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Banking on Amazon – Bringing the Amazon Approach to Banking

By Nathan Snell, Chief Innovation Officer, nCino 

This July the internet and retail giant Amazon celebrated its 25th birthday. Following Apple, it’s only the second US company to reach a market capitalisation of $1 trillion. Originally a small marketplace for books, it’s now a behemoth that has completely transformed the way we shop. It also offers important lessons for other companies about how to leverage innovation, respond to consumer needs and build a thriving business.

Nathan Snell
Nathan Snell

While Amazon’s plans to enter the banking industry remain somewhat vague, banks should keep the tech giant in their sight—especially in light of a report conducted by Accenture, which revealed that nearly a third of global respondents would switch from their traditional bank to a service offered by Amazon, or a similar company. Considering these implications, it’s time for banks to take stock of Amazon’s meteoric rise as a technology leader and learn from their success when navigating the digital age.

A maniacal focus on the customer

Jeff Bezos, CEO of Amazon, famously said, “The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.”

Amazon was built on the belief that understanding the customer and answering their needs must always come first. With an increase in digital banking and high street banks closing (nearly 6,000 local branches have shut since 2010), the physical relationships between traditional banks and their customer is weakening. As customer expectations change, banks need to take a step back, listen to what today’s customers want and need, and create new products and services that solve genuine pain points and help them achieve their desired outcomes.

Speed of reaction is paramount

Millennial customers have high expectations for instant communication and service, which has been conditioned by companies such as Amazon with “buy-it-now” options and same-day delivery. A study found that 68 percent of millennials have stopped doing business with brands due to just a single poor customer experience. With the stakes this high, it’s no longer just about making sure people are at the ready (though that is important). It’s also about putting yourself in the customer’s shoes, empathizing with them and then evolving their experience in scalable ways. This is one reason more and more institutions are leveraging artificial intelligence and machine learning to provide data-driven insights quickly and efficiently.

This customer-centric approach builds the trust and reassurance needed to effectively solve problems, ultimately connecting with and retaining customers.

Preserve some physical roots

Amazon is best known as an online retailer, but in 2016 they opened a number of brick and mortar stores in locations like Chicago, New York, San Francisco and Seattle. The twist was that customers never actually checked out. Instead, Amazon developed an innovative new shopping technology that used a combination of computer vision, sensor fusion and deep learning to scan items in a customer’s cart as they shop and charge their Amazon account when they walk out the door.

In this case, Amazon isn’t selling a product—they’re selling a service. Banks should take a similar view of what they’re offering. More and more, their services rather than their products will be the differentiating factor. Now, I’m not suggesting customers walk in to a bank, grab cash and walk out, only to have it subtracted from their account later. But when it comes to things like loan applications, customers should absolutely be able to automatically fill in whatever information the bank already has to speed things up. Then, any new information they do provide online should be accessible in the branch, should they want to finish the application in person. This will reduce the need to repeat time-consuming tasks that cause frustration and lead to churn.

By finding ways to create these types of experiences that leverage innovation technology to blend offline and online experiences for a premier customer experience will be key.

Get to know your customers

One thing Amazon is not short on is customer data. In fact, Amazon has successfully expanded its business using this data to its advantage by personalising the shopping experience based on a customer’s previous purchase and shopping habits. This strategy helps further develop their connection to each customer, securing their position as a partner and go-to resource.

Similar to Amazon, banks also have access to hugely valuable data sets, but if these insights are stuck in siloed legacy systems it won’t be beneficial. To be successful, banks must leverage their customer data intelligently and innovatively. Embracing new technology, such as artificial intelligence (AI) tools, will help provide better means of understanding and building relationships with their customers.

The lessons banks can learn from Amazon are plentiful. Amazon provides its global userbase with a technology-driven and experience-led environment, ensuring that customers’ needs and demands are met in a personalised environment. Amazon proves that banks do not need to choose between being an online or high street offering. In reality, the best way forward is a consistent experience that effectively and delightfully combines the two.