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Fintech firms understandably spend a great deal of time suggesting that financial institutions should put the customer at the centre of their strategy through technology. Financial institutions are increasingly getting much better at providing a slick technology driven banking experience for their customers. There is, however, an increasing interest from diverse financial institutions in engaging their customers on a different level, inviting them to become part of a community rather like the co-operative and mutual societies of the past.
Recently, Ricky Knox at Tandem Bank called for customers to become “co-founders” of the bank, receiving a share in the company and early access to new products in exchange for feedback on the customer experience. Tandem will offer further shares for referrals to further encourage active participation in the banking community, rather than just being a passive customer.
This is a really interesting development clearly aimed at putting the customer squarely at the heart of Tandem bank, not just in terms of service, but also collaborating in the creation of new products and services.
Mondo is on a similar trajectory, having effectively two communities impacting the shape of the business – the alpha and beta communities and also its CrowdCube investor group. The impact of these new challenger banks moving customers from being just that – a customer – to an active individual with a say in the future direction of the institution will create a more trusting relationship between the bank and the end user.
This more trusting relationship has great benefits for the financial institution. Aside from the obvious more sticky relationship with the customer, banks also have access to an engaged community where they can trial new products and receive instant feedback.
One interesting application of this type of community feedback that springs to mind would be exploring the potential for wearable devices in financial services. Experiments are beginning to deliver banking information and alerts as well as enable transactions, and it is a worthwhile endeavour for financial institutions to evaluate how wearable technology can be used to better serve customers. In such a new market, customer input on products and services could play a vital part in delivering the right proposition first time.
In future, tapping a group of customers could also provide great cost savings – just look at the huge “unofficial” support communities that have grown up around major tech players, with non-employees providing advice to fix issues, and you can see the potential customer service benefits of moving to a collaborative and community based system.
Of course, it’s not just banks that are looking to engage their customers on a more collaborative basis. Credit unions, a staple financial institution in the US and Australia, are on the rise in the UK market too, with research predicting that credit union assets in the UK will hit £2.2 billion by 2020.
Aiming to provide responsible, community-based lending, these financial institutions hark back to earlier days of trusted, local services based around helping people by providing financial support and inclusion where other lenders do not. With increasing investment in technology, credit unions are pushing their offering into the modern age, aiming to reach more people and provide a customer experience that is similar to that provided by established lenders, but with an overarching strategy that is grounded in the community that it serves.
So, is this the start of a new age of customer centric banking? Quite possibly. Clearly, financial institutions are looking for new ways to differentiate themselves from the competition, and while ensuring that customers are getting the latest technology is one way of doing this, nimble financial institutions are also clearly working to define themselves as trustworthy organisations that want to actively collaborate with their customers to create better experiences.