Bionic banking

17 July 2019 Lyndon Subroyen, Global head at Investec Digital

As the finance industry adapts to a world that is increasingly informed by technology and the digital age, the concept of ‘Bionic Banking’ is moving to the forefront.

This does conjure up images of a Steve Austin or Tony Stark, who attain super-human powers after being infused with special technology.

For bankers, this imagery can be quite appealing - customers clearly want a more digital experience, which inevitably places cost savings within reach of a bionically-augmented hand.

Who doesn’t believe that it’s more efficient to have customers use online platforms and mobile apps?

And therein lies the rub, because technology certainly does have the power to drive efficiencies and ease of use. But it’s not a silver bullet that makes all customer service headaches disappear. In fact, reliance on trends and analytics from customer behaviour are more likely to blur rather than illuminate individual preferences.

Despite this, the concept of a Bionic Bank is one that financial institutions need to heed if they want to remain relevant in a digitally-focused world. The concept was first put forward by Boston Consulting Group (BCG) and proposed that retail banks need to combine digital technology with a human touch in order to thrive.

BCG proposed six key elements to achieve this:
1. A clear vision
2. A multi-channel delivery model
3. Customer centricity
4. Technology and operational excellence
5. Organisational vitality
6. Financial and risk control

The consultants went so far as predicting higher income and lower costs if banks adopted this model.

As anyone associated with the financial services sector knows, income and cost per customer are vitally important metrics when measuring efficiency.

As a concept, BCG has certainly hit the nail on the head in terms of banks globally needing to find ways to remain relevant. Where our view differs from this, is that these guidelines place undue focus on internal processes, at the cost of the customer experience.

In the private banking context, this is a serious oversight.

Regardless of how efficient banks become, they become immediately irrelevant unless they’re able to provide a high-touch, personal experience. High touch in no way detracts from a digitally-focused banking experience.

We believe in, and use, data analytics as much as any other financial institution, but never at the cost of customers’ individual needs. The power of technology in this context is a guiding tool rather than a crutch used to prop up our ability to respond to customer needs.

There is a very real danger of organisations, irrespective of their industry, falling into the trap of believing that data and analytics are the saviours of their business. Such reliance is more likely to lead to companies falling behind competitors unless they’re able to enhance the human element of their customer engagement strategy.

We should also never lose sight of the fact that the biggest cheerleaders for data gathering and analytics tools are the vendors of those exact same tools. It’s natural then that data is espoused as the alpha and the omega, and that new trends such as robo-advisory services are lauded as the death-knell for financial services as we know it.

For Investec Private Banking, we see a very different future. We see a future where data and analytics are tools used to enhance the high touch customer experience. And, we are unapologetic about our view that undue reliance on data could actually be detrimental to a client relationship.

The biggest danger, in our opinion, lies in relying on data analytics to craft the shapes and boxes into which customers are forced on the basis of demographics, lifestyle preferences or banking habits.

The only way that organisations can truly know their customers with real certainty is to have a very human relationship with them. No-one has yet managed to programme empathy and understanding into an algorithm. And the reason for that is obvious.

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