Personal banking for the masses? Try Amazon face-to-face.
March 8, 2009
Banks realized that although electronic banking is cheaper than maintaining branches, they don’t need to deter clients from seeking personal contact. In fact, they might get the most out of the branch by not trying to figure out how they could “herd” different people to different communication channels (branch, internet, telephone) for different services, as one of my interviewees said. Rather, they can let them come for whatever reason—once you have the customer’s willing attention, you can achieve a lot.
The problem is how to have effective interactions with a large volume of small retail clients who are largely unknown to the clerks serving them. The problem of banking as a mass financial service is how to singularize an already standardized product to an ever-growing mass of mobile clients. First, this is different from “high finance”—the topic of much research in the social studies of finance—where products are custom-developed by investment banks for large corporate clients (see Vincent Lepinay’s work in the volume Market Devices). Second, the Hungarian bank I studied wanted to be in the niche of quality services, but had to deal with an exploding customer base. A single clerk typically does not personally recognize the clients who show up at her branch. Third, we shouldn’t forget that clients had just been raised by banks to be mobile—the movement towards electronic banking and telephone services meant that you could break away from your local branch and complete transactions anywhere, with or without human assistants.
Banks’ return to the personal is via the technologies that personalize. The technology Customer Relationship Management is spreading to support the clerk’s work of serving clients, providing personal banking for the masses. CRM refers to both an information and communication technology (SAP, Oracle, and Salesforce are leaders of this market) and the strategy of “relational marketing,” which is based on the idea that the firm should be organized around the customer instead of the product. Instead of selling as many products as possible to any number of people over the short term, the customer-centered strategy is to treat each customer longitudinally and focus on selling multiple products to that customer throughout the lifetime. This means that each interaction with the client has a dual goal: it counts towards the relationship long-term, while it should also be used to attempt a sale. Pitching products and building a relationship can both be done in a very personalized way because the bank has had information about the client and knows her habits well.
CRM as an information system makes instant familiarity with an individual client possible because it tracks clients by pooling data from all corners of the bank, and renders it legible for the bank staff who have live interactions with clients. When clients use the bank’s services they leave a trace, but these myriad points of data about a customer are scattered around the organization in heterogeneous formats. More precisely, in order for tracking technologies to work, there must be traces to piece together, so the bank has to make sure that each contact is recorded in specific form that is acceptable to the technology that will integrate it. Customer Relationship Management integrates all that data, analyzes it, compiles, updates, and delivers it to the screen of any clerk at any branch of the bank.
At the bank I studied, Customer Relationship Management software did more than tracking: it tailored the product offer to each (existing) customer. When the customer visits the branch next time, the clerk pulls up the profile and immediately sees the list of products that match the profile, and she is supposed to be offering the customer some of those products. Amazon is the prime example of mass customization, with its technique of collaborative filtering that compares customers’ behavior as it is visible within the system (what items they have purchased) and based on that calculates what new products to recommend. The CRM that I observed in action at the bank branch relies partly on similar calculations that relate one customer’s behavioral pattern to the rest, in a dynamic evolving fashion that recalculates the best offers when new data are entered.
Ironically then, banks are bringing in impersonal technology to turn personal encounters with customers into a more individualized experience. In the next post, I will describe CRM in action, based on my observations of the situation between the client and the clerk. The fact that in this version of dynamic and personalized product recommendations, there is someone between my “Amazon screen” and myself, and that someone selects the product they think is appropriate for me–what’s more, I am not aware that there is an Amazon screen–has all kinds of consequences for what kind of exchange can be accomplished between me and the bank.