Digital focus is imperative to survive in 'divided' industry

Banks will have to adapt to the fragmentation of the customer service chain and work harder at building customer advocacy, industry consultant and investor Brett King told an industry briefing yesterday.

King said that the first moves by outsiders such as Apple into banking (which seems likely to provide near field communications functionality on the next version of the iPhone) and the telcos would take a place in a "divided" banking industry.

King - the CEO of Movenbank (and author of the books Bank 2.0 and Bank 3.0) - scorned the notion that banks and other financial services firms could build customer relationships on the basis of an advice model.

"If you don't have a relationship with your customer digitally you don't have a relationship," he said.

He said that the average number of branch visits a year was now 2.6 - down from 23 times a year in 1995.

"If you only visit 2.6 times a year, in the branch, what quality of a relationship can you build?

"When you walk into a bank, do you get this wealth advice? I think advice from a bank is a myth.

"We don't get measured on advice. We get measured on revenue."

King said the typical customer that approaches a bank is likely to have spent "hours" researching his or her product of interest before contacting the bank and may be better prepared for the meeting than the banker.

He said in a typical case the customer was likely to be frustrated by the bank's lack of preparation for the meeting and the repetitive processes employed, such as filling in forms and having to prove his or her identity to someone.

King also questioned why banks persisted with forms of advertising such as painted trams, billboards and newspaper advertisements.

"One of the key drivers for Y gens is what my friends tell me about your brand.

"There is a strong correlation between advocacy and brand awareness among Y gens.  I trust what my friends say more than what you tell me in an ad or a billboard. If my friends say it sucks then it sucks.

"If their friends think it's cool… then it's an easier approach into the engagement."

King pointed out that YouTube was the second most used search engine after Google.

Y Gens, he said, are more "visual... they want to see the product, they want to hear it."

King urged banks to devise simpler products.

"We make financial prods more painful than they need to be, so we can give you advice. We've made them complex to create more value in the value chain."

Sitecore hosted the industry briefing in Melbourne.