How slow banking can create a winning competitive advantage in customer service for banks
In today's hectic, fast-moving world, returning to slow banking practices can be a hidden asset for banks that wish to establish a unique competitive advantage.
Just a couple of decades ago, banks and other financial institutions had adopted a highly personalized customer approach, which was further enhanced when they entered the bankassurance game.
Since there were many mergers between banks and insurance companies, an extensive range of mixed financial services and products became available to consumers.
In this context, financial advisors and planners, and in fact, any customer service employee who worked in the banking and insurance sector had to explain and offer to their customers the option of an increased number of financial options and decisions to be made, based on the relevant products and services available.
Therefore, customers were given plenty of time and received a "pampering service", for example complimentary coffee etc., when they visited their local and/or preferred banking and insurance branches.
A lot of smiling was taking place from both the banks’ staff and the customers, since that was long before the financial crisis, and there were no darks clouds in the horizon.
This enhanced level of customer service created an unbeatable competitive advantage for those banks that practiced it regularly.
Then, all of a sudden, the occurrence of the global financial crisis and its consequences changed this sense of “slow banking” overnight, although it used to be common practice in the provision of financial services all over the world.
Banks and other financial firms were under severe pressure to survive and hopefully make some profit.
As a result, they were also pressed for more sales and revenues, and they felt that they had to change their standards of customer service, by becoming, for example, less oriented to offering a “human”, slow-paced, and highly-personalized service.
On the contrary, they chose to use automated methods of serving customers, such as directing them towards using ATMs for withdrawals and deposits of cash, as well as other services.
In this context, the faster the customers were served, and the bigger the number of customers that were served in a 24-hour period, the more productive the specific branch was believed to be, and the more profit it made for the bank.
However, this approach could be as good as textbook theory (or perhaps faulty interpretation of textbook theory), since the daily practice of customer service in bank branches has long showed that customers are, most importantly, humans, and they like to be treated as such. Consumers don’t like being pushed to making fast decisions, and they definitely want to take their time and think about it, before making any decision that they may regret later on, if they could have chosen a better alternative, or in case they face the risk of losing money in the future.
Despite this, banks and other financial institutions do not seem to take note of the increased need of their customers for what could be termed as “slow banking”, uust like “slow food”, compared to “fast food”.
While fast food can satisfy the body’s fueling needs almost instantly, it cannot become a sustainable long-term solution for effective nutrition. On the other hand, it’s slow food what the body really needs, as it provides the full range of necessary nutritional ingredients for the body.
Taking a loan or investing in stocks is not (and should not be) an impulsive decision, which must be made in a matter of minutes (or worst, seconds), because its effects will remain and be inevitably felt in the long run.
Unfortunately, banks have increasingly become “financial supermarkets”, and they are mostly interested in the volume of sales, leaving customers poorly-advised.
Banks could argue that they actually offer a “slow banking” service, especially to elderly customers. However, although older customers need a slow and more relaxed approach by the banking staff, in order to understand what they are being told, younger customers should not be considered as “financial experts” themselves by the banks, and they should also receive the same “slow banking” approach.
Even large discount supermarket chains, like the hugely successful German brand of Lidl, had to realize that pushing prices down and lowering customer service standards is not an easy recipe for success. On the contrary, they had to follow other practices, as well, such as displaying popular and long-established brands on their shelves, as well as private-label products made under contract especially for Lidl.
Therefore, it would be a good idea for banks to review their customer service approach, and probably offer full private banking and wealth management services to all of their customers, without any exception.
Banks should also review their customer service policy, in terms of how profitable it really is, due to the risk of losing customers in the long run, as a result of going for volume and not quality in selling financial products.
Otherwise, rivals may prove to be savvier by returning to the "slow banking" practices of the past, thus offering an enhanced customer experience and, as a result, operating more efficiently and profitably.