Consumers in the digital age don’t really embark on commerce journeys anymore, so much as they find themselves always on one. This is a situation that Chief Marketing Officer Devon Watson at Diebold Nixdorf calls the “constant stream of commerce,” which means consumers are bombarded with content of all kinds from brands and merchants, all constantly vying for their attention.
The mistake financial services players have made in the past, Watson told Karen Webster in a recent conversation, is somehow viewing themselves as a separate entity from that constant stream — touching it only with the “narrower bits and pieces” of their specific offerings.
“The example I like to give,” Watson said, “is if you ask your average financial services provider about a customer journey to get a loan, they will be able to talk a lot about the onboarding process or even about how they’ve solved the entire process in an end-to-end omnichannel way.”
What they perhaps aren’t seeing is the fact that the loan is part of a bigger journey called starting a business. While banks are only thinking about underwriting, other FinTech players are thinking about that full journey — and are capturing the customers who will then open the loan “along the way” with the player that brings them that fuller list of relevant services. As banks are thinking in narrow terms, competitors in retail and technology are thinking broadly as end-to-end facilitators of total customer journeys.
The first hurdle for financial services providers to overcome, Watson told Webster, was mindset — and accepting the reality that, in the digital age, they must look at a much bigger customer journey. Engagement models need to be wholly reconsidered, he explained, and there is good news on that front.
“That is the piece of this that we saw people really catching on to in 2018, and will, hopefully, double down on in 2019,” he said.
The coming challenge for financial services providers, Watson noted, will be in retraining people — both the customers and the financial services workers — and in resetting the tech.
The Possibilities For People
On the customer side, that retraining will require some undoing of work that has been ongoing in banking over the last several years, as providers have sought to reduce overhead costs by moving customers away from the branch and onto the mobile and online banking site.
“We have now trained the marketplace, especially in North America, to be a DIY market,” Watson said, noting that this DIY marketplace in consumer financial services exists alongside low financial literacy on an individual basis.
There is an opportunity, he told Webster, to retrain consumers on what a bank is for and how they can use it, as well as a change to redeploy the employee base toward services that are value-added.
“I don’t know if that is possible, but it sure would be a shame if we couldn't collectively figure it out,” he added.
The other big change that must come on the people side, Watson noted, is a greater willingness in general to think outside-the-box and in a more experimental way within banking. That will be challenging because it will involve a change in how banks make decisions — and reckon with things like failure.
“There is this predilection toward command and control,” Watson said. “So, you will see financial services institutions set up these agile think tanks, but then not let them out to the outside world because central control has to approve all of their ideas. The only way to get past that is to relinquish some of that control and decentralize the ability to take on a little bit of risk.”
Those risks, he noted, need guard rails in place. Banks are heavily regulated, and are relied upon to be consistent and safe above all, but there has to be room for experiments going forward — and for data to be gathered and analyzed.
That flexibility will be particularly important as financial services institutions are facing their next big challenge: resetting their technology.
The Two Big Shifts In Technology
As of 2019, financial services institutions first need to adopt application program interface (API) infrastructures that give them the ability to both partner and integrate so they can expand their service menus at will, Watson told Webster. The average financial services provider isn’t fully wired for that today, he said, and it needs to happen.
The second big change will be around data, he noted, and how banks are tapping into it to build their offerings.
“We do a good job of using data to look at historical things and to plan some marketing campaigns,” Watson said. “We don’t use it to personalize the experience in real time, even though, when we experiment with doing that, the payoff is huge.”
These personalized attempts at targeting aren’t necessarily complex. Targeted ATM advertisements, he explained, have the highest click-through rates of any channel, and are basically free to the banks offering them up.
“There are a lot of these high-engagement things that can be done using the data in the background. And that data can be used to better drive their journey from all points, because it offers clear insight into how to best engage this customer,” he said.
The End Of Pure Play
The question — as the 20-teens are coming to a close — isn’t about making a choice between physical and digital. That's because, Watson said, the dichotomy doesn’t make sense anymore, as we are entering the end of the pure-play era — it no longer makes sense for any entity to define itself as purely online or offline because those models just don’t make sense at scale anymore.
“You have to be both these days, and even the leading thinkers in the digital realm are realizing the physical channels are very differentiating,” Watson said.
Physical channels, he noted, are powerful tools on that journey to scale, but they are also highly challenging to manage — a fact Diebold is intimately familiar with, given its core business in ATMs.
“We think about this in terms of how do you accelerate your physical distribution channels to close the gap on the pace of digital. That has always been one of the sticking points. How do I get my physical channels to behave so I can tweak and innovate them as fast as I can my digital channels?” he said.
For Diebold, that means when it works with customers to help them “stitch all of this together,” and as it considers its consumers’ journeys, it can modify both the physical and digital approach in a way that ties them to each other. Those ties can be multifaceted. Cash, for example, though often not counted as part of the digital commerce stream, has a role to play because it is so consistent. The average customer, he noted, takes cash out of an ATM twice a month.
“And shame on us as an industry if we don’t use that opportunity for a value-add,” he said.
That value-add can be a bill pay reminder or a service offering. The goal, he noted, is to move the encounter from being merely an opportunity to dispense cash and give it a chance to ride the ongoing commerce stream alongside their customers.
“These moments of interaction,” Watson said, “especially when we are all competing for the consumer attention versus Amazon, Netflix and anyone else, those are really precious and really expensive to try to get back.”