Frequently I find myself debating pundits who say bankers are behind the curve in changing their business models. While many of them make valid points about the need for banks to meet customers’ expectations for self-service technology, some commentators demanding drastic changes are only 50% correct about claims they make with 100% certainty.
Most bankers I know take the constant pressure to blow up their business models with a grain of salt. Bankers aren’t in denial about the technologically demanding environment. However, they are in business; unlike commentators, the impact of their decisions is not hypothetical. They have real businesses to protect, run and grow today.
The need for creative destruction is not being debated. No one disputes the ideas that technology improves, customer expectations change, products morph and business models evolve. Around the time of the first internet bubble, Bill Gates encapsulated the need for creative destruction when he said: “In three years, every product my company makes will be obsolete. The only question is whether we will make them obsolete or somebody else will.”
Contrary to the “banks are dinosaurs” stereotype, creative destruction is indeed happening in thousands of banks across the country. However, the transformation is happening at various speeds.
The challenge for any bank is managing and controlling the destruction of existing practices on the institution’s way to developing more attractive, efficient and (hopefully) profitable models. It has been my experience that many banks have solid plans and great intentions, but still struggle with gaining traction with their new service models.
Creative destruction sounds hip until a bank makes a misstep and finds the only things it is destructing are customer relationships and employee morale. Most tenured bankers have had experiences with changes that were well-conceived yet failed to generate the results expected. The status quo has serious pull.
But that doesn’t mean game over.
An example I have used to explain that phenomenon is the rollout of self-service airport ticket kiosks years ago. When they were introduced, no one wanted to use them. Folks would stand five-deep in a line to see an employee behind the counter instead of trying a self-service kiosk. Frankly, the employees didn’t seem to mind. Many looked at those kiosks as competition for their jobs.
Eventually, the airlines convinced employees that the kiosks were a useful tool, not a replacement for their jobs. Counter employees began stepping out and physically showing customers how to use them. After about a year or so, customer preferences inverted.
Today, counter personnel perform fewer routine tasks. This shift provides them with a greater availability to deal with more demanding customer issues. The technology that once seemed to threaten employees is now seen as an invaluable resource for their jobs.
There is a difference today between what many bank customers are technically able to do with self-service technologies and what they actually feel comfortable doing with those technologies. But as the example from the airline industry shows, customers’ unease does not preclude their eventually developing a comfort with or preference for the time-saving options banks give them.
Getting customers to understand, accept and willingly adopt the changes we make is critical. However, that really is Step B. Too often, Step A is overlooked. The first step is helping our own employees understand, accept and willingly promote the changes a bank is implementing. The odds of success for just about any changes to products, strategies, business models, etc. are directly tied to whether our teams are truly on board.
Being on board is more than simply following instructions. Being on board means that they understand not just the changes being made, but why they are being made. It means that our teams realize how changes affect their roles as well as how their roles are tied to the future success of the company.
Ultimately, we need to show our frontline teams that changes are being made for them and not just to them. Companies that meet customers’ evolving preferences in the most proficient ways possible are those that can also offer employees career and growth opportunities in the future.
When employees recognize this, our teams are far more willing and able to show our customers how new systems and forms of self-service are actually geared to benefit customers, not burden them.
There was a time in which self-service in banking was seen as mostly benefiting the bank; the bank was seen as offloading tasks onto customers. When handled properly today, promoting self-service features is perceived as something banks do for their customers, not to their customers.
Changes are inevitable. The success of any bank’s changes, however, will depend on how able leaders are in helping their teams — and ultimately their customers — understand that changes are being made for their benefit, not at their expense.