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Banks, big data and doing the right thing

July 21, 2013 Leave a comment

How comfortable are we about our banks mining personal data?

Banks around the world are wrestling with the complexity and the opportunity around big data as a way to deepen their relationship with customers online.

According to a study earlier this month by Infosys nine out of 10 people would be happy sharing some data with their bank if they received more customisable offers or experiences.

The study compared consumers attitudes to sharing data with retailers, banks and doctors and, probably predictably, banks came out as slightly behind the other two sectors when it came to data trades.

However, despite the finding above the study clearly shows consumers are in some conflict over the benefits and drawbacks of banks using big data.

Almost half  (49%) also say they do not want their purchase and transaction data used to offer new services based on their habits but, almost in the same breath, 48% of bank customers would be happy for the bank to use email or social media to provide them with updates or insights.

The study also finds consumers are more concerned with their account security. Around four fifths (82%) want their banks and financial providers to mine their data to detect anomalies from identity thieves, with the same amount (82%) expecting their banks to already be doing this.”

It is such an important issue that just over three quarters (76%) agree that they would consider changing banks if one offered assurances that their data and money would be safer in their systems.

Financial services futurist – and co-founder of MovenScott Bales has an interesting theory that following Edward Snowden’s revelations the strength of feeling around how our data is used could create a new social and political movement around transparency.

Digital natives will come to demand complete transparency on how their data is being used not just by governments, but by corporates as well.

He says: “The reality of the modern world is that if your doing something wrong behind closed doors. The Facebook Generation will find out,  they will share what your doing, and you will be held accountable.”

The Infosys study shows consumers expect better deals from retailers in return for sharing personal information and better attention from their doctor’s office for a similar trade. But banks don’t have a great track record in utilising what they know about the customer: e.g. “Would you like insurance with that?”

Post-GFC, trust in banks generally is going to take some time to recover – particularly in Europe and the US where bank failures have destroyed consumer confidence. One UK survey predicts it will take a generation before banks are trusted again.

How banks use big data to interact with their customers online (and by online I really mean mobile) in the next few years is going to be critical to the relevance of banking and the securing of trust in the minds of a new generation of customers.

There is an amazing opportunity for banks to use the data opportunity to transform their customers online experiences for the better. Instead of going down the retail route of using the data just to flog more products what if banks decided their focus would be purely on using insight to create ways to make customers richer; safer and happier?

But above all there is an incredible opportunity for banking to use big data in a way that embraces openness. That combination of deep insight and transparency could be the difference between banks continuing to be relevant to a new generation of consumers. Or not.

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Creating personality online

March 28, 2013 Leave a comment

Kiwibank customers have been engaging with their Online Relationship Managers for a a year or so now.

Kiwibank ORM

Kiwibank Online Relationship Manager Becks on mobile

I have written about our unique online customer champions before and they also received a fair amount of media attention (for a banking innovation) when we put them into the Kiwibank mobile banking app on IOS and Android. And to cap off the publicity they won the 2012 NZ Innovators Award for Marketing and Communications late last year.

The rationale behind the Online Relationship Managers (or the Oh-Ar-Ems as they have become known at Kiwibank) was to reinvent the traditional personal banking relationship model for customers who are now more at home in a digital world rather than a bricks and mortar one. And, as most banks know, that’s a mobile digital world these days.

The good old days

The traditional, 20th Century-style relationship manager is someone you meet when you first join the bank at a branch somewhere in town. Most people meet them once and then probably won’t see them again until there’s a life-change moment requiring a lending or investment decision e.g. you need a bigger house; want to go on a trip; upgrade the car etc. This happens maybe every couple of years or so. If you’re like me you try and deal with bank relationship managers mostly by email – rather than sacrifice a lunchtime walking down to the branch and sitting in an office for an hour.

And if you get a good one the irony is you probably won’t have them very long because the bank, for good reasons, will probably promote them and they’ll be off become a branch manager somewhere else. With my first bank after coming back to New Zealand from the UK I had three relationship managers in four years. It didn’t bother me too much because I knew I was just another name in a very long list of customers and I tried to keep my dealings with them to emails, because it was easier for the few interactions I had.

The first was reasonably extrovert and bubbly late-20s early 30s woman and sorted out my mortgage; the next was sporty-looking late 30s-early 40s Kiwi bloke who during my set up for internet banking managed to misspell my log in name so I’ve had to misspell it ever since. Maybe not a biggie – and probably made it more secure – but I’ve still always felt that I’ve had to carry a small bank error with me in every online interaction.

The third was a down-to-earth 40-something proud Mum of two who nailed a “moment of truth” refinancing request at a critical time for me and my family. And she also gave me a humorous insight into how her bank set and communicated its interest rates by cheerily sharing with me some insider stories as she tapped away at her computer.

Good eggs each and every one of them – although as I only got to meet each of them once over that four year period I never felt we were that connected.

My banking rite of passage

My interactions with these relationship managers were very different from the first experience I can remember with a bank manager. I would have been about 11 or 12 and my father took me down to our bank branch in Ashburton as “it was about time you met the people at the bank”.  As we approached the glossy pale-wood varnished counter a female teller greeted Dad. Behind her a large man in a dark suit and tie appeared from out of an office and, with a very hale and hearty salutation, came from behind the counter and pumped Dad’s hand. Dad introduced me and said he “thought it was about time my son met the Bank” in a kind of jokey fashion.

The Bank Manager turned his full attention to me, looking me right in the eye and shaking my hand, my other hand clutching the cash to deposit. As my face grew redder as a result of this unrelenting adult attention – he told me how pleased he would be to look after my money over the years. He asked if I wanted to give over that money, I looked to Dad and he nodded approval of this action. I was then directed to the teller where I went through the process of handing over my cash and receiving a passbook with the cash translated into a single entry in blue pen, dated, stamped and signed. The teller explained that over time the bank would pay me interest on what money was in the account – so the more I put in (ie the less I spent on trips to Christchurch toy shops) the more money the bank would pay me.

As we left the bank I felt like I had been inducted through a rite of passage. I had been given an insight into an engine of society and met an engineer who managed that engine. He knew my Dad and now me – so I was now inextricably linked by more than just my passbook and some numbers in it. The Bank Manager knew my name and my face and even though I knew my humble finances were small in this scheme of things – they were now generating interest, both financial and personal. And therefore I was now a person of interest.

And as with many other experiences in life that was the glamour moment of banking for me. After that it was vanilla and in the background as banking became more and more commoditised. Like buying toothpaste or petrol – the only standout experience being Barclays in the UK who gave me a fantastic student package which made the difference during my university years. I stuck with them for 10 years after that before being seduced by a revolving home loan deal with a building society.

For most of us the bank managers of old, who knew you, your business and your family, and could exercise that personal touch at moments of truth have gone the way of the Moa and the Dodo. Their replacements, while decent people, aren’t set up by banks to be anything more than a pale comparison. And most of us don’t have the time or inclination to troop down to their office to engage – what’s the point if there’s no real personality to deal with. You might as well do an email.

Putting the personality back into personal banking

So what if you could have a real individual to look after your banking with all the convenience of online, to ensure your interaction with the bank was on your terms? That’s what we asked ourselves at Kiwibank and came up with the Online Relationship Managers – the relationship managers for 21st century banking but for all our online customers. They would turn the traditional model on its head by focusing on three key problems that came out of customer research :

1. I want to be treated as an individual;

2. I want the convenience of delegating my issues online:

3: I want to deal with one person

What was key was that the service experience had to embody the values of Kiwibank – Make It Easy, Do What’s Right, Raise The Bar and Go Further Together. To be a part of Kiwibank you really have to sign up to these – it’s the only place I’ve worked where they are not just lip-service.The hardest conversations we had in the project were about how we could ensure the Online Relationship Managers would live up to these values. In my opinion they are our Taonga and what make the difference in our service experience.

The easiest decision was to put the Online Relationship Managers onto our mobile app. The internet is now all about mobility and this suddenly meant customers now have a bank in the palm of their hand.

But at the heart of it,  our Online Relationship Managers are not about technology – it’s a service innovation by putting people into an internet banking environment that has been purely about transactional information in the past.

The reaction of customers has been fascinating. There have been two marriage requests; a few “fancy dinner?” invites; regular delight at being wished a happy birthday or Kiwibank anniversary date.

ORM FB comment 2

The most heart-warming was from a woman who needed help to finance a trip for a relative who was dying of cancer and whose problem was sorted out by their Online Relationship Manager.

Bill Gates once famously prophesised that society needed banking, but not necessarily banks. Banks that have looked to gain scale by automating and removing the human factor are living up to that statement. Banking has always been more than a ledger and without personality in the online environment, Bill Gates’ words are bang on.