[Finance] How Banks Can Offer Self-Service While Avoiding Disintermediation

Posted by Kenny S. on Jan 9, 2018 9:50:28 AM

3 minute read

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“I can do it myself.”

I often hear these words from my increasingly independent two-year-old son. But as it turns out, customers in virtually every market and industry are saying much the same thing through their demands for an increase in self-service options.

In fact, Gartner has predicted that by 2020 customers will manage 85% of their interactions without any assistance from a customer service representative.

The banking industry isn’t exempt from this trend. Bank of America, Citigroup and JPMorgan have shut down numerous branches and moved towards more advanced technologies  which enable customers to serve themselves.

Are Banks Shooting Themselves in the Foot?

In an attempt to offer expanded self-service features to their customers, some banks are partnering with fintech startups. In a sense, these newer outfits serve as extensions of the better-established banking platforms, allowing for new technology to be fueled by the resources of the more prominent banks.

The agility of fintech permits financial juggernauts to become more nimble and offer more bespoke solutions to their existing customers.

This raises a big problem, however: disintermediation.

As banks push their customers toward third-party solutions, they invariably write themselves out of the story. As customers spend more time with fintech brand X, they lose touch with traditional banking brand Y.

So how can banks take advantage of fintech to provide more personalized self-service solutions to their customers without diminishing their brand?

By Using the Power of Community to Broaden ‘Self-Service’.

The answer, of course, isn't to back away from fintech. Nor is it to attempt to beat the startups at their own game. Instead, banks must embrace these new technologies  and offset their disintermediating impact with a healthy dose of online community.

By developing and utilizing a robust online community of customers and advocates, banks enable their customers to serve themselves by serving one another.

To be sure, ‘community’ isn’t a panacea for every challenge faced by financial services in the digital age. Nevertheless, there’s power in numbers, which–when wielded appropriately–can strengthen a bank’s brand without necessitating more than just a modicum of input and direction.

The reality is, a community can't conduct an automated spending analysis. A forum isn’t able to monitor your account for suspicious activity. A user-generated knowledge base isn’t able to notify you how much more you paid in bank fees this month and offer tailored product recommendations. That’s where evolving financial technologies come in.

But what a community can do is help customers find answers to the mundane questions that take up valuable call-center time, like: how do I open a new account, how do I set up automatic bill payment, how do I transfer money between accounts?

More importantly, digital communities offer space for customers to seek personalized advice and offer contextualized solutions with limited labor input from the bank itself.

Consider this thread on asset location as one small example.

In a nutshell, using online community to help customers serve themselves won’t accomplish everything a local branch or an online banking platform would. But  it will give users a branded platform for accessing financial advice that keeps their eyes on the bank and not on some third party fintech provider.

Topics: Fintech

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