This time it's personal


5 December 2011


Personalised – and localised – service is vital if banks are going to earn customer loyalty in the future. The solution, according to Gartner’s research director Stessa Cohen, is personal financial management. Here, she discusses with Future Banking why these financial institutions should implement PFM systems to see eye-to-eye with their customers.


While the look and function of future bank branches will vary according to many factors, including location, one pursuit is the ability to cater to every kind of assistance in every area, and the agility to effectively manage those assistances. Whether it's in the middle of London or in the middle of nowhere, banks need to identify with their customers at every level. And the means to reach those goals is through personal financial management (PFM), which fundamentally turns the motivation of banking on its head by delivering data and information of cash flow and bill payments in ways that help the customer more than the bank itself.

"If you're going into a rural area, you have different needs, like educating people and overcoming misgivings about trusting a bank," says Stessa Cohen, research director at Gartner. "I think the challenge for banks is to look at how to view location in context to enable customers to construct their own interaction with their bank.

"At the heart of these initiatives is implementing intuitive technology that people are already accustomed to. "Let's face it," says Cohen, "banking is not the reason you wake up in the morning; it's not the reason you're on the internet. All the data shows that consumers spend between three and six minutes at their bank website and 45 minutes or more a day on Facebook. Trying to change that is not the goal; it's reaching people where they are and understanding their location in context - the technology they're using, the device, the kind of access, the complexity of transactions - and allowing them to operate by virtue of convenience."

"Let's face it, banking is not the reason you're on the internet. All the data shows that consumers spend between three and six minutes at their bank website and 45 minutes or more a day on Facebook."

Therefore the flexibility of the bank has to parallel the flexibility of the customer, in that a transaction might start on a mobile and end on a laptop or iPad later on. While that kind of broken transaction is nothing new, it means that the bank can't hard-wire transactions past workflows, and it must be forgiving and understanding that people have different ways of doing things. Banks can't dictate to customers in the traditional way anymore.

They have to be ready with technology that's open enough to push the right kinds of products and services to various locations, workflows and transactions. Banks, according to Cohen, have to understand that this is not simply online banking, pushing what banks think people want and use. People function in a much more fluid and multifaceted way than they did a few years ago, and banking has to flow with those changes.

Social networking

Naturally, one of the principal changes is social networking, which Cohen sees as another way of doing online banking. "I think banks have to look at [social networking] as going to a new town square," she says. "Whatever the social network is, isn't that another town square? And if you don't have the technology that enables you to go to wherever your customers are, it's going to be as bad as not building a brick-and-mortar branch in the hot new area where all the rich kids live."

It's also critical for banks to realise that social networks mean different things to different people in that teenagers use Facebook differently to their parents, so applying financial services and online banking on social networks in the same way won't be effective. Nevertheless, there's a mutual grasp of social networks across the generations, and funds, for instance, can be transferred through Facebook pages. "Parents already use online banking so they get it," says Cohen. "Also, the products and services a customer has then become ways to advertise to friends and relatives, which is the primary way people learn about financial services."

According to Cohen, the future for banks involves them not only understanding but also capitalising on new segments, not just the traditional ones. Additionally, by looking at people as individuals, and helping to solve their problems, they can repair some of the trust lost in the wake of the financial crisis. But it won't happen overnight. "It's costly to give personalised service," says Cohen, "which is why banks have to look at technology to enable them to produce personalisation over and over again, not in a massive way to make it impersonal, but systems that can analyse down to an individual's level."

Cloudy skies

One way forward is to engage with cloud-based services to deliver more personalisation, which makes it easier to test new services and measure how well they work. Another is customer data integration, which leverages data and shows CRM solutions and customer information.

One prominent issue, however, is that of security and its direct link to customer trust. Cohen believes, through the research Gartner publishes, that online banking security is not as good as it could be. "But on the flip side," she says, "consumers don't want to have longer pass codes or additional gadgets, so that's a problem. I think one-time pass reach through your mobile could be a bridge to that, but there are still a lot of security issues."

Banks are also treading cautiously toward developments such as social media because of regulatory concerns. "It's pretty clear that the regulators are going to clamp down on anybody around this," says Cohen. "I think for some banks, private social networks might be a way for them to engage with certain customers in a way that doesn't allow everybody visibility and they can control things. But they have to think carefully about what kind of customers and what kind of activities to focus on."

Personal financial management is the key to online banking in the 21st century, Stessa Cohen believes.
Stessa Cohen is a research director at Gartner, where she is part of the Banking Industry Advisory Service.