Build better tools to build better customer relationships

Startups and fintech companies have been innovating and finding alternative ways of providing banking and financial products for a number of years now.

That means traditional banks are under threat — they cannot win by sitting behind a desk and waiting for customers to walk in. Taking a leaf from the innovators’ playbook is the way forward, yet throwing technology at the problem, by itself, is not an effective strategy.

Banks should remain true to their calling: building close engagement with customers and leveraging technology to do so, rather than focusing solely on more traditional manager-client, on-premises relationships. They can do so by better tapping into local norms and creating aesthetics that help form real bonds with their clients.

Take the first case, the failure to understand how local language and cultural norms can lead to a lower-than-expected take-up of certain banking products. Banks can begin by understanding why, for instance, there is a marked difference between the savings rate in different countries of a similar economic profile. In Japan, China, Scandinavia, for example, the rate is around 40% of disposable income, whereas the U.S. is closer to 10% in some years. Could cultural difference or language differences be a factor?

Keith Chen, a Yale economist, has suggested that a fundamental difference in the spoken language spoken itself may be a factor behind this. What is this fundamental difference? While the English language modifies the verb according to whether it is in the future or in the past, in Chinese, Japanese and Scandinavian, there is no such difference: Everything in those languages takes place in the same tense. English is a “future-based language,” according to Chen, whereas Chinese is “futureless.” Saving for retirement, a far-off event in the future, may well be influenced by this linguistic distinction.

Knowing this type of thing can only enhance a bank’s ability to engage with its customers in innovative ways. One suggestion for tackling this savings issue, for example, is to try to break down the distinction between the current state and future state in the mind of the customer. That could include an app that literally portrays a version of your future self, including how you will look when you’re 70, how your children and even grandchildren will look, and what they’ll be doing. The actualization of the future self could act as a nudge to help make the future a more real part of your present — and so make the decision to invest for that future resonate more authentically.

In the second case, research and human experience also has indicated the existence of a universal language of aesthetics that product designers would do well to tap into to engage the emotional side of the consumer that makes for a longer-lasting relationship.

The British industrial designer Richard Seymour has spoken about how design can channel our innate emotional responses to a certain aesthetic sense all of us have. One example: the way that the interior car light gradually darkens upon closing the car door. Seymour says about this, “I remember sitting there the first time that happened, thinking, this is fantastic. In fact, I've never found anybody that doesn't like the light that goes out slowly. I thought, well what the hell's that about?” Seymour connects the transition to another experience, the exciting anticipation we experience when the lights go out slowly in a movie theater. Perhaps, it also connects us to our experience when we watch the sun’s last embers of the day as it that slowly disappears over the horizon and day turns to night. Connecting to this human experience through the product helps to connect more closely with the customer.

How can banks adapt a similar mindset? Today it is likely to be in the user interface of your bank account on your mobile phone. How can that be made to respond more clearly to our emotions? The investments made by some banks into the user interface increasingly reflects this understanding. Moreover, allowing customers to sign into their accounts just by a wink or a nod at their phone, as some banks have begun to do with facial recognition technology, has the potential to increase the emotional bond between banks and their customers. Voice technology that is done in a cognitive and intelligent way, is another way to create such long-lasting bonds.

The trend toward the use of symbols and emojis is another example of this universal tendency. Banks would do well to leverage this trend to buttress developing relationships with consumers in this new world.

Creating an emotional bond with customers and helping customers create an emotion bond with their future selves are two important ways that banks can continue to build strong relationships with their clients even during this period of technological upheaval and disruption.