Customer Centric Banking Experiences: Where Banks are Falling Short and How They Can Deliver

I never thought I’d say this, but my airline knows me better than my bank.  This isn’t a reflection of how great the airlines are – it’s really a sad statement about my bank.  I started with my bank when I was about 9 or 10 years old and have been with this bank ever since.  I had a passbook savings that would be stamped by the teller when I deposited money from my paper route.  This has been a relationship counted in decades.  They collect my paycheck, process all my spending (I spend almost exclusively with a debit card), and lend me money.  They know how much I earn, the value of my assets, how much I spend, how much I save, how regularly I pay my bills, where I live, my age, and my spouse.  I can’t think of any institution with a more intimate view of my life. So, imagine my surprise when I recently inquired about an auto loan and it became clear they actually knew nothing about me. 

I had to go to a branch not long ago and happened to be in the market for a car.  I saw a loan promotion and asked the teller about setting up a loan that day. I was told they couldn’t process it at the branch – best to go home and do the loan on-line.  Really?  I assumed it was a mistake.  No mistake – that was the process.  So, I went home, logged into my account, and clicked to start the loan.  I had to start from a blank “sheet”.  I was logged into my account but still had to fill in everything including my name, address, account information, employer and earnings.  The bank “knows” all of this information.  They know everything I do.  Yet, they know nothing.  

Contrast that with my airline.  I travel a lot and it shows.  The airline immediately “knows” me when I log in. They complete most of the ticket once I tell them where and when I’m going , the weather of my arrival location, and – without fail – follow-up on every trip for feedback, unlike my bank.   Why not my bank?  Well, because, to my bank and its’ systems I am a series of accounts; not a customer.  I am a deposit account, a mortgage account, or an overdraft account.  I am not an entity and everything I do with the bank is about managing accounts or originating a new account.

The problem stems from the fact that most banking systems were created around the time I started my passbook savings account.  These systems are product-centric and built around accounts.  There are separate systems for deposits, unsecured loans, secured loans, overdraft, mortgages, etc.  All of these systems have an independent customer model, pricing, limits, and origination.  So, when I went to start my car loan, my information was located in the siloed systems.  I was new to the car loan system – for all it knew, I never existed.  Everything about my car loan would be collected for the first time and evaluated independently.  Further, there was no view of other products that might fit my needs at that time.  The car loan had no way of seeing whether a new credit card or other lending offer might make sense.  Those are independent and – like the car loan – would be originated and evaluated entirely on its’ own. 

Times are changing – a product-centric view won’t make it anymore; banks must become customer-centric.  As consumers, we have been conditioned to expect systems to know us, empower us, and – at times – even “wow” us.  When I log into my cable company, I can see the status of every cable box, phone, and router in my house.  I can run a performance test, activate new equipment, add services, schedule appointments with a technician and get it confirmed down to the hour.  This isn’t some cutting edge new technology company.  It’s a utility.  It’s the cable company.  If the cable company can do this then my bank had better be able to it as well – or, it’s really behind.  But, what has my airline and my cable company done that my bank hasn’t?  They’ve gone customer centric.   

What does customer centric mean for a bank?  Let’s look at my car loan experience.  When I logged into my account and clicked “get a car loan”, it should have only asked for new information – details about the car.  Based on that information and my existing information with the bank , I should have immediately seen my loan options and then with one-click, activate my loan.  Further, the bank should have seen I was in an origination cycle and offered other services that might make sense such as insurance or – best case – a model that would have consolidated some of my debt (including the new car) and offered me a new lending package.  At a minimum, I expect things to be fast and insightful – know me and empower me.  In my best case, I expect to be “wow’d” and shown specific products that could actually allow me to manage my money better.

Customer centricity has remained elusive for most large banks.  Conventional thinking is that the systems and architecture can’t enable similar models without high risk and cost and ultimately, that it is not economically viable.  But, this is changing.  A key attribute of customer centricity is that we move true “customer” capabilities to independent services.  We abstract the customer model, originations, pricing, and limits.  We reduce the core systems to little more than a ledger.  We don’t replace.  We modernize.  And, do it progressively.  Progressive transformation is the key.  Large banks (mine is one of the largest in the world) can’t replace systems in a big-bang model.  They can’t turn off the old bank on Friday and turn on a new bank on Monday.  They have to be evolved.  Origination is a great place to start.  If we view the origination process as the application, it changes how we think about the architecture.  Originations become “core” with services for pricing, limits, customer, and the ledger itself.  Initially, these functions are filled through integrations to back-end systems but over time they are migrated to neutral services.  These services become the new “master” while the old services in the core become the “slave”. 

This isn’t something off in the future.  It’s happening today. National Australia Bankis already well underway with the change.  They started with a customer-first mindset and are working top-down towards the product.  It is the customer-in view that separates them from others, who think product-out.  Over time, they will replace the core but they see highest return in streamlining processes (the modernized mortgage origination process is a great example of a straight-through processing with almost no human intervention) and demonstrating true customer awareness and insight.  Contrast that to other banks, who are investing a billion dollars or more to modernize single product-centric system like, deposits.  Congratulations – you now have a new version of 40 year-old thinking!