Retail banking: Lions and bankers and fintechs, oh my!


“Toto, I’ve a feeling we’re not in Kansas anymore.” Everyone knows these as the ominous words spoken by Dorothy in the Wizard of Oz, and just as Dorothy was magically transported by a tornado to Oz, digitalization has transported retail banking to a place where everything seems shiny and new. That place might not be Oz, but we aren’t in Kansas anymore, either.

In the digital era, although everything seems exciting, it’s more than a bit scary for bankers. Fintechs are reimagining what banking can be, and unlike banks, they are unencumbered by legacy, regulations, and in most cases, even the need to make money. They threaten the status quo, and for incumbent bankers who, it must be said, tend to see the glass as half empty, it’s a frightening time. Lions and tigers and bears, oh my!

One constant in retail banking: Customer needs

While the outward appearance of banking has changed, consumer needs really haven’t. At its core, banking is a means to an end, which hopefully makes the customer’s life better and more secure. Whether it’s a loan to buy a house or car, a place to save money, or for day-to-day living, customers still need banking.

Regardless of fintechs, my belief is that banks are still the best positioned to provide those means, but banks must play to their strengths, and not be distracted by lions, tigers and bears, or the latest Fintech.

So where does technology fit into all of this?

What technology can’t do for banks

Technology alone can never replace the value of personalized customer relationships.  Technology can make the process more efficient and more convenient. It can make the information look “cooler,” but how hip you are is not the deciding factor.

Look at it this way: If you were handed a few hundred million, you pick a currency, would you even be bothered with banking? No. You would have someone else do your banking for you, and that’s the point. Banking is a means to an end, and not an end in itself.

What technology can do for banks

What technology can do is help you understand your customers and their intentions well enough so that you can create personalized customer relationships through the multiple channels that constitute today’s bank. While developing the technology to foster individual relationships with each and every customer might seem like a tall order, and not be as exciting as the latest technology, personalized relationships are the best – and I would argue the only – defense against customer defection to the latest and greatest FinTech.

Focusing on personalized relationships might be a leap of faith for bankers, and not as sexy as a FinTech magic bullet, but bankers need to swallow their fear of not matching every FinTech value proposition and provide the kind of relationship customers actually want from banks. As examples, the recent Finextra report Engaging the Unengaged Customer found that 63% of bank customers wanted their banks to provide personalized banker services and 59% wanted their banks to provide financial advisor services.

When all the sparkle and shine wears off new fintechs, consumers still need a financial institution they look to and trust, and banks can be that trusted partner if they realize they’ve had the tools all along, they just need to use them.

How banks can stay on the yellow brick road

Banks can’t win over (or keep) loyal customers if they are constantly in reaction mode, trying to answer each and every new FinTech that comes along. It’s like the game “Whack a Mole;” they may be able to hit one or a hundred and one, but there’s always another popping up, demanding attention.

As I said before, I believe incumbent banks are best positioned to win and be more profitable when they simply focus on being banks. For Dorothy, the yellow brick road was the road to success. When it comes to the retail banking industry, the road to success begins with engaging customers, not as numbers, but as individual people.

Bankers can click their heels together three times, but unlike Dorothy, they will never be transported back to Kansas. We’ve reached a point of no return in banking, and banks have to remember their original purpose: meeting the individual financial needs of their customers.

Want to learn more about how banks can improve customer relationships? Download the report ‘Engaging the Unengaged Customer’ for free here

James Eardley
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James Eardley

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