As banks face increasing competition from out-of-industry players such Google, Apple and Facebook, the need to innovate the customer experience is emerging as a key point of differentiation for the incumbents.
Social engagement and the branch network have been identified as primary avenues for investment, with a view to customer retention and strengthening banking brands.
Speaking at the FST Media’s recent Technology & Innovation – the Future of Banking and Financial Services conference in Melbourne, IT chiefs from across the sector agree banks need to be proactive in driving innovation, while ensuring any developments actually deliver true benefit to customers.
David McQuillen, Senior Vice President of Group Consumer Experience at leading Singapore bank, OCBC, says organisations need to be wary that innovations are visible to customers, rather than offering meaningless differentiation that defeats the point of the investment. “Where differentiation goes wrong is when people look at their competitors and just do something different to them,” he says. “What actually works is meeting the needs of your customers better than everyone else.”
McQuillen points to OCBC’s Gen Y based retail experience, FRANK, as a case study of effective innovation in action. The bank hired a design team and has undertaken an extensive global research project to understand what customers are looking for when engaging with their bank.
Frank was inspired by the retail sector’s focus on providing a comfortable, casual ‘in-store’ experience “We did a cardboard mock-up of a store and invited Gen Y to come and engage with it. We learned that most of our ideas were completely wrong. It allowed us to start refining our ideas once Gen Y had the chance to react to something,” McQuillen says.
The customer research process was also a key innovation within the project. Rather than relying on data and analysis, OCBC sent researchers to tail Gen Ys and observe their shopping behaviour. It provided insights into customer behaviour that McQuillen says could not be obtained otherwise.
One young man was observed writing down purchases on Post-It note to keep track of his expenditure. McQuillen says this behaviour helped form some of FRANK’s product development strategy. “He said to us ‘Internet banking is too cumbersome to log into and feeds are delayed. I need complete control over my finances because I don’t have a lot of it (cash) and if I get an overdraft, I’m in trouble.’ This kind of insight was the thing that started driving how we’re thinking about our bank.”
BankWest Retail Chief Executive Officer, Vittoria Shortt, has also spearheaded a retail transformation project for the Western Australian-based bank. Shortt says investment in innovation needs to be selective, however careful investment can still see substantial return on investment.
“We set about reinvigorating the store model, and found that little innovations weren’t, in themselves, the answer, but collectively they made significant differences,” Shortt says. “We operate seven days on the east coast, and we took away the teller glass screens so we have a very open environment. We’ve also introduced things like Wi-Fi and coffee.”
Shortt, like McQuillen, is drawing inspiration from sources outside of the banking industry when looking for examples of innovation. The runaway success of the Apple stores, which focus more on product branding and providing advice rather than sales, has influenced the design of both banks’ new flagship store experiences.
“Innovation has got to be visible to customers,” Shortt says. BankWest’s flagship store includes an equivalent to Apple’s staff geniuses,plus a bar with experts on social media, business banking, lending, and other topics to help address customer queries around the banking experience, both on-and off-line.
“There’s a convergence of the online environment with the offline environment,” Shortt says. “I’m not a fan of separating products into what we in the industry call channels, as channels are not visible to customers.”
Online banking is also seeing a wave of customer-centric innovation. UBank is currently developing online services designed to move it away from the trap that many online-only business fall into, which is competing purely on price.
“All serious retailers are trying to do the same thing – keeping eyeballs on the screen, and not just for the first time, but for repeat visits,” says Timothy Mannah, UBank’s Head of User Experience and Digital Media.
UBank recent innovation is a social application which allows customers to anonymously input their financial details, and receive advice based on that data. They can discover what people earning similar salaries, and who live in similar areas, spend on goods and services. They can also receive advice on how to save for a holiday or another substantial target. Mannah says the project’s goal is to build an emotional attachment between the bank’s service – which is to be offered for free to non-customers as well – and the act of banking with UBank.
“Customers don’t really value our products, they value the outcome. We wanted to bring value to the customer by helping them reach the outcomes.” Mannah says. “We’ve asked the question on how to bring back the engagement to the customer, so that there’s a little bit of emotion behind the transaction. It was even more important for us to tackle because we’re an online-only bank.”