Balancing human and digital: BPER Banca
Maurice Lisi, Head of Direct Channels BPER Banca, discusses the importance of striking a balance between digital innovation and human interaction in the banking industry.
Maurice Lisi, Head of Direct Channels BPER Banca, believes that while digitalization is important, there are limits to what banks can achieve solely through digital means. He tells us more about the bank’s balance between digital and human touch, in an interview for the Qorus-Avanade report titled Balancing human and digital: Are banks losing touch with customers?
What are your roles and responsibilities in the bank?
I joined this organization in June 2022 and am relatively new to the team. I currently oversee the digital business department, which reports directly to the Chief Retail and Commercial Banking Officer. My responsibilities encompass a range of activities related to Digital Business, such as mobile banking, web banking, transactional business, cards, POS, and acquiring. In addition, I am also responsible for the digital branch, which combines self-service channels with human interaction. I lead a team of over 300 people and oversee the overall digital offering of the group, ensuring a balance between digital and human touchpoints.
What is your top customer challenge right now?
In the past, banks primarily shifted non-convenient services to digital channels such as mobile banking and internet banking, but they did not focus on using the advanced capabilities of these channels. For instance, offering complex products like mortgages through digital channels is still a challenge, since managing such complexity is still traditionally done through branches. As someone responsible for customer experience, my top challenge is to provide more complex products through digital channels while also combining the human experience.
How do you decide the balance between human contact and digital interaction for your retail banking customer segments? Can you give an example? Do customers ever get lost in the process or experience lower levels of service?
When it comes to balancing human contact and digital interaction in retail banking, there are a few key factors to consider. First, it's important to understand the customer's maturity level and the complexity of the product they are interested in. For example, younger customers who are just starting out with banking may only need basic transactional services, like making payments and managing their daily banking needs. We can easily shift these services to digital channels to reduce costs and improve efficiency.
However, as customers become more financially mature and interested in more complex products, such as investment strategies or life insurance, they may require more personalized guidance and advice from a human advisor. In these cases, it's important to offer a combination of digital channels and human touch to provide a seamless customer experience.
One way to do this is through the use of a digital concierge, which allows customers to schedule appointments with remote relationship managers and have video conferences to discuss their financial needs. Additionally, the use of remote contracts can provide a more convenient and efficient way for customers to sign important documents without having to visit a physical branch.
Ultimately, the decision to offer a particular service through digital channels or human touch should be based on the product complexity and the customer's maturity level. For more complex products, human touch is often necessary to provide the personalized guidance and advice that customers need. As an incumbent bank, it's important to offer the best technology available, and for many customers, that means a combination of digital channels and human interaction.
Do you think there are limits to what banks can do by focusing on digital only? Or are the benefits much greater than the disadvantages?
When it comes to digitalization in the banking sector, it's important to understand that there are limits to what can be achieved. While neobanks and fintech startups are excelling at offering seamless experiences, there are certain complexities and important customer interactions that cannot be handled through digital means alone.
Customers are not simply interacting with banks to make payments; they may be undertaking significant financial transactions, such as setting up a pension fund for their children, that require a higher level of confidence and understanding than can be provided by a chat button. These long-term relationships with customers are built on trust and require a human touch to truly be successful.
A concrete example of this is the sale of loans. While quick, self-service options may be suitable for some customers, those looking for additional protection may not be comfortable adding credit protection insurance to their loans without guidance from an advisor. By meeting with an advisor, customers can receive the necessary information and education to make an informed decision, resulting in a significant increase in cross-selling ratios from 10% to 50%. If the goal is to increase cross-selling and offer higher-quality service, it's essential to combine the strengths of both digital and human experiences. This will ensure that customers receive the best possible service and make informed decisions for their financial future.
In the future, how will banks make the most of human engagement? Will such engagement come at an additional cost for the customer, or even at a premium price?
I believe the question at hand may not be entirely accurate, as it assumes that all products can be evaluated based solely on price. However, there are certain products that do not require human engagement, such as self-service platforms, where customers can re-contract on their own without the need for human interaction. In these cases, there is no competition on price.
On the other hand, there are more complex products, such as mortgages, that require human engagement due to their complexity. In our domestic market, it is nearly impossible to contract a mortgage independently. In these cases, price competition alone is not the determining factor.
In the future, banks should not simply add costs to the customer's price but rather offer premium services that customers are willing to pay for.
By offering a more comprehensive suite of services, customers will feel confident in investing in products that are unparalleled in quality. Even simple products like loans can benefit from human engagement, such as offering credit protection insurance. As mentioned above, by providing human interaction, up to 50% of customers may contract this insurance, leading to higher product complexity and cross-selling. Therefore, we should not solely compete on price but rather offer superior services and human engagement to ensure customer satisfaction and higher product value.
As we enter the recessionary period, banks will be keen to demonstrate greater understanding of and support for their customers. What initiatives are you taking to appear more human and empathetic? Or are you relying on more automated contextual responses based on algorithms and avatars?
It is my belief that the ideal approach lies in combining both human engagement and data-driven understanding. Though a greater level of understanding can be achieved with a data platform, it is important to acknowledge the value that human engagement brings to the table. This is particularly relevant in instances where complex needs require additional data and information gathering that may be more effectively performed by humans.
In order to create a personalized and tailored customer experience, it is important to understand the customer's unique needs and preferences. This requires a data platform that is capable of analyzing customer data in order to discern spending habits, financial behavior, and other key consumer insights. By understanding these factors, we are able to provide more fitting proposals that better serve our customers' needs.
To achieve this, we should combine a clear data strategy with human engagement. This involves leveraging the insights provided by data analysis to enhance the human touch in customer interactions. By utilizing this approach, we can provide a level of customer service that is unparalleled, as we are able to offer the best possible product fit at the most reasonable price point.
Are you developing any partner ecosystems? How are they integrated into the end-to-end customer process? What issues do you typically face? Can you demonstrate the benefits of adopting this approach?
Yes, we are currently implementing an ecosystem which we believe will provide several benefits. To illustrate this, let me give an example of how the ecosystem we're creating can add value to the realm of digital invoices in Italy. Italy is an advanced country where you can offer digital invoices. By integrating this feature into our corporate banking platform, customers will be able to see who is invoicing them or which invoices they should issue. We can integrate this with our payment system to offer a billion services and provide customers with the possibility of not having to switch from our platform to a separate invoicing system.
In this way, we can offer a comprehensive view of working capital and make it easy to integrate payments, which can ultimately lead to a drastic increase in our profitability metrics. By engaging customers more and keeping them within our ecosystem, there will be more opportunities for us to cross-sell our products to them. This is the first important aspect of our ecosystem.
The second aspect of our ecosystem is related to complementary business. While there may be some business that we cannot cover by integrating third-party services, we can use this opportunity to offer complementary services. For instance, we are making significant investments in our digital experience to integrate several insurance products offered by one of the largest insurance companies here. This benefits all parties involved, as we are able to offer more products and increase our profitability metrics while providing customers with a new sales window platform. Through this platform, customers can access banking and insurance products through the same window, thereby enhancing their shopping experience.
We believe that there are two different partnership models for banks. The first is related to offering various services that increase the number of services the bank is providing. The second model is to increase business opportunities by offering new products that are not typically familiar. We are excited about the opportunities that our ecosystem will provide to both our customers and our bank, and we are proud to be part of this innovative approach to banking.
Could you please give us an example of how you collect and use customer data to improve the customer experience?
Certainly. When I joined in June last year, one of my top priorities was to start implementing a digital data platform. We recognized that, with mobile banking, we had a huge opportunity to gain insight into customer's behavior and interactions with the bank. So, we introduced an event-based platform and even invested in a professional solution to accomplish this. This platform has given us two key types of information. First, we now have a detailed understanding of how customers are interacting with the bank, and second, we know what they're looking for. By using heat maps, we're able to identify what customers are interested in, and by analyzing their financial behavior, such as their transactions and spending habits, we gain insight into their overall financial behavior.
By combining these two aspects, we're able to determine the overall maturity of each customer, which allows us to make more targeted and relevant suggestions to them in near real-time. For example, if a customer is near a branch, we can immediately notify them about any promotions or offers we have going on. Or if they're in a ski resort, we can let them know about ski insurance options that might be relevant to them. Overall, we're striving to create a more contextual environment that better serves our customers' needs.
What collaboration tools do you provide for your employees so that they can work more efficiently and effectively on improving customer service?
One of the key areas in our work is service design, and we have recently introduced a platform called Figma that allows us to design the customer flow. This platform has been particularly useful for our business analysts and service design team, as they can collaborate in real time to draw out the flow and process of the customer experience. We have received contributions from our employees, and our department has been using this tool for the past six months, fully integrated with our JIRA platform.
To improve our customer services, we have also integrated this model with the voice of the customer. This means that we collect feedback from customers on a weekly basis, linking it to the services we provide and analyzing the data to improve our design. We call this process a ‘loop’, as it creates a continuous cycle of improvement in the customer experience. We use Figma, Salesforce and customer voice together to give our business analysts and customer service designers the tools they need to deliver exceptional customer experiences.
What issues do you face in adopting technology to manage customer interaction? How have you managed the need for legacy modernization, for example? How are you applying AI and analytics to generate better customer engagement?
We need to divide our efforts into two separate areas: legacy modernization and digitalization. As we began pushing towards digitalization in our bank, we realized that one of our constraints was not just how to invest in consumer experience, but also the need for a significant change in our legacy team. To illustrate this, let me give you an example: asset management, asset allocation and financial reviews were designed to work only during branch working hours, and typically the user interface was not user-friendly. So, if a customer wanted to see their asset allocation on their mobile device, the first reaction was not how well designed it was, but rather that we needed to fully revamp our legacy system in the financial area. This is especially true in wealth management areas, where asset management and other financial services require significant changes.
The focus now should be on bringing together the overall digitalization of the bank, which is not just about digitalizing services and products. It's also about bringing the people who are working in the legacy system up to speed with the changes. This means making investments to adjust back-end services and legacy services so that we can offer a better experience over digital channels. For instance, contracting loans at 10 pm is not common because the system was designed to work mainly during branch working hours.
AI can be applied to different areas of the bank, but mainly to data analytics and data-related services. For instance, we use AI to analyze what the next best product is for the customer and to enhance our chatbot experience by engaging the customer during conversations. There are currently 14 different project streams focused on customer analytics, the next best product, and churn prediction, all designed around the customer. I firmly believe in this kind of technology because it allows us to understand more about customer needs and preferences than humans ever could. With the right investment, we can interpret data, create a personalized experience, and engage customers through both digital and human channels.
Is there anything else you would like to add?
I disagree with one thing that many consultants and experts say about traditional banks being disrupted by neobanks and fintechs. While it has been almost a decade since the fintech story began in 2007-2015, traditional banks continue to do complex and highly regulated work. This is not a simple ethical business; rather, it is a complex regulatory environment. It is worth noting that even the neobanks that started with disruption are now struggling to become profitable on a large scale.
Therefore, there is a great opportunity for incumbent banks to find the right balance between human and digital experiences, as this is what customers expect. There are things that customers want to do on their own, and there are things they want to discuss with a bank representative in person. While it is true that many customers no longer visit branches for money transfers or new card contracts, some discussions require face-to-face interactions, and the complexity of such discussions increases the bank's profitability.
We must remember that traditional banks hold 94% of total assets in Europe. This indicates that traditional banks are here to stay and will continue to play a vital role in the banking industry.
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