“Audacious, provocative and ... controversial, Brett King BANK 2.0 PREDICTS THE END OF BANKING redefi nes the paradigm of consumer banking.” AS WE KNOW IT. BRETT KING Ten years ago, no one could have predicted that 90 per cent BRETT KING of daily transactions would be electronic, that Internet banking would provide more revenue than branches, that social network conversations would be the primary criteria for whether customers trust your brand, and that growth in mobile banking would be the fi nal nail in the coffi n of branch banking. Brett King explains: • why customer behaviour is so rapidly changing; BANK • how branches will evolve; • why cheques are disappearing; • why your mobile phone will replace your wallet; and BANK 2.0 • how bank marketing departments must be deconstructed. HOW CUSTOMER BEHAVIOUR BANK 2.0 shows how banks can adapt and thrive in this new environment. 2.0 AND TECHNOLOGY WILL CHANGE + THE FUTURE OF FINANCIAL “On the Web and on Mobile the customer isn’t king – he’s dictator. SERVICES_ Highly impatient, skeptical, cynical. Brett King understands deeply what drives this new hard-nosed customer. Banking professionals would do well to heed his advice.” Gerry McGovern, author of Killer Web Content Marshall Cavendish Business BUSINESS/BANKING ISBN 978-981-4302-07-4 ,!7IJ8B4-dacahe! Bank-Cover.indd 1 4/5/10 12:04:05 PM “BANK 2.0 will change the way you think about banking in the future. Audacious, provocative and sometimes controversial, Brett King redefi nes the paradigm of consumer banking. This compelling book is guaranteed to send your pulse racing and your mind searching for a new strategy for your bank.” Suvo Sarkar, Executive Vice President, Emirates NBD “BANK 2.0 represents a view of the future of bank retailing and channel strategies for the next decade. The fact that banks take so long to respond to these changes in the status quo means that any bank acting upon the key recommendations in this book will be a step ahead of the competition, and that surely is no bad thing. Now think what you could be if you acted upon all of the recommendations.” Chris Skinner, Chairman, Financial Services Club “BANK 2.0 is informed by Brett King’s analysis of trends in banking over many years. Brett’s work has led to signifi cant performance improvements in some very large and well respected fi nancial institutions. I’ve worked with Brett and I have seen some of the results; they explain why Brett is highly sought after as an authority on banking and how the industry is likely to evolve into the future.” Dr. Richard Petty, President, CPA Australia “On the Web and on Mobile the customer isn’t king—he’s dictator. Highly impatient, skeptical, cynical. Brett King understands deeply what drives this new hard-nosed customer. Banking professionals would do well to heed his advice.” Gerry McGovern, author of Killer Web Content 00 Bank p1-64 (09Feb2010).indd 1 4/5/10 12:30:08 PM “The impact of the Internet and mobile devices has made the rules in managing channels and how we reach customers a moving target. This book does something that no one I know has been able to do thus far —teach us to re-design our instincts fi rst and then our knowledge about how this moving target will evolve. With the correct instinct, we will be able to respond correctly to the rules as they change. I am very grateful to Brett for putting down to paper the instincts that he has been able to hone over the years. Brett is a true international; he is probably one of the few I know who can draw from personal examples from across Asia, where as much and maybe more innovations are taking place in fi nancial services, as anywhere else in the world.” Emmanuel Daniel, Chairman, The Asian Banker Journal “Creating more value for customers is a hallmark of successful and growing organisations. But the fi eld of competitive battle has changed. What customers value today is different from what they appreciated years ago, and will be very different once again in the rapidly unfolding future. BANK 2.0 brings together Brett King’s incomparable view of technology, strategy, customer value and delivering superior service. His insights are a “must read” for anyone who wants to attract and keep customers in the incredible years ahead.” Ron Kaufman, author and founder of UP Your Service! College 00 Bank p1-64 (09Feb2010).indd 2 4/5/10 12:30:08 PM BANK 2.0 HOW CUSTOMER BEHAVIOUR AND TECHNOLOGY WILL CHANGE THE FUTURE OF FINANCIAL SERVICES_ 00 Bank p1-64 (09Feb2010).indd 3 4/5/10 12:30:08 PM © 2010 Brett King and Marshall Cavendish (International) Asia Pte Ltd Project editor: Lee Mei Lin Designer: Steven Tan Cover art by OpalWorks Co. Ltd All content information in this book is correct at press time. Care has been taken to trace the ownership of any copyright material contained in the book. Photographs are used with permission and credit given to the photographer or copyright holder. This edition published 2010 by Marshall Cavendish Business An imprint of Marshall Cavendish International 1 New Industrial Road, Singapore 536196 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. Request for permission should be addressed to the Publisher, Marshall Cavendish International (Asia) Private Limited, 1 New Industrial Road, Singapore 536196. Tel: (65) 6213 9300. Fax: (65) 6285 4871. E-mail:[email protected]. Website: www.marshallcavendish.com/genref The publisher makes no representation or warranties with respect to the contents of this book, and specifi cally disclaims any implied warranties or merchantability or fi tness for any particular purpose, and shall in no events be liable for any loss of profi t or any other commercial damage, including but not limited to special, incidental, consequential, or other damages. Other Marshall Cavendish Offi ces Marshall Cavendish Ltd. PO Box 65829, London EC1P 1NY, UK • Marshall Cavendish Corporation. 99 White Plains Road, Tarrytown NY 10591-9001, USA • Marshall Cavendish International (Thailand) Co Ltd. 253 Asoke, 12th Flr, Sukhumvit 21 Road, Klongtoey Nua, Wattana, Bangkok 10110, Thailand • Marshall Cavendish (Malaysia) Sdn Bhd, Times Subang, Lot 46, Subang Hi-Tech Industrial Park, Batu Tiga, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia Marshall Cavendish is a trademark of Times Publishing Limited National Library Board Singapore Cataloguing in Publication Data King, Brett, 1968- Bank 2.0 : how customer behaviour and technology will change the future of fi nancial services / Brett King. – Singapore : Marshall Cavendish Business, 2010. p. cm. ISBN-13 : 978-981-4302-07-4 1. Banks and banking – Customer services. 2. Bank management. 3. Financial services industry. I. Title. HG1616.C87 332.17 -- dc22 OCN520278739 Printed in Singapore by Fabulous Printers Pte Ltd 00 Bank p1-64 (09Feb2010).indd 4 4/5/10 12:30:08 PM BANK 2.0 HOW CUSTOMER BEHAVIOUR AND TECHNOLOGY WILL CHANGE THE FUTURE OF FINANCIAL SERVICES_ BRETT KING 00 Bank p1-64 (09Feb2010).indd 5 4/5/10 12:30:09 PM 00 Bank p1-64 (09Feb2010).indd 6 4/5/10 12:30:09 PM To Beck, Hannah, Matthew and Thomas who are the reason for everything 00 Bank p1-64 (09Feb2010).indd 7 4/5/10 12:30:09 PM Contents Preface 14 Acknowledgements 17 Introduction 18 PART ONE: Changes in Customer Behaviour Chapter 1: What the Internet and “CrackBerry” Have Taught Customers Psychological impact 25 Process of diffusion 31 The three phases of behavioural disruption 34 Customer empowerment 37 Putting service back into fi nancial services 40 Key lessons 41 Chapter 2: Measuring the Customer Experience Channel silos 44 Organisation structure 48 Customers? Who are they again? 55 Conclusion and key lessons 63 PART TWO: Fixing the Broken Bits—Channel Improvement Chapter 3: Rebuilding the Branch One Customer at a Time The core function of the branch in the 21st century 69 Branch models emerging that will survive in the Bank 2.0 world 74 Branch improvements today 86 Key lessons 89 00 Bank p1-64 (09Feb2010).indd 8 4/5/10 12:30:09 PM Chapter 4: Please Hang Up and Try Again— Contact Centres and IVRs The rise of the call centre 94 Capitalising on sales opportunities 97 Staff turnover and employee engagement 102 Consistency and quality of communication 108 Quick access to the right information 114 Improving the “Invasive Virtual Resistance” system 118 Making new technologies pay 126 Going green 135 Outsourcing—the case for and against 137 Customer advocacy 141 Tactical channel improvement 144 Key lessons 145 Chapter 5: Web—More Than 10 Years Old ... and Still Broken The right mix 149 Findability 154 Usability 157 Value exchange and content scoring 165 Cross-sell to existing customers 172 Best practice website templates 177 Internet channel improvement today 182 Key lessons 188 00 Bank p1-64 (09Feb2010).indd 9 4/5/10 12:30:09 PM Chapter 6: Mobile—The New Internet and Death of Cash? From WAP to iPhone—the emergence of portable banking 190 Device platform—why Motorola failed, and why BlackBerry still might 194 Operating systems and software stacks—driving mobile application development 197 Needs and solutions—why mobile is a viable business 202 Interface—small screen, big possibilities 216 Revenue and savings opportunities 221 Key lessons 228 Chapter 7: ATM and Self-Service Banking—Convergence and Control Self-service banking—where it all started 231 Self-service—the promise and the reality 232 What about the revenue? 236