by Colin Jowell

Technology: differentiator or commodity? Some lessons from the banks.

According to Roy Morgan, satisfaction with banks is now at record high levels. To give perspective, this is a seismic shift. In a read of the Big Four from June 2005, ANZ took top honours at 73.1% - a near five-point lead over its nearest rival Westpac, and almost 10 points ahead of CBA at the back of the pack. There were clear winners and losers, but with room for improvement all round. Lack of switching was driven by hassle and inertia rather than an experience worth staying for.

Fast forward to today, and CBA is now on top at 82.6% with NAB behind by just over one point. ANZ is at the bottom, but with a gap of just 4.4 points – the gap has narrowed by half.

Driving the category change has been the rapid adoption of technology. Transactional banking has moved online and now successfully into mobile, so that people’s everyday experience is seamless and easy. Those of us with good memories remember a time when technology was touted as the ultimate source of differentiation. The sell was “Lock people in with the technology and it will become even harder to move”. Except now we know the opposite is true - technology hasn’t just improved the experience at one bank, it has improved the experience at all of them.  And now switching is easier than it has ever been.

These positive statistics hide a relationship gap - when we conducted our Relationship map study, we cross correlated the habit (measured by tenure) with the attitude (measured by “likely to recommend). And what we found was that while habits were expectedly and exceptionally strong, the attitude was borderline to say the least.  Technology is driving satisfaction, but it’s not driving love. Well not the kind of love that’s worth telling your friends about.

Proof of their prioritization of tech over people can be found in the Business banking satisfaction scores. In business banking, personal interaction matters more - and failure to deliver this could be why the satisfaction rankings of all the banks middles back in the 60 %’s.  Little wonder then that every second business banking ad features a thriving business person, backed up by the handshake of a banker bearing an AAMI-like grin. 

There are some interesting developments to cover these gaps - in the consumer space, ANZ just launched its Grow Centre - a concept store designed around delivering financial advice (and providing a more relevant role for banks to have face to face relationships now that technology has all but wiped out the need for it on the transactional side). Though even here, technology is being put at the forefront with the opening line on the site saying “The digital age is transforming the way people live and think”, and a venture with IBM’s Watson applying artificial intelligence to the problem.

One cannot help but think though that real intelligence now is the source of differentiation - the kind that can only be delivered by well trained, empathetic staff. The kind of ability that senses whether the person walking through the door has just had a windfall or a tragedy. Our ability to backwards engineer the process and technology will only increase. Whereas the ability to greet the customer with not just a smile, but the right kind of smile will remain a rare skill.

Things to think about:

  • Are you matching your investment in technology with an investment in people?
  • Have you defined your service proposition tightly, in terms that go beyond just the basic benefits of efficiency?
  • Have you communicated this vision effectively so that a truly differentiated experience can be created by your business?