By Michael Muirhead
Relationships with a bank's call centre can sometimes be one of annoyance rather than appreciation for its intended convenience. Often, a human voice would be preferable to an automated system offering numerous options, followed by pre-recorded messages, none of which are suitable for the original query. And then you get cut off. Conversely, sometimes information can be sourced far more efficiently via the click of a button rather than a cumbersome conversation with a person.
The challenge facing the modern service industry is to know when to create automated self-service channels for clients, and when to provide the kind of discernment and understanding that only interpersonal relationships can provide.
Banks are at the coal face of the challenge to decide what to automate and what to leave to a one-on-one interaction with a person. The benefits of automation for banks are compelling, allowing quicker access to information, reduced risk of human error, and lower costs leading to lower client fees.
These benefits are so compelling that they can lead to automation and rules-based client interaction even where it is not desirable for clients.
Rules-based systems do not take into account things such as the reputational aspects of a banking relationship, the history of that relationship, and the mutual trust between the bank and its client, instead focusing on predetermined categories that inform the treatment of that client's needs.
Banks need to adopt a client-orientated relationship as unless a close relationship exists alongside the implementation of automation, there is the danger of developing for the bank's needs rather than the client's.
Though banks are often at the forefront of automation, and therefore convenience, sometimes they are sceptical. It is often not banks which initiate changes in the way they interact with their clients but rather smaller, independent companies such as credit card portal Yoco, online payment provider Stripe, or Bitcoin seller Luno, which are nimbler at bringing new technologies to the market.
Banks have historically tried, in turn, to ignore these changes and then to copy them, often with limited success.
Most traditional providers have been sceptical of these new technologies but if a new product or service is helpful to a client, it should probably be embraced and given impetus to grow rather than ignored.
After all, it is only through staying close to client needs that banks can ensure future relevance. In many instances, banks can work with these companies, either by purchasing them or forming joint ventures taking the benefit of the technology they have identified to a larger client base.
Another effect that technological disruption is having on banking relationships, is the commoditisation of products and services, either through easier mechanisms to survey competing price more easily and bring them closer in line, or through making it easier to switch between product providers via technology.
Platform technologies and interfaces which provide web-based trading technology, in particular are giving clients the opportunity to more readily compare product prices between banks.
One way for a bank to adapt to new fintech developments is to look at the commoditised product as merely the accessory to providing an added service to the client rather than the selling proposition itself. This is where changing technology can be a bank's best friend.
Quoting an interest rate forward through an online platform might be one such product. But with not much difference in the price between banks, some added tools may give one bank a competitive advantage over another.
For example, a tool to manage risk across the client's business which enables it to reference its interest rate hedges against other correlated, and sometimes not very obvious exposures, provides a service beyond a simple rate that will be roughly in line with competitors.
Michael Muirhead, Western Cape Regional Director at Rand Merchant Bank.
Similarly, acting as provider of merchant services and cash to a retailer can be extended from being merely a function of price. If these services, and their associated prices, are a given, banks could accept the going rate and appeal to the retailer on another basis.
One of these solutions could for the bank to assist a retailer's customer relationships by using access to spending and borrowing pattern data, and its understanding of credit principles, to administer rewards programmes.
Another is to assist the retailer in supporting its suppliers through sophisticated supply chain finance technology that provides working capital to more suppliers earlier on in the purchasing process. Suppliers are therefore able to receive payment far sooner than they would be able to on ordinary terms, and without the cost of raising that liquidity on their own.
Technology has already provided banks with ways to do better business with their clients. Robotics, artificial intelligence and increased automation are being explored on an ongoing basis. But the need, on occasions, for a more personal relationship cannot be ignored.
* This article was sponsored by
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