More than a year ago, the UK head of banking at Santander said that the banking industry is facing a Kodak moment. Steve Pateman was suggesting that banks are facing an existential crisis because of financial technology (fintech).
We all know what happened to Kodak. Once the world leader in photography technology and supplies they felt that digital photography would never take off because the cameras were too expensive and people would always want printed photographs. Look at photography today. Everyone has a digital camera in their phone and printed photographs feel like museum exhibits.
I was thinking about this when I attended the Marketforce “20:20 Customer Experience: Financial Services” event earlier this week. I was there and I enjoyed the debates, but it seems like the sense of crisis that I see in banking was not reflected in the programme. For example:
“In just one day, benefit from a jam-packed agenda of compelling content and strategic insights including the importance of instilling a culture of customer-centricity throughout the business, developing robust and rewarding omnichannel experiences, leveraging insight and analytics to improve the customer journey and engaging employees in pursuit of great customer service.”
This is all true. The customer journey has changed and customers are demanding omnichannel experiences, but in industries such as banking and insurance this expectation of a different customer experience is shaking the entire industry. Companies that believe they can tinker at the edges, perhaps just improving customer service a little, will not exist a decade from now.
Why do I feel so sure of this? Take a look at the retail-banking marketplace right now. New entrants are opening up all the time. Companies like Metro Bank are reshaping how bank branches work and Atom Bank is showing how a full service bank can operate just using an app.
These companies are redesigning the banking experience. They are designed around the customer from the start without the legacy of hundreds of years of banking processes and an enormous branch network.
But the change runs deeper. New companies are taking individual processes, such as loans or transferring money overseas, and offering these services on apps at far better rates than full service banks. These are the services that traditional banks rely on to make the bulk of their profits, as operating current accounts is not a great revenue earner.
These new market entrants are able to succeed because they are offering a better experience. Banks have ways of doing business that has just been accepted over time. Many processes have not been reviewed or improved for decades. If you can go to an app and get a decision on a car loan within seconds then why would you endure the process of completing a loan application form at your local bank branch?
The fintech revolution is changing banking and other financial services because the technology is allowing services to be created that are built with the customer in mind from day one. Customers are now reshaping the entire financial services industry so any conference focused on customer experience in financial services needs to be considering this as the first question: Now that the customer is in charge, what will the industry look like a decade from now? Who is the next Kodak?
Please leave a comment here if you have your own thoughts on this or get in touch via my LinkedIn.
Photo by Brook Ward licensed under Creative Commons.