it’s more important than that.

That is why I think financial services embarking on an Open Banking spree need to connect with their community first…

1. Open a direct feedback channel

When you don’t build the mechanisms to be habitually aware of what your customers feel, how can you hope to understand the services they want to receive?

One Barclays customer recently told me how he called to offer his views on certain service features - but was told there was no process to handle comments, only to deal with complaints. To be in tune with what customers want, banks should normalise channels for customer input that aren’t just formal customer service projects but which link directly to product teams who can quickly change or build things.

2. Make input public

If a tree falls in a forest but no-one is there to hear it, has it really made a sound? A similar aphorism can be applied to bank customers - when you can see other customers are communicating with a company, you are much more likely to feed back yourself. After all, why would someone be motivated to take action if they cannot see their comments being received and acted upon, or if they believe they are a lone proactive customer?

At Fidor, we operate a community feature request messaging system - not only can customers see and endorse each other’s ideas, they can also see when our staff act on them. That generates a real feedback loop in which ideas and concerns are expressed and also resolved.

3. Act in customers’ interests

Modern banks place far too much emphasis on selling customers new and unnecessary financial products. Some banks’ online platforms even show ads for loans in between customer bank transactions - that borders on the offensive.

But judging staff by product sales targets is nonsensical, and anti-consumer. A far better yardstick would be to judge employees by customer satisfaction and loyalty. It is important to be by customers' side, not at their doorstep. As a bank, your only interest should be ensuring customers can make the best of their financial position, not you of yours. If you achieve that, rest assured, your own future will be a bright one.

4. Let them shape you

These days, consumers want to feel they are really part of the service they buy. That means asking their views to help mould your business - not just cosmetic or marketing exercises, but the real underbelly of your company.

We involve customers in everything we do. We tapped our community of clients to name our new MasterCard offering and to design our new instant transfer service.

But we don’t just stop at the surface - even our account interest rates have been developed in close cooperation with our customers. Weeks before we propose a change, we ensure customers are informed and can feed in to influence our decisions. Don’t customers always want the lowest loan rate? Not necessarily - if you keep them informed as part of a conversation, they will always understand that a fair-minded bank has to cover its costs.

5. Listen from top to bottom

To be able to implement the feedback of clients, the organisation needs to be able to follow. That means the bank needs to communicate its vision to both clients and employees, integrate customer feedback, install customer-centric core functions while aligning their governance and incentive systems to happiness, as well as growth.

Gé Drossaert, Chief Commercial Officer and Member of the Board, Fidor Group
Image Credit: MK photograp55 / Shutterstock