NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

A lot happens in even the simplest meeting between two people. Instantly, and without thinking, each person observes the other’s appearance and body language. As their eyes connect, they form impressions and make judgments about each other. Whether it’s a smile, a handshake, or the response to a question, the information and emotional content that passes in simple acts can be far richer than the words exchanged.

It has long been important for banking operations to ensure that when customers meet staff, whether at the teller window or in the marketplace, the interactions build customers’ trust and convince them to use the institution’s services. At the same time, crucial information about the customer would flow back to the bank.

For example, a loan officer visiting a business owner’s premises observes the customer and his business directly, while the business owner gets answers to his particular questions. When a teller provides cash at a window, the customer enjoys personal care while the bank has a chance to discuss other products that serve the customer’s specific needs. And when a staff member greets a customer in the market, she can remind her that her loan is due, letting the customer know that bank staff are paying attention—and increasing the likelihood of timely repayment.

In today’s digital world, however, customers may rarely or never interact with a person. Digital transactions are fundamentally different from person-to-person encounters. Information flows in precise, narrow and predetermined electronic packets: ID verification, account balance, transaction amount, receipt. No spontaneous exchange of additional information occurs. A digital transaction lacks a social aura. It is often simply a completed task.

As we work to extend financial services to the two billion, typically lower income, people around the world who are disconnected from the financial grid, we must rely on digital financial services. Business economics make digital delivery of financial services unstoppable. And digital services can bring dramatic benefits—service for small ticket and remote customers, 24/7 availability, fewer errors and faster responses.

It is undeniable that in the transformation to digital interfaces, valuable personal connections between financial service providers and customers are lost. But what exactly is lost, and how can that loss be mitigated or replaced?

Among the benefits that might be at risk in the transition to digital are:

• customer trust and comfort with the financial institution, especially if the customer is new, interacts infrequently with formal institutions, or comes from a socially disadvantaged group
• the ability to respond efficiently to a customer’s specific questions, supporting successful use of financial products
• emotional and social connections that drive behavior
• in-person assessments that allow providers to discover and address potential problems or find new opportunities
• the wealth of market information—about things like political events, competitor moves, or problems with specific customer segments—that front line staff gain as they do their work

How can a financial service provider mitigate the loss of these benefits? There are many creative responses. Providers can integrate elements of technology while retaining personal interactions in some parts of their delivery systems. Alternatively, they can enrich the digital experience itself, making it more like a face-to-face interaction.

Finding the Right Place for Human Touch

With staff time freed by digital transactions, banks can choose to deploy people only where they will be of the most strategic value. They can identify the points in customer relationships where person-to-person exchanges really matter—whether in initial outreach, customer enrollment, or periodic check-ins. One of the greatest needs for person-to-person support is when customers have questions. Another is assistance using technologies for the first time. Perhaps financial institutions’ branch locations could become centers of problem resolution and learning rather than routine business.

Banks can provide staff and agents with digital tools to compensate for some of the weaknesses of human interactions—such as inconsistency, misinformation or bias. Digital tools can help agents provide consistent information and gather responses efficiently from customers. When banking agents are equipped with tablets, their ability to provide accurate product information is improved.

Going one step further, digital tools could be used to create richer interactions with customers. As new apps and voice and video features expand communications capabilities, and as artificial intelligence advances, providers could create richer digital customer interactions with some of the same features that a person-to-person interaction provides. It is now possible to build interfaces with data flowing in two directions to answer customer questions, provide nudges and reminders, help build financial capabilities, and receive regular customer feedback.

This future is already closer than one may think. Juntos, for example, is a platform that allows financial institutions to carry on personalized, electronic conversations with customers through text messages. Juntos’s powerful data analytics can tailor messages to customer behavior. The friendly style of the messages suggests the presence of a person, and indeed, Juntos reports that many customers share personal news and even wish Juntos a Merry Christmas during the holidays. Through the two-way data flow, customers gain a sense of connection to the institution, support for financial discipline (via reminders), and information about products. At the same time, institutions hear from customers more often.

The financial inclusion sector has barely begun to explore these possibilities. It deploys technology mainly to select customers and perform transactions. But as these basic digital functions are increasingly available, the sector may soon need to focus on creating rich, multifaceted customer interactions that capture more of the benefits of a person-to-person interaction. Customer engagement, facilitated by a combination of technology and the strategic use of people, could be the next competitive frontier.

This post was originally published on the Center for Financial Inclusion blog. It is republished with permission.

Photo credit: Pui Shan Chan, via Creative Commons.

Elisabeth Rhyne is Managing Director at the Center for Financial Inclusion at Accion.