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September 3, 2014

How Banks Use Technology To Improve Security & Quality

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 9:10 AM


Beware of technology for technology's sake. Experts who predicted the demise of the Big Box retailers 15 years ago are now fairly mum about the bricks-and-mortar resurgence. These are the same kind of people who predicted that the radio would become extinct the minute consumers started to buy television sets.

I bring up these examples because of a ground-breaking new survey by TD Bank, a large and influential Canadian financial services firm. TD Bank weathered the global economic crisis because it didn't jump head first into offering collateralized debt obligations to customers. The bank was conservative in its approach to savings. It also has a track record of stellar customer service. So good, in fact, that many so-called millennial customers in its survey said that they actually enjoy visiting bank branches because the employees there are so friendly and helpful. These are young customers who do everything online. So when they say they enjoy face-to-face interaction with bank branch employees, those survey results should all give us pause and help us learn from how organizations should be operating their bricks-and-mortar branches at the dawn of the digital age.

TD Bank must have assumed that millennials would have eschewed branch banking in a big way. Indeed, 90 percent of respondents (all of whom were between 18 and 34) said they used online or mobile tools for their most common banking activities - things like checking balances and paying bills. Plus, 57 percent of the people surveyed said they are using mobile banking tools more frequently than they were one year ago.

When it comes to depositing or withdrawing money, however, millennials said they visit their local bank branches as often as they did one year ago. In other words, no change in their deposit/withdrawal behavior. The main reason? The respondents cited security. They said they felt as though dealing with a teller was somehow safer when it came to making the transaction. That's not surprising when you consider how other industries are making a mint off of consumer concerns that their information isn't remaining private and confidential. Just recently a company that specializes in file-sharing, BitTorrent, said it will soon bring to market a chat product they call Bleep that is a completely closed and secure method of online communications. No central server through which your text travels on its way to your intended chat-mate. You correspond directly, with no middleman.

Consumers undoubtedly have security on their minds when it comes to transactions and correspondences - more so than in recent years. Perhaps last winter's retailing credit card security breaches are partly to blame.

So what is it about bricks-and-mortar retailing and banking that those of us in any industry can learn from TD's millennial survey? One thing is clear: That some companies have a long way to go when it comes to having online customer service technology that mimics face-to-face interaction. My presumption is that an executive who is told that his firm has a customer care hotline has probably never called that hotline to test it out. He should - customers who feel they have good service online or over the telephone will more than likely come back for return business.

Another thing we can learn from the bank survey is that technology shouldn't be a separate part of your overall customer focus. It should be an integral part of the customer ecosystem. Therefore it should matter little if a customer decides to come into a branch rather than use a smartphone app. The fact that the customer makes no distinction is, I think, a testament to how seamless your technological ecosystem has become. The lack of distinction between customer engagement models is also telling when it comes to the online-to-offline strategy now being promoted by Big Box retailers that even five years ago were left for dead by many Internet analysts.

Customer focused technology should be enabling. The best financial services technology for consumers should be so fluent and seamless that it shouldn't matter in their minds whether they visit a branch or not. So long as they get results. When consumers get results, your business will, too.

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