The Bankwatch

Tracking the consumer evolution of financial services

The power of internet, and drivers of change

Internet has flattened old hierarchies, made information freely available, and eliminated distance. This is a revolutionary driver of customer expectations, and customer buying methods. It has also had the impact of opening previously closed kimono’s and exposed old style advertising for what it is … management of peoples opinions. Internet has allowed people to form their own opinions, and act on them.  That empowerment is fundamental to many changes we see now.

One market driver is therefore ‘customer empowerment’.

Another driver, comes from the way customers are continually required to manage their own affairs, at the ATM, the pin pad, online banking, bill payments, office card access, airport check in, car rental drop off, quick hotel checkout, travel booking. This frequency of self service is now pervasive and required several times daily for everyone. Organizations have become impersonal and are represented by their self service touch points. Self service has been underway for a long time, and internet has only sped up that process for Banks’.

Customers appreciate self service, but the sheer pervasiveness of it, means customers are continually, comparing and evaluating it. Without realizing it, customers are comparing your bill payment web process flow, to the Hilton quick check out, the credit card pin pad machine to your ATM, etc etc. People do not interact with products; they interact with self service touch points, and that is where the value is experienced, or value is lost.

So our other main driver is the advent of ‘the experiential economy’.

While Banking has benefited from technology advances in information management, and elimination of human processes, it has absolutely not addressed these drivers.  Bank motivation has been entirely financial driven by the vagaries of the quarterly announcements and the impact on stock prices.

Banking has benefited from detailed analysis of customer behavior allowing enormous profits on credit cards through targeted marketing, and portfolio management of card holders supported by high interest rates.  However banking has suffered from having to bear the additional costs associated with the new technologies, and in particular the plethora of new channels, including direct mail, ATM, telephone banking, online banking, and disruption in traditional marketing channels.

Relevance to Bankwatch

How has your Bank adapted to customer empowerment within the online experiential economy?  This would involve re-thinking marketing tactics, site design, and even branch personnel training and tools.

Written by Colin Henderson

September 4, 2008 at 15:03

2 Responses

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  1. One of the things not discussed in this article were offshore banking and investing. With the rise of the internet, no type of bank has benefited. The ease with which an offshore bank account can be started and the fast speed with which information can now be viewed makes them as fast as any domestic bank. This coupled with higher returns makes them have a very competitive product.

    Frank Miller

    Frank Miller

    September 4, 2008 at 17:33

  2. […] things were before.  What better opportunity to rethink strategy.  We are now in a period of an experential economy, powered by customer empowerment.  Internet has seen to that and that change is also […]

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