Banks are rethinking their business in the light of social networks and their customers’ use of mobile devices. They are also looking at multi-channel business models that combine online and branch services.
L'Atelier: Are mobile and the social networks just changing the way customers interact with their banks, or are they changing the business model in a more fundamental way?
Geoffrey Laloux: These new factors are really going to trigger profound changes in the banking business. However, there won’t be any visible change in the immediate future, because what’s needed is a fundamental rethink of the way a bank works and its business model, but there’s certainly a new dimension here which will become part of the banking
business. A banker will increasingly have to learn to communicate. The basic business is banking, but s/he’ll have to become a ‘banking communicator’. S/he’ll have to become comfortable with the new media, the social networks and s/he’ll also have to learn to respond to comments or criticism at times.
L'Atelier: Will these new channels help banks get closer to their customers?
Geoffrey Laloux: From a practical point of view, yes, from the instant when you can use your smartphone to carry out account transactions. And also when it comes to communication as well, making an appointment, for instance. I see it every day in the way I use my bank’s services. I use only online channels to communicate with my bank, but there’s a total disconnect between what I do online and what happens at the branch. Staff at the branch mostly have no idea at all who their customers are and no idea of the products their customer has signed up to via the online channels. These are still two entirely separate worlds. The goal should be to achieve a multi-channel model which enables smooth communication between what takes place online and what goes on at the branch. So you could for instance order a bank card online and go and pick it up at the branch, or ask some questions at the branch and receive the answers by email. This will call for a radical reorganisation at the bank. We’re now seeing different physical layouts at banks, with areas becoming open spaces or cafés that alter the traditional approach to the customer. The aim is to be friendlier, more interactive, more flexible, and to create a more personal relationship.
L'Atelier: Will social networks play a role in helping bankers to get to know their customers better?
Geoffrey Laloux: Yes, in theory, that’s a role they could play, but in practical terms it would raise concerns about an explosion of data. We’re going to see more and more channels giving us customer information. The problem will be just how to use that information. You’ll need to have the right software and people, and basically you’ll need products that can be tailored according to your dealings with your customer. If I find I have 25 or 50 different types of customer, but only one product to offer, is this hyper-segmentation really going to help me? So banking also needs to evolve in terms of products. But the question is, will it be profitable and indeed is it technically possible to do this kind of thing?
L'Atelier: When it comes to new banking models, we see an ever-increasing number of online banks such as Movenbank, Simple, and Mymoney. Could this type of banking model turn the banking sector upside down in the coming years?
Geoffrey Laloux: I have a feeling that this purely online banking model will remain relatively cosmetic. Yes, banks will be setting up new communication channels. But I don’t think that this will alter the banker-customer relationship, as it’s mainly a question of branding – it helps a bank to burnish its image. But even though a bank may perhaps become younger-looking and more accessible, the banking business basically remains the same - you open an account online, you request a loan online - so I don’t really think that using new channels will represent a fundamental revolution. It’s the ‘how’ of banking that will evolve. Banks will appear, at least, to be more friendly, more available, and closer to the customer.