I'm having this conversation about what a digital bank is all about and suddenly a light switches on.
This light goes to the core of why I keep saying that digital banks are built upon digital infrastructure, and not an evolution of channels to be another one built upon existing infrastructure.
The light bulb moment goes like this.
Customer engagement in a digital world
In the new world, the customer will first engage with the bank digitally.
It will come from some point of contact through their social media.
A friend likes the bank on Facebook or tweets about them.
It’s something complementary like: “just got a loan with digibank”, and so you decide to have a look at digibank.
You find that digibank has good interest rates, a nice mobile look and feel so you register with them an interest.
The digibank asks you to download the app or like them on Facebook to get relevant deals and offers, so you do both.
The app asks if you will accept push notifications, which you accept.
At this point, if the bank is any good, you are hooked.
You are an acquired customer, as there’s no way you’re going to tell the bank to go away when you see what happens next.
First, the bank starts to send you interesting things based upon your digital footprint.
It knows that you like Coldplay from your Facebook Likes, so you get a push to buy Coldplay tickets this Friday at 9 a.m. ... or would you like digibank to do it for you?
You get a push saying that, as you’re walking into town today, would you like a cappuccino at Starbucks?
Half price if you say yes (and by the way, you’ve just signed up to Starbucks’ loyalty program and oh, of course you don’t have to pay for the coffee, it’s all done through your account automatically).
And hey, you know that BMW you were lusting over online last night on Google - yes,you were searching and looking - well hey, you can afford it, based upon this financing plan.
I’m not even a customer of digibank -- I just downloaded the app for heavens’ sake - but I like the way they talk, so ok, maybe I’ll give you a try.
The KYC is immediate - the bank just asks me to send a photo of my utility bill and passport or drivers’ licence - and they ask if I want to switch or just try us out?
I say try you out, and they ask for $100 deposit just to show what they can do.
Wow! Digibank immediately credits my account with $125 - $25 is my try-out welcome gift (they’ll give me another $250 if I switch) - and off we go.
I start getting more and more relevant push notifications:
- Use Uber now, and your taxi is 25% discounted (they know I’m walking to a meeting and will be late)
- Cheap tickets for the Lakers tonight (they know I like them from my Facebook likes)
- Take out a digiloan up to $2500 and we’ll credit your account with the cash within 5 minutes (they can tell I’m about to go overdrawn with my main bank account)
After a week of this, I think they’re pretty cool, amazingly perceptive and a little scary, so I decide to check them out properly.
I want to see how they behave in real-life.
Do they have a branch?
They don’t have many but, as we’re all urbanites these days (everyone is moving to cities aren’t they?), they have two branches near where I work.
I go to both.
In the first one, the concierge says “hello, this is your first visit to digibank I believe. Welcome. What can we do for you?”
I ask him how he knows this is my first visit, and he lets me into the secret: “your app told me”.
I tell him that this is a bit scary, and he says: “well Chris - may I call you Chris? - let me show you the privacy settings on your app and let’s change them to suit your style”.
I then get a run through the app and how it all works. Fantastic. I change the ‘privacy’ settings to ‘only personalise push notifications’ and switch off the general ‘always greet personally everywhere’ option.
I go to the other branch to see if it works and, sure enough, the concierge here says: “welcome to digibank. What can we do for you today?”
I like these guys.
The scenario would build and build until my mortgage, pension, loans, investments and everything else is with digibank ... but the one thing here, and the reason for writing about it, is that I’ve just turned the bank relationship on its head.
My start point is through my social community via social media, so digibank has to reach me through the social community.
Digibank is then leveraging big data consistently across all touch points to be relevant to me. They are accessing and using my complete digital footprint to gain a relationship with me. It is how they know about Coldplay, the Lakers, my meeting and location-based habits.
Finally, digibank’s human interactions are fully supported by information from my digital footprint which is why these interactions are exceptional.
Now, the only way to deliver that capability is by having everything built upon, and sitting on top of, a digital infrastructure designed for the internet age.
Hence, when a bank says that digital as a channel to add to their existing infrastructure, they’ve got it 1000% wrong.
After all digibank starts with digital community relationships and ends with branch based relationships. Most existing banks start with branch and end with digital.
Digibank is designed for the digital distribution of data in a global network; most banks are built for the physical distribution of paper in a local network.
And digibank is focused upon leveraging every point of the network to maximise the relationship 24*7. Most banks are focused upon just having a relationship.
That’s why the ones that are true digital banks, and just banks with digital channels, will win.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...