Industry Analysis from an Outsider, #2 â€? Banking
This is the second in an ongoing series that takes the view of a complete outsider into certain industries. Without in any way even attempting to understand the operational constraints and the concepts within an industry, this particular series of articles has a look from a customer and emotion economy perspective at certain industries with which we interact on a daily basis. And purely from a customer perspective aims to ask a few critical questions. These questions may be helpful to industry insiders as they plan how to make the next evolution (or quantum shift) in their businesses.
These questions can act as strategic inputs to any people who actually work within these industries. Where there are constraints that currently prohibit dealing with these issues, a GameBreaking perspective may be needed to break through some of the constraints and become truly customer centric. One of the reasons that we do not take our particular industries forward or find major breakthrough innovations, is that we are too often constrained by our current frameworks â€? the current way in which we see an industry or problem. The difficulty with this is that the more you understand about an industry and the more of an insider in an industry you are, the less capable you are of stepping outside of those frameworks and those boundaries, and the more constrained you are by them.
So it is sometimes helpful to hear from the crazy ones, from the people who donâ€™t understand at all, from the newcomers to your industry, because they donâ€™t look at the constraints that you understand and see them as problems. They try to work around them and ask the questions that may be considered simplistic, puerile or childish – but yet it is these questions which in themselves may provide the breakthroughs for a particular industry.
In this article, we will consider the world of customer care in banking.
Looking at banks from a customer perspective, I believe can be exceptionally helpful.
Let me just tell you my storyâ€Œ
As a young person, I grew up in the 1970s and early 1980s when banks were realising that making connections to young people (children and teenagers) was an important starting point with banking products. Not exceptionally profitable for the bank, it nevertheless helped to get young people on board with various products early on in their lives and hopefully would create a sense of loyalty – or at least lock young people into a particular bank and make it easy for them to transfer what may be a very simple savings account into bigger products as they grew older. So a long term plan, in other words for the banks, and a fairly clever one, too.
In South Africa, one of the first banks to do this in a particularly brilliant fashion, was First National Bank, (Barclays), who introduced their BOB cards. Now, virtually every single teenager in the 1970s and 80s had a BOB card and a savings account. Unfortunately for FNB, they were not able to convert the majority of these people into longer term adult customers â€? a failure of policy that we will not have a look at in this particular article. I too started off with a BOB card, and then when I went off to varsity and needed to get a student loan, converted across to a bank that was prepared to give me a student loan. My bank, in offering me the student loan, directed me to a branch close to university, which opened the student loan account for me. At the same time I wanted a savings account and it was suggested that I open a savings account at a bank branch near my home, which I did. None of that at the time felt very strange, it was quite easy while I was at varsity to pop into the branch there and of course the branch close to home, when dealing with the savings account was a quite useful location.
The bank was a fairly faceless institution at this stage and of course they didnâ€™t have to waste too many resources on a young student, like myself. After one year of full-time study, I decided that I was bored of being bored at varsity, and decided to convert and start my articles with KPMG immediately, studying part-time. I moved across to KPMG and with the advent of my first pay cheque, realised that it would be much more efficient and more structured way of cashing my pay cheque by having a chequeing account. I therefore went to the bank to open a cheque account and was told that the counter that had opened my savings account was not able to open up my cheque account and it was a different division and I was pointed downstairs to the managerâ€™s office, who then opened up a cheque account for me.
At that stage it was felt that I did not qualify for credit card facilities and I really didnâ€™t feel that I needed them. But a few months later, having now got a number of pay cheques into the bank and shown a little bit of a record, I went back to the bank to open up a credit card facility. I was told that the branch that I was working with, and none of the people in that branch, were able to open a credit card account for me, that I would fill in the form and they would send it off to the credit card department, who would then open up that account and send my credit card to me. This I dutifully did. Interestingly, I had a strange query about credit cards, and was surprised to notice that the branch personnel had to phone the same toll free number I did in order to get an answer.
I then got married and my wife and I wanted to get a home loan for our new house. Going back to the same branch that I had worked with all along, I discovered that the people I had been speaking to in that branch were not capable of helping me because this was now the home loans department, and I was passed on to another new person in the branch and introduced to a lovely young lady, who was able to help me very efficiently to establish the criteria for opening a home loan. One of the questions on the application form was â€šwhich bank do you bank with?â€› â€? a question I thought very strange. Even more strange was the question about how long I had had my account with them â€? surely their computer would know much more precisely (even down to the time I opened my account) than my shocking memory?
Of course you understand what happened next. I needed to purchase a car and was told that nobody at this branch would be able to help me â€? this was a separate entity that dealt with car loans â€? but it was connected to the bank and I was put in touch with the right people, whom I then went to visit, who happened to be close to the place I bought the car, so again I didnâ€™t think too much of it, but I had now met quite a few people at my favourite bank. Oh, and again, they asked which bank I banked at, and how long I had had my account. They were doing their best to pretend they didnâ€™t know me!
I then had to open up a business account as I started the consultancy that I worked in for a number of years before joining TomorrowToday.biz. I was told that none of the people who had helped me before would be able to help me because they needed to go through the business banking division, which happened to be in the same building, just on a different floor and instead of going down to the managers I went up to business banking and opened the account.
Then I needed to purchase some foreign exchange, because we were now able to afford going overseas on holiday. And again I was pointed to a different department. I then had to get a foreign exchange payment made to an overseas supplier for my business account and that was also another new person. It was wonderful to meet all these new people at the bank every time I needed something different. It just bothered me that with all that computer equipment, they kept on pretending to have no knowledge of me! And they always needed me to bring my ID book with me â€? they must have had close to 100 copies of it in their archives by this stage, with all the chequebooks I had collected, statements I had requested and accounts I had opened.
Then I made the biggest mistake of my life: I moved house. I now needed to inform the bank that I had moved. But who should I choose to inform? Who was it that was going to take my new details and update my records? You see, the thing is, the bank doesnâ€™t have one record of me – the bank sees me as a multitude of different people.
I realised this even more powerfully, when having now started my own business and become reasonably successful, I received a letter in the post saying: â€šDear Mr Graeme Codringtonâ€›. A nice form letter, which at least spelled my name correctly (with a name like â€šGraeme Codringtonâ€›, you can imagine that doesnâ€™t happen all that often). However, although it was meant to be personal, it was incredibly un-personal. â€šMr Codringtonâ€› or to be particular, â€šDr Codringtonâ€› is my father, not me â€?my name is â€šGraemeâ€›, and that is how I prefer people to address me. And it would have been nice if the bank had even asked or known that I preferred to be addressed as Dear Graeme or my father preferred to be addressed as Dear Mr Codrington, and neither of us, certainly, would want to be addressed by full name and title.
But anyway, I read through the letter. It was all about me being a fantastic client, and how, over so many years I had proved myself to be a wonderful client that any bank would be proud of, blah, blah, blah. And at the end of it, said, â€šwe would like to introduce to you a new facility that we have created. It is called, the cheque cardâ€›. This was the first step towards debit cards, just a few years ago. This one was a gold debit card and the letter went on to say that â€šweâ€™ve attached a form for you to fill out and we just simply want you to send this back to us and we will send you by courier your gold debit cardâ€›.
Of course I thought this was fantastic, it sounded like a great facility and feature, and I flipped over the letter to find attached an application form. I opened the application form expecting all of my details to be filled in and simply having to find the place to sign so that I could return it to the bank and open this facility. Instead I found a completely blank application form. As with every other account I had ever opened with my bank, my car account, my home loan account, my credit card account, I was asked some questions that I now frankly have come to resent giving to the bank.
The first question was â€šwhat is your nameâ€›, the second question is â€šwhat is your addressâ€›. Now, the letter sent to the correct postal address including my name at the top meant that the bank knew me. So it was a little bit irritating for me that this had not been filled in for me and that the bank was pretending not to me again. But anyway I decided that wasnâ€™t too difficult to fill in. The next questions were the big stumpers for me, â€šwhich bank do you bank with?â€›, â€šwhat is your account number?â€› and â€šhow long have you had your account?â€› On seeing these questions I simply turfed the letter into the dustbin. A bank which calls me its valued client, yet doesnâ€™t even know my name and doesnâ€™t even know where I stay and then has to ask whether I bank with them, is not a bank that really deserves to get my attention as a customer.
You see the problem is, every time I go into the bank, I have to show them my ID book because they donâ€™t know who I am. They donâ€™t have a centralised system that keeps all my records â€? once! – has a photograph of me that can be compared to my face as I walk into the bank. They are not prepared to accept any form of identification accept the one they specify which is a form of identification we as South African citizens are not required to carry around with us, so I have to make a special note and remind myself to haul that out of the safe and take it with me whenever I go to my bank. Its not that they donâ€™t have the systems. They do! They just donâ€™t use them with the customer in mind â€? theyâ€™re more concerned about their internal systems than the customer.
Compare this with Amazon.com. Amazon.com, using your e-mail address as a unique identifier, has all of your details – and shares these details with every Amazon.com network around the world, including the German, the Swiss and the Australian and British Amazons. It also shares it with thousands of suppliers who link into the Amazon system, so that having logged into Amazon.com you can buy everything from books to toys, to DVDâ€™s, to home appliances, to cars, to auctioned products at eBay, without doing anything other than entering your e-mail address and verifying that you are who you say you are by using a password. You are one person and Amazon.com links everything that they know about you to one set of details.
This is something that banks have not yet understood with their siloed approaches to their own internal divisions. This is not something a customer is interested in. A bank provides car, house, equipment and asset finance. It provides facilities for chequeing and credit card and overdraft for both personal and business and non-profit environments including clubs and associations. It should provide access to banking for children and possibly even grandparents, it should provide student loans and even bridging loans and all sorts of things to one person. I am one person and I want the bank to treat me as such and to recognise me as such.
Now, many banks have started to move in this direction, with what they call their private banking or the banking for high net worth individuals. This is the first step in the right direction and of course at this level makes sense because these are people who make a lot of money for the bank. But even these do not yet take into account business entities.
That approach to keeping track of people using technology and taking care of them with the human touch needs to pervade the bank and go right down to the lowest level of customer in terms of profitability for the bank. That is a way that any bank anywhere in the world these days will be able to differentiate themselves from the mass of banking options available to the general public.
We do consulting work with most of the major banks in South Africa â€? all the banks are aware of these problems. So why are they not solving them? Because of legacy systems, too many internal issues, pure politics, and a lack of understanding of what the key competitive advantage of the future will be. That advantage is not going to be products or pricing, or quality or systems. It is the human touch, the relationship economy. And the company that gets there first will get most of the benefit.
Industry Analysis from an Outsider, #2 â€? Banking