Retail authority Doug Stephens opened his Sept. 18 keynote address at the 2017 Bank Customer Experience in Chicago with a startling announcement.
Literally five minutes before taking the stage, he said, a friend had sent him a news story:
“Apparently this is breaking news as we speak,” Stephens said. “Apple made an announcement just minutes ago, apparently, that they are now looking at entering the banking world. … They were short on details but what they did say is that they intend to ‘reinvent the banking experience.’ They’re going to create an entirely new kind of platform.”
An entire ballroom full of bankers fell into stunned silence. Then, after a short pause, Stephens continued.
“The other thing I should tell you is that this, of course, is fake news. This is not true. … But tell me this: How many of you, even for just a second had your heart stop — just for a second?” The bankers in the room laughed weakly.
The initial response of the audience was a measure of the vulnerability traditional financial institutions currently feel, Stephens said.
This sense of vulnerability is generated not so much by other banks, but rather, by disruptive new players in other high-visibility verticals. Players like Uber, Tesla, Netflix, Google, Airbnb and, of course, Apple.
And the point is not necessarily that any of these companies is looking to get into the retail banking business. The point is that they are changing consumers’ opinions about what the retail banking business should be.
“The consumer is now measuring the performance of Bank A against Netflix, against Apple, against Uber, and against a host of other companies that are essentially changing our lives,” Stephens said.
And then, of course, there’s e-commerce. And Amazon.
“It wasn’t that long that people could dismiss Amazon as just this profitless nuisance that was growing its topline but didn’t make any money, so they were no threat,” Stephens said. “But now Amazon has posted eight straight quarters of growth and more and more of that growth now is coming from its retail business instead of its web services business.”
The engine behind the company’s retail business growth is Amazon Prime, a multifaceted membership service that is an “ever-expanding ecosystem of value,” Stephens said.
As companies like Amazon, China’s Alibaba and now Walmart (which recently purchased online retailer/delivery service Jet) are proving, the challenge is no longer to get people to buy things online.
“The challenge now for companies is to get the things that were buying to us in this ever-diminishing window of time,” Stephens said.
And one way Amazon has hit upon to shorten the window is through connected devices. Need toilet paper? Just tell Alexa to order it. Need milk? Push an order button on your fridge and you’ll have a fresh gallon in about an hour.
Running out of laundry detergent? Never mind. The chip in your washing machine noticed that you were running low and has already placed an auto reorder.
“We anticipate that by as early as 2025, 30 percent of everything you buy in the centers aisles of a grocery store will simply come to you via sensor replenishment,” Stephens said. “You will no longer go to the store and drag this stuff home.
“What this sort of indicates to me is that we’re moving towards this intelligent world; this world that is of aware of me and what I’m doing and what I need and it informs me as I go. And in that world, I think it’s going to become increasingly dissonant to receive a credit card or a bank balance statement … that looks like a financial report.”
So what do banks do to modernize and compete in this new, connected world? “Create remarkable experiences,” Stephens said.
And how do they do that?
Stephens listed five actions that all banks should seriously consider taking:
- Engage more of the consumer’s senses
“Think about it this way: It’s not about building a store, so much. It’s about building a story. It’s about giving the consumer the impression that they’re walking into an entirely different world. … What story do your branches tell? What do they say about you as a brand?”
- Create experiences that are unique
“The way … brands do this is by changing the script.” When customers walk into a store, they have a particular set of expectations about what they will experience. Great brands turn that expectation on its head.
- Personalize every interaction
“They always find something they can do, whether it’s the packaging or the service or product customization itself. But there is always some way that they make you feel that this was just for you.”
- Surprise people
“They add an element of surprise — something you didn’t expect. It could something very small like a note that you get after your transaction. It may be the packaging that the product comes in. It may be something major like the customization of the product … but there’s always a surprise.”
“Great brands I spoke to said it’s not good enough if we only deliver a great experience three days a week, or when we’re fully staffed, or when you come in with the right issue. We have to deliver all the time — 24/7, 365. And therefore, it’s not just about training, it’s about rehearsing. Imagine if you went to Cirque du Soleil and they said, ‘You know it sucks that you came in on a Wednesday because we were very short staffed, it wasn’t a very good show. Come back on Saturday and we’ll be much better.”
One insight from Stephens that carried particular relevance with his banking audience related to the way great brands think about their bricks-and-mortar space:
“Great brands don’t think of their physical space anymore as being the point of conversion. If it’s a bank, for example, they don’t think about somebody coming in and inquiring about investments or trying to close that deal right there and then. They look at their stores really as being the place where they create converts for their brand.
The idea of the physical space is to be the entry point, it’s the portal into everything that the brand can offer. And it really tries to galvanize a relationship with that consumer so that they will transact across any channel with that brand. More and more great brands are using their space that way.