I’m presently working remotely from Australia. Its been a while since I spent any substantive amount of time here, and I’ve somehow forgotten just how very strongly people feel about their banks here.
Over the Christmas period, I got the usual ear-bashing from relatives and friends outside the industry, and they all focused on one thing: how banks don’t earn the profits they make, and more particularly, how they make their profits by taking advantage of the "little people".
If anything, people in Australia feel more strongly about this issue than anywhere else I’ve ever been.
I spent quite an amount of time over the break trying to explain to people just why banks need to charge fees. Why the money we get from writing loans is not always earned on the backs of the deposits people make. And, repeatedly, how self-service does not a free transaction make.
I may as well have been speaking a different language. I was either not understood, or not believed. I’m rather thinking the latter is most likely. These were people wise in the ways business, and financial services in particular.
Therefore, it is my view that this will be the year that banks spend a lot of time communicating with customers. And not in the way that we’ve done it in the past. The past has been about selling propositions.
In 2008, it will be about explaining propositions. It will be the year that we make contact with customers, treating them as equals rather than punters that need to be convinced to buy.
Why do I think this?
The quite technical treatment the financial services industry has been getting in the press since things went a bit haywire suggests that our customers are rather more knowledgable about financial services than we might previously have imagined.
Here in Australia, for example, journalists blithely talk of the interbank rate, contrasting it with central bank rate that used to be front and centre of most of their writing.
They explain the complex instruments which led to banks not having clear visibility of the riskiness of lending to each other. And dinner conversation prognosticates on the likelihood of recession and the probabilities that, regardless of government backing, there could be additional runs on banks in 2008.
People outside the industry are offering their opinions on technical matters within the industry. And their opinions are, quite often, well grounded in knowledge of how things work.
A doctor, though she may not be an expert in drug design, is nonetheless treated quite differently by a pharmaceutical company than a patient consuming a retail medication.
Perhaps not every customer is a financial services expert. But it seems to me that our customers are rather more like doctors these days than patients. We need a new way of working with them so that their new knowledge is a positive.
So, then, if 2008 is the year we make contact with customers, it is also the year that customers change the way that they think about their banks. They’ll be more demanding, certainly, but their new sophistication will make it possible for us to offer products that we’d previously not consider. And we’ll be be able to be more transparent in 2008 than we’ve been in the past. The new knowledgeable customer doesn’t need us to manage the message so much.
Ron Shevelin makes the point, somewhat ironically, that every year people come along and declare that this year is the "year of the customer". Well, I think that we do do that. But this year, we have the chance to speak to customers in our language, and have them understand it. Clearly, that’s a new kettle of fish. In the past we’ve tried to speak to them in their language, and not understood it ourselves.