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A banking story

Old Way:

A colleague of mine gave me this story regarding dealing with a large US bank. The story has a number of points where things could be different, so bear with me.

He had recently sold his house and, temporarily, moved into a Condo while depositing his equity in his bank accounts. When he deposited the (large) check his bank asked him if he had a personal banker and he said no. They then deposited the check. At the same time he closed the (unused) line of equity he had on the house with his bank- he had sold the house, remember, so was obliged to do so. Meanwhile he had lost his ATM card and a check he had sent through online banking failed to arrive. In addition his signature strip on his credit card was so worn that he wanted to get a replacement. So now he had four things he wanted to do:

  • Stop the payment on the lost check
  • Get a new ATM card
  • Get a new credit card
  • Change his address

So he called the bank. The person he spoke to could only help with the new ATM card - he was told that he had to call a different group for the new credit card, the online banking team for the stop payment and some third location to change his address. He only got through a couple of these, asking each person he spoke with to navigate him on through the banks phone systems, before running out of time. At this point he called up, got himself a private banker (thanks to the temporarily large balance in his account) and the private banker, it turned out, could do everything.

This experience is pretty customer-hostile and is leaking opportunity, and piling up retention risk, at a rapid clip. Let's think about how this could have gone:

EDM Way:

  1. When he makes the deposit of his home equity the bank's system alerts the teller to offer an investment product for the amount as it exceeds what is considered usual for a checking account. He declines as he only plans to keep it there for a short period.
  2. When he closes the home equity line the bank identifies him as someone who has sold his home and not bought a new one (the combination of large deposit and home equity loan closure is a dead giveaway) and he is mailed an offer for a discount of a future mortgage product (to increase odds he will use the bank for this product). The system also identifies the possibility of offering a higher yield account but notes that this has been offered and declined and so does not offer it again. In both cases the bank has risk scored him based on past behavior and identified him as a low risk customer.
  3. The next statement he gets includes both offers as a passive back-up - the mortgage discount and the higher yield account - rather than a generic offer
  4. An event-based trigger fires when the online check payment fails to clear in a reasonable period and sends him a notification by email (something he has configured as his preferred communication vehicle). Next time he logs on to the online system he will also get a similar, passive notification
  5. When he calls the customer service line to do his four actions he speaks to someone empowered to use the system to take a wide range of actions. The system they are using is driven by the customer being helped and so identifies that this person has an overdue online payment (with the option to stop it as this is a high probability action) and that they are eligible for the mortgage discount with a note to remind them of this unless they are very unhappy (this decision is left to the call center representative rather than automated). The representative can stop the payment (assuming they can enter the required set of information), order new ATM and credit cards and handle the change of address. In each case the system presents a smart dialog that gathers the minimum required information and uses a variety of data sources to check for validity:
    The customer must know the old address to change it. The form asks for data in a logical order but fills out fields when it can and constrains fields based on what was entered so far. When the change request is placed a risk model is executed to see how likely it is to be a fraudulent change. In this case the system has already flagged the customer as having sold his house and so the risk of fraud is very low and the change is accepted
    For ordering the new cards the system requires that a reasonable amount of information be collected so as to verify the customer is the person they say they are. One of the questions is whether this is replacing a lost or a damaged card and this causes either a new number or the same number to be used on the card. As the ATM card was lost the system tells the representative to tell the customer the new card will have a different number and for the credit card it does not.
    The stop payment process likewise asks for enough information to verify the transaction is the one being discussed and then issues the stop
  6. The representative is presented with the current outstanding offers as well as new ones based on the current next best action in the system for the customer. In this case he offered identity theft insurance as he has lost a card and stopped a payment and is profiled as someone likely to be concerned about identity theft.

Why is this a better process?

  1. The staff involved are empowered for better customer service because crucial decisions have been automated and because they have access to this automation
  2. Event based marketing is being used to drive share of wallet, leveraging the actions being taken by the customer and known facts about the customer
  3. Customer analytics are being used to constantly model the customer's risk, propensity to buy, likely future profitability etc. Combined with situational rules these drive the systems and people with whom the customer interacts to act appropriately
  4. Customer service representatives can focus on the interaction and its quality, not on guessing what offers might work or what else might be going on. They get the benefit of a customer view without having to wade through lots of graphs and data
  5. All of this could have been done on the website in a self-service mode or at the branch by the teller and the systems would have hooked into a consistent set of decisions ensuring that the customer is treated appropriately not randomly based on their choice of channel.

Now is Enterprise Decision Management the only thing you need to do this? Clearly not. But EDM and the focus on automating and improving decisions is crucial to this future vision.

Thanks Noah for the "Old Way" story.

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Comments

Rolando Hernandez

What will it take to modernize a bank from the 'old' way to the 'new' way?

Most of the banks I am know are stuck in the past. I wonder which banks are operating at the 'new' level or on the right track.

Rolando Hernandez
BIZRULES

RandyC

James --

Don't even get me started on telephone banking. My favorite is when you call to activate a new debit card and they hold you hostage while you listen to all their ads.

Fundamentally, I don't think banks behaving badly is a technology issue. It must work or they wouldn't do it. Just like standing in a teller line seems to work for many consumers even though it makes no sense "logically." (See my post here: http://www.greatwriting.com/blog/2006/09/whats-behind-bank-branch-building-boom.html.)

I think if one big bank did telephone banking right (the way you suggest) it could set a huge example for other banks to follow.

The comments to this entry are closed.

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