Embracing a digital operating model: a call to action for banks (1)
By David Cox, Digital Architect, Microsoft Digital & Annette Harris, Sr. Director, Financial Services Industry Solutions, Microsoft on February 21, 2018
Filed under Financial Services - Banking & Capital Markets
Part 1 of 3: broken experiences
A colleague recently lost her mother. She wanted to settle some affairs with one of the world’s largest banks. The bank insisted on only using faxes and a manual exam that would take 7 to 10 business days just to confirm receipt. Unfortunately, one of the faxes went astray. When she questioned the bank, they claimed never to have received it. For the bank, the resolution was simple: have the customer send another one. For our colleague, this was a moment of extreme frustration at a time of excruciating pain. That one moment of disappointment—when a crucial need was not met, and excessive effort was required—led her to end her relationship with the bank and move on.
We have another story to share. We had just finished a meeting and were ready to go home. It was a long way to the airport. Time was short. We both tried to request an Uber from our phones; it didn’t work. So, one of us downloaded the Lyft app. In minutes, our ride arrived, and then provided an experience that convinced us both to use Lyft ever since. The drivers are great. The cars are great. The experience is great. Why go back? The cost of switching to Lyft was low while the experience was better. We have also moved on.
Moments of truth
What can we learn from these two experiences in very different contexts?
First, despite the extreme differences in technology, both organizations failed to meet expectations. Neither had a back-up plan. Everything depended on the performance of their technologies at specific, moment of truth. Both companies lost customers because they required too much effort to work with them.
Regarding our colleague’s bank distress, she wonders why, in a digital world, one of the world’s leading electronic banks is still using faxes. In our case, Uber knew we wanted to go to the airport and that it was some distance away. They had that information from the app. It would have been a simple matter of using that information to prompt a chatbot to contact us and say, “I see there is an issue with obtaining a driver, let me help you.”
Secondly, the Lyft experience continued to impress at each stage of the journey. With Uber, the car was almost half an hour away. The Lyft car arrived within minutes. Maybe it was coincidence. But the result was clear, no matter what: Lyft gained customers and Uber lost them.
Customer-centricity at every stage
We live in a world of constantly rising customer expectations and diminishing patience. Customers are comparing their experiences across industries. If getting a ride to the airport is so easy, why is dealing with a bank regarding a death so hard? We can get in the car with a stranger more easily than we can transact with a bank we have used for decades.
Operations can no longer be something that happens entirely in a back office or some remote datacenter. They can no longer be based on processes that remain unchanged for decades. They must be customer-centric at every stage—and they must constantly evolve.
The CEO of ClearBank, recently in the U.S., was showing his vision for payments in his business using an app on his smartphone. He demonstrated how to buy a cup of coffee for his daughter in Sydney, Australia. The transaction was virtually instantaneous and relatively inexpensive. This simple, memorable example epitomized his vision of a world where real-time payments can happen anywhere in seconds, and at a fraction of the cost.
In a world where emails are frictionless—but payments are not—antiquated systems may soon evaporate.
An operating model for the digital era
The call to action for banks is to embrace a new, digital operating model based on customer-centricity at every stage of their journey. In that journey, the effort required of customers must be measured and optimized to eliminate friction and create a memorable experience.
The contours of this mandate are increasingly clear:
- Satisfying customers is no longer enough. We must turn them into fans.
- Great apps and online channels are not enough. Whether your organization is a bank, a taxi firm, an airline, or a hotel, every aspect of your operating model must serve the twin ends of consistently delighting your customers and delivering value at a cost-efficiency ratio that shows Wall Street you have a command of your business AND your customers.
- Technology alone is not enough. Data will only get you so far. There needs to be that additional element of empathy: understanding customer’s needs and exceeding them; turning moments of truth into relationship opportunities.
And, the operating model must continue to evolve.
Microsoft has the same charge. Our success depends on our ability to consistently empower every person and institution on the planet—and make their lives better.
Let’s take this journey together.