AVOIDING THE ‘BOTWAGON’ TRAP : HOW BANKS CAN RESPOND TO NEW PAYMENT TECHNOLOGIES

Daniel Gonzalez, Design Strategy Senior Manager, SapientNitro and Karwai Ng, Design Strategist, SapientNitro.

Are we all turning into digital magpies? Financial institutions seem to be jumping on the ‘botwagon’, with Amex launching a Facebook Messenger bot that sends out real-time notifications to customers when they make a purchase (it even comes with its own FAQ page), and Bank of America soon to be releasing its own version to help customers “stay connected to their finances whenever and wherever they choose”.

Given the hype around payments in messaging and bots, how should banks respond to this new technology?

The battle for payments

Payments are a gateway product for customer acquisition across the whole banking experience. As BBVA puts it, “the prevailing logic dictates that whoever offers the best customer experience (CX) in payments will own the customers for other products/services and create additional upselling or cross-selling opportunities”.

Payments have become even more pertinent with the incoming PSD2 legislation, which grants permission to third party providers to process payments on customers’ behalf. As customers increasingly migrate to third party platforms, banks risk being pushed further down the value chain and reduced into dumb pipes.

Given this, how can banks reverse the tide of losing direct customer relationships while addressing the emergence of new payment technologies?

1. Change internally to become leaner and faster
   First and foremost, instead of jumping on the next tech bandwagon, banks should focus on embedding greater agility in their organisations. This is because banks aren’t going to drive the evolution (or revolution) of bots, and they shouldn’t be worried about that.As Forrester states in the title of its recent report, “Bots Aren’t Ready To Be Bankers”. Customer experiences offered by most bots today are still poor or inconsistent. “Tech companies are better staffed and equipped to push AI and bots to the next level, and banks can reap the rewards of these advances”.
   By designing for flexibility, banks can a) test new technologies quickly and b) discern which technology is better and more relevant to people’s lives. Barclays has built a beta, invitation-only app – Launchpad – to co-create new digital experiences with their customers and fintech start-ups to shape future digital solutions for the bank. It works in banks’ favours to be bot-agnostic when it comes to investing in new technology and working in nimbler, faster ways.
   Once banks have greater agility, they can then ‘atomise’ their payment functionality to become more relevant to customers’ lives.

2. Build connected, ‘atomised’ payment offerings
   Financial institutions need to shift their focus from building standalone payment features to atomising or connecting different parts of their payments offering to third-party touchpoints and platforms.
   Spotify is a prime example of an ‘atomised’ product. It’s distributed across various third party platforms (on your TV via Chromecast, in your Uber or local Starbucks via the Starbucks app), but still provides the same experience for its listeners.
   By atomising payments, banks can become more integrated to customer’s lives and reverse the trend of being rendered as dumb pipes.
   Some financial services players are looking across the globe in efforts to atomise their payment offerings. French payments processing group Ingenico recently partnered with China’s Alipay, which would enable thousands of European merchants to accept payments in-store via the Alipay app and Chinese tourists to pay for goods using the Alipay e-wallet.

Two years ago we spoke about the unbundling of apps. Today we’re talking about bots, and possibly the end of apps and websites.Tomorrow it may be the singularity of AI that will ‘disrupt’ bots altogether.

Rather than jumping on each of these bandwagons, banks should embed greater agility into their organisations, building and testing atomised products and services with their customers. Remember, disruption in and of itself is not a strategy. Even Facebook’s head of Messenger David Marcus admitted that the bot craze was ‘overhyped, very, very quickly’. So let’s not forget that bots are only one form of atomisation, a tiny piece of the technology puzzle. 

When it comes to payments, banks shouldn’t focus only on building bots, but distributing services in even more relevant ways to customers’ lives. 

Daniel Gonzalez, Design Strategy Senior Manager, SapientNitro and Karwai Ng, Design Strategist, SapientNitro.

Are we all turning into digital magpies? Financial institutions seem to be jumping on the ‘botwagon’, with Amex launching a Facebook Messenger bot that sends out real-time notifications to customers when they make a purchase (it even comes with its own FAQ page), and Bank of America soon to be releasing its own version to help customers “stay connected to their finances whenever and wherever they choose”.

Given the hype around payments in messaging and bots, how should banks respond to this new technology?

The battle for payments

Payments are a gateway product for customer acquisition across the whole banking experience. As BBVA puts it, “the prevailing logic dictates that whoever offers the best customer experience (CX) in payments will own the customers for other products/services and create additional upselling or cross-selling opportunities”.

Payments have become even more pertinent with the incoming PSD2 legislation, which grants permission to third party providers to process payments on customers’ behalf. As customers increasingly migrate to third party platforms, banks risk being pushed further down the value chain and reduced into dumb pipes.

Given this, how can banks reverse the tide of losing direct customer relationships while addressing the emergence of new payment technologies?

1. Change internally to become leaner and faster
   First and foremost, instead of jumping on the next tech bandwagon, banks should focus on embedding greater agility in their organisations. This is because banks aren’t going to drive the evolution (or revolution) of bots, and they shouldn’t be worried about that.As Forrester states in the title of its recent report, “Bots Aren’t Ready To Be Bankers”. Customer experiences offered by most bots today are still poor or inconsistent. “Tech companies are better staffed and equipped to push AI and bots to the next level, and banks can reap the rewards of these advances”.
   By designing for flexibility, banks can a) test new technologies quickly and b) discern which technology is better and more relevant to people’s lives. Barclays has built a beta, invitation-only app – Launchpad – to co-create new digital experiences with their customers and fintech start-ups to shape future digital solutions for the bank. It works in banks’ favours to be bot-agnostic when it comes to investing in new technology and working in nimbler, faster ways.
   Once banks have greater agility, they can then ‘atomise’ their payment functionality to become more relevant to customers’ lives.

2. Build connected, ‘atomised’ payment offerings
   Financial institutions need to shift their focus from building standalone payment features to atomising or connecting different parts of their payments offering to third-party touchpoints and platforms.
   Spotify is a prime example of an ‘atomised’ product. It’s distributed across various third party platforms (on your TV via Chromecast, in your Uber or local Starbucks via the Starbucks app), but still provides the same experience for its listeners.
   By atomising payments, banks can become more integrated to customer’s lives and reverse the trend of being rendered as dumb pipes.
   Some financial services players are looking across the globe in efforts to atomise their payment offerings. French payments processing group Ingenico recently partnered with China’s Alipay, which would enable thousands of European merchants to accept payments in-store via the Alipay app and Chinese tourists to pay for goods using the Alipay e-wallet.

Two years ago we spoke about the unbundling of apps. Today we’re talking about bots, and possibly the end of apps and websites.Tomorrow it may be the singularity of AI that will ‘disrupt’ bots altogether.

Rather than jumping on each of these bandwagons, banks should embed greater agility into their organisations, building and testing atomised products and services with their customers. Remember, disruption in and of itself is not a strategy. Even Facebook’s head of Messenger David Marcus admitted that the bot craze was ‘overhyped, very, very quickly’. So let’s not forget that bots are only one form of atomisation, a tiny piece of the technology puzzle. 

When it comes to payments, banks shouldn’t focus only on building bots, but distributing services in even more relevant ways to customers’ lives.