Today I’m in Barcelona, giving the opening keynote at the EFMA Channels and Customer Experience Forum, an event where the finance sector looks at best practice, today and tomorrow, in customer relations. My talk is about the impact of technology on the future of banking, particularly with regards to that critical interface between bank and customer. What does it look like in the future? Here’s what I will say.
You are all cyborgs. Every one of you. You might not know it. There may be no microchips under your skin. You might not be able to lift a car over your head like Steve Austin, the 6 million dollar man, and you might not be on mission to wipe out humanity like the Terminator. But you’re a cyborg. We all are.
We are all augmented by technology. Don’t believe me? How did you get here this morning? Who used a mapping application on their phone? Who knew where to be and when because of their digital diary? Who has already taken a photo to share?
These technologies are all augmentations of our minds and bodies. They improve our sense of direction, our memories, our communications skills.
Now most of us don’t realise that we are cyborgs. It has rather crept up on us. Because no-one has suggested surgery to implant something in our bodies, we don’t realise. But the interface between us and our devices is now so slick, so easy, that we don’t need microchips under the skin to augment our minds. We just need a high resolution display and a few taps of our fingers on the screen.
In many ways this is nothing new. Human beings have always used technology to amplify their capabilities. Go back three and a half million years and you can find evidence of our ancestors using tools to augment their bodies. Sharpened stones for butchery. Maybe a million years ago we were controlling fire to help us prepare food. We created language to augment our communications. We are a race of toolmakers. It’s our defining trait. So it should be no surprise that we continue to augment ourselves in every field of our endeavour, including banking.
As human beings we use our understanding of the world to lower the friction in our lives. To make things easier. Technology is life’s lubricant, smoothing our passage through the day. (Please don’t google that phrase without turning on Safe Search by the way. What comes up is NSFW).
The challenge this presents is that sometimes friction is good. In the past, overcoming friction often meant deploying people to talk to people. That solved problems but it also built relationships and trust. The more that we lower friction by replacing human beings with more efficient machines, the fewer opportunities we have for this sort of interaction. And the less control that we have over the relationship, both as banks and as consumers.
Think about the buying cycle for a second, the classic five step model of a purchase that we all go through when we buy something new. We recognise a need: “these jeans are looking a bit worn.” We do some research: “Does my bum look big in these?” We compare the options: “Who has the best price?” And we make a decision: “I look great in these!” Then we get home and evaluate our purchase: “Oh, my bum does look big in these.”
Right now machines assist us with some of these steps. Search engines and personalised shopping websites help us to find and compare options. Slick checkout procedures take the friction out of the purchase. In just a few years though, machines could be doing much more than helping us with these processes. They could be doing all five steps autonomously.
Imagine a world where you have a personal AI assistant. One that collects data about you and your world through wearable technology and uses it to make decisions on your behalf. The camera in your smart glasses captures when you’re running out of things. It could be cereal, or tins of tomatoes, or it could be that it notices those jeans are getting worn. It knows how you react to different items, sensing your heart rate, breathing, and galvanic skin response when you taste certain foods, or look at yourself in the mirror. It knows your social graph. It knows where you have shopped before. And with limited discretion it takes decisions and buys things for you. When they arrive, it captures your feelings about the purchase using the same sensing technology.
This is coming. Now take this model and apply it to banking. Apply it to every financial product. Products that we are carefully stripping the friction from. Products that might evoke little emotion. Products that to the consumer are increasingly just data. Think about how easily and frequently an AI assistant could switch bank accounts, or credit cards, or mortgage provider, or insurance company, if it was operating in the best interests of its owner.
This sounds bad. In fact it sounds like the churn apocalypse. But it ignores something about human beings. Sometimes we do care about who we do business with. Sometimes we do want a relationship with a company or brand. We want trust and quality more than we want the absolute lowest price. We want an arm around our shoulders at the important times.
Take the music industry as an example. Music buying has shifted progressively over the last fifteen years to the lowest common denominator: a single subscription for unlimited streaming. What we used to call, when this idea was still a dream back in the early noughties, the ‘celestial jukebox’. But alongside this, we have increased our engagement with the richest and most visceral forms of music consumption: live music and vinyl. 80% of the time we just want it to be there, automatic and ephemeral. But 20% of the time we want a rich, engaging, human experience.
The same thing is true with banking and finance. 80% of the time we just want it to be invisible, automatic, and hassle free. 80% of the time I don’t think we care where the money comes from and who it goes to, as long as we get what we want. But 20% of the time we want that richer, human experience. And this is what makes brands sticky in this market. This is the good friction.
The challenge for you is identifying what is the good friction and what is the bad. What do we extend and what do we eliminate. Ensure that you oil the chain and not the brakes.
In summary then, humans have always sought to lower friction in their lives and we always will. Technology is our lubricant. Automation & augmentation are coming, for banks and customers, potentially reducing many bank services to nothing but APIs and data. This creates a competitive opportunity for you to be the bank that has eliminated the bad friction. But you need to ensure that you keep, and even extend the good friction, the interactions that build trust & demonstrate empathy.