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Human banking

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The customer experience landscape is changing. Our digital world has made it possible for an increasing number of organisations to offer 24/7 service. The old 9-5 x 5 operating model is rapidly becoming a thing of the past. But customers are not bits and bytes and still require a human touch. This certainly holds true in banking.

A mobile banking app can offer only a finite amount of help or reassurance. Customers still need to discuss issues with a banking professional who can offer advice. Humans add value and can display empathy which is why human-to-human interaction will never be completely replaced by machines. Only another human can satisfy our deep interpersonal needs.

As I have repeatedly opined in this blog, banking is all about relationships which is why machines should only be used to automate repetitive or low value tasks. Attempts to automate high-value tasks invariably meet with failure. An example is the decade-long project in Australia to fully automate the end-to-end mortgage application and settlement process.

The (mistaken) belief by many in the Australian banking industry was that borrowers wanted a seamless mortgage process without any human intervention. In reality, almost 55 per cent of Australians turn to a mortgage broker to find the mortgage that’s right for them. This is borne out in research which confirms that borrowers value hand-holding when taking out a home loan.

Automating decision making processes in banking can lead to poor outcomes. Indeed, the absence of human judgment can cause embarrassment to both a financial institution and its customers. Two such instances were noted in a 2014 article in American Banker titled Go Digital, But Don’t Forget Banking’s Human Factor. It reported:

When President Obama has his credit card rejected at a restaurant because of a fraud protection algorithm in his bank’s computer system and when Ben Bernanke can’t refinance his home, it’s a sign that the banks have lost their human sensitivity. These experiences are not outliers; they are the norm.

Machines might be smart but I believe that humans are smarter. Sure, artificial intelligence is outstanding at analytics (logical intelligence). But emotional intelligence is just as important for decision making. We humans rely on nuanced readings of complex situations while machines have no such subtlety. When it comes to artificial intelligence, faster isn’t necessarily wiser.

To this end, someone who does not believe that the bank of the future will be completely automated is Jean Dermine, Professor of Banking and Finance at INSEAD. He notes that user adoption is an important psychological aspect to digital technologies:

Just because you disrupt the field with a very advanced form of artificial intelligence doesn’t mean people will trust it with their accounts, passwords or life savings. Yes, many people will welcome the change, but I strongly believe that the human touch will always remain important to some people. In fact, human interactions may one day become a rare value-added feature, something that the high-net-worth customers are willing to pay extra for, while the less well-to-do have no choice but to have a fully automated account with no personal service.

Given the significant levels of wealth held by non-Millennials around the world - particularly Baby Boomers - there is still a place for relationship banking. Some customer segments will continue to value the customer experience associated with familiar faces and working with people you know. Nonetheless, I accept that Millennials will approach banking differently.

In this banking battle for the ages, no one size fits all. In the words of The Financial Brand, Millennials and Boomers are “the two largest generations in history (but) have vastly different financial needs and expectations”. Hence, banks that act too rashly in replacing the human touch with digital channels risk alienating customers who crave a more human experience.

Digital may be alive and kicking, but personal interaction is not dead. The human touch still matters in a digital world.

 

Regards
Paul J. Thomas, CEO

Comments

avatar Des Tubridy
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Paul, good to hear that you had a great family holiday.

Thank you for the latest Blog which for everyone clarifies the differing banking needs of two important generations. Looks like a huge segmentation challenge for bank Marketing departments.

However, the human side has always been a key differentiator for the Credit Union/Mutual Banking sector.
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avatar Jon C
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Hi,
While I appreciate the human side to banking, as an I.T. Engineer, I am very interested in the way technology is moving. Can you please tell me when Apple Pay will be available to Gateway Customers?

Thank you,
Jon.
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avatar Paul J. Thomas
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Hi Jon,

At this stage we don’t support Apple Pay. However, we understand that keeping up with technological advancements is important to ensure our Members have fast, convenient and secure access to their money when they need it. As such, we are constantly looking into mobile payment options.

Kind Regards,
Paul
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CEO Paul Thomas