As the finance industry adapts to a world that is increasingly informed by technology and the digital age, the concept of ‘Bionic Banking’ has been proposed. This conjures up images of a Steve Austin or Tony Stark, who attain super-human powers after being impregnated with special technology. By Lyndon Subroyen, global head of Investec Digital
For bankers, this imagery can be quite appealing — customers clearly want a more digital experience, which inevitably places cost savings within reach of a bionically-augmented hand.
Who doesn’t believe that it’s more efficient to have customers use online platforms and mobile apps?
And therein lies the rub, because technology certainly does have the power to drive efficiencies and ease of use. But it is not a silver bullet that makes all customer service headaches disappear. In fact, reliance on trends and analytics from customer behaviour are more likely to blur rather than illuminate individual preferences.
Despite this observation, the concept of a Bionic Bank is one that financial institutions need to heed if they’re to remain relevant in a digitally-focused world.
The concept was first proposed by Boston Consulting Group (BCG) in early 2015 and proposed that retail banks need to combine digital technology with a human touch to thrive.
BCG proposed six key elements to achieve this: a clear vision; a multi-channel delivery model; customer centricity; technology and operational excellence; organisational vitality; and financial and risk control. The consultants went so far as predicting higher income and lower costs if banks adopt this model.
As anyone associated with the financial services sector knows, income and cost per customer are vitally important metrics when measuring efficiency.
As a concept, BCG has certainly hit the nail on the head in respect of banks globally needing to find ways to remain relevant. Where our view differs from this is that these guidelines place undue focus on internal processes at the cost of the customer experience.
And that, in the private banking context, is a serious oversight.
No matter how efficient banks become, they become immediately irrelevant unless they’re able to provide a high-touch, personal experience. High touch in no way detracts from or demeans the concept of a digitally-focused banking experience.
We believe in and use data analytics as much as any other financial institution, but never at the cost of customers’ individual needs. The power of technology in this context is a guiding tool rather than a crutch used to prop up our ability to respond to customer needs.
There is a very real danger of organisations, irrespective of their industry, falling into the trap of believing that data and analytics are the saviour of their business. Such reliance is more likely to lead to companies falling behind competitors unless they’re able to enhance the human element of their customer engagement strategy.
We should also never lose sight of the fact that the biggest cheerleaders for data gathering and analytics tools are the vendors of those exact same tools. It’s natural then that data is espoused as the alpha and the omega and that new trends such as robo-advisory services are lauded as the death-knell for financial services as we know it.
We see a very different future in which data and analytics are but tools used to enhance the high touch customer experience. And we are unapologetic about our view that undue reliance on data could actually be detrimental to a customer relationship.
The biggest danger, in our opinion, lies in relying on data analytics to craft the shapes and boxes into which customers are forced on the basis of demographics, lifestyle preferences or banking habits.
The only way that organisations can truly know their customers with real certainty is to have a very human relationship with them. No-one has yet managed to programme empathy and understanding into an algorithm. And the reason for that is obvious.