According to Sebastian
Siemiatkowski, CEO of Klarna, which is one of the leading Swedish FinTech
unicorns, banks need to be customer centric, not just talk about it. But in
practice, we see little change in the banks’ approach. That’s why we often hear
about developing alliances between banks and FinTech platforms. Will friends
become enemies?
“Customer-centricity? Yeah, right” - this title of an article by Deloitte shows precisely what
retail customers have to deal with when it comes to treating the client as a
midpoint of traditional financial institutions. There are a few reasons why
that is.
In banks we trust
First, traditional banks as financial institutions have
developed a strong heritage of procedures Not only in terms of workflow,
compliance, and products but also in their corporate culture. It is not easy to
bring down the walls of tradition and create a climate of openness to novelty
and innovation. It requires introducing a brand new set of beliefs executed by
top management. Even these execution-driven visionaries, however, must face
these decades-old walls because fiddling with these walls means gambling with a
bank’s most valuable assets: trust and reputation.
Banks have worked for hundreds of years to gain this
reputation, which remains at the center of their business models. The history
of their products is often impressive, with accounts and saving deposits
enjoying longer lives than individuals do. Moreover, banks leverage the
credibility of other institutions by mastering a “regulatory tsunami” to
receive licences, obey additional and separate regulations, and their deposits
are guaranteed by the state.
All of this trust projected from the state makes banks
appear credible and trustworthy to their consumers. This is one of the
economic laws of contract theory, called: “signalling theory”. It
describes how trust between cooperative partners starts before they know each
other very well. The approach can be applied to many situations in our lives,
i.e. having a recruiter verify our experiences, degrees, networking, etc.if we
want him or her to help us find employment. As she or he does not know us,
there is a search for signals, like a highly rated educational institution or a
company with a strong brand that we have studied at or worked for previously.
Signalling theory indicates that potentially somebody else did their
due-diligence on us, so we have to be good in case a strong brand has accepted
our application. When all of the candidates are brilliant, it still does
not mean we are a perfect match for the company, but there is a high chance
that we might be.
On the other hand, when we have a major career change and
start doing something new, we run into more unexpected developments than when
you were doing the job that you are the expert at. Banks and other traditional
financial providers like Insurances or Structural funds are in the very same
situation. If it is an employee suddenly out of their depth, you can simply
say, “Oops, sorry!” and move on, but for banks, this is far from satisfactory.
Click
here for the original article from Forbes.