Will they be Amazoned or Grabbed? As big tech companies circle, looking to introduce disruptive business models, it is not a matter of if but when. AirbnB, Netflix and Amazon have changed the face of beds, blockbusters and books.
And as fintechs snap at the heels of traditional retail banks, and Bitcoin continues to make headlines, a new order in financial services feels closer than ever.
Under these new and fast changing conditions, traditional retail banks should leverage their natural advantages of visibility and heritage.
While I don’t enjoy spending time in banks, their sheer physical presence (bricks, mortar and all) and time in-market give me a sense of reassurance. Even as most of my financial transactions become electronic, I still want to bank with someone who doesn’t just exist in the clouds. My money just feels safer that way.
Once ‘pure-play’ on-line brands like Amazon (the everything store!), Warby Parker (glasses) and Glossier (beauty), have made recent moves to combine physical retail space with human interaction and digital know-how. This combination offers an integrated experience that transcends traditional customer service. While the final purchase may still take place on-line, the off-line experiences can be critical pieces in the process.
By comparison, the human and digital aspects of retail banking remain disjointed. At branches, people generally enter, queue, transact and depart. Separately, a similar thing takes place on smartphones and computers - there is little integration between the off and on-line experiences. These worlds need to connect and give consumers the service they expect and have likely already experienced in other categories.
More can be done to unify the physical, human and digital aspects of retail banks.
For example, the branches, offices and buildings (Physical) can reinforce the perception of strength and security that comes with a heritage bank - while still looking forward to the future. They can be staffed with approachable and knowledgeable “genius bar” types (Human) – who help bridge the gap between off and on-line services. And finally websites and apps (Digital) that deliver the value consumers need, painlessly, frictionlessly and efficiently.
At FITCH, we refer to “aprons and algorithms”. Algorithms make experiences frictionless by removing pain points, whilst aprons re-insert some of the good friction in the way of emotion. The future of service-based retail needs both.
As consumers, we are very demanding of our brands. When we’re not happy with the service, we demonstrate that feeling on obliging social-media platforms. Generation# know how to make their feelings known #not happy and will explore other options in a heartbeat.
But the definition of service has long moved on from a smile and a willingness to help. Today, service is the whole gamut (physical, human and digital) that delivers “time well spent” (enjoyment) balanced with “time well saved” (achievement). Done right, the experience is the service and it overshadows all of the marketing and communication messages consumers receive. It is the most powerful tool to deliver on promises already made.
C’mon banks, it’s time to climb the ladder of old trust and integrate the physical, human and digital aspects of your brand. Instead of waiting for big tech to disrupt you, you must consider how to disrupt yourselves.
The writer is Simon Bell, managing director of Fitch Singapore.