In this second blog on ‘customerization’ we take a look at the banks, another industry that is seeking to make their customers responsible for transactional activity that was previously done by the business.

The ubiquitous ‘hole-in-the-wall’ cash machine – or, more correctly, the automated teller machine or ATM – is a product of the 1960s with the first machines appearing on the high street in the mid to late 1960s. The raison d’être for their existence was the idea that customers could be given 24/7 access to their cash deposits through the use of networked computerised machines that would read a magnetic card and allow the user to withdrawn money. In theory, this is an excellent idea and a genuine benefit to the customer at a time when there was more money around and being spent and banking hours were, to put it mildly, restrictive.

Like most things in the ‘customerization’ field, the idea was not conceived as a benefit to the customer but as a benefit to the bank. Traditionally, banks had ‘tellers’ who sat behind glass screens or metal grills and manually checked customers’ balances and then cashed their cheques so that they could withdraw money. Given that this was the only way of withdrawing money at the time, banks had to employ growing numbers of tellers (or cashiers as they were known in the USA) to cope with the lengthening queues of customers wishing to make withdrawals. The efficiency experts watched and checked these queues and the estimated waiting time – they also checked the speed with which the teller could conduct the transaction (estimated at 90 seconds to 2.5 minutes) and thus how many they could process in an hour (usually around 30). With banking hours restricted to 09h30 – 16h00, a total of six and half hours, it soon became obvious that one teller could deal with a maximum of 195 customers in a day providing each only wanted to conduct one cash withdrawal transaction.

Given that the 1960s saw a huge increase in the number of people establishing and using bank accounts and, in many countries. the payment salaries and state benefits going direct to the bank, the banks themselves came under severe pressure as waiting times increased and people found getting access to their cash more and more difficult. The ATM was thus seen as a way of (a) moving the customers out of the bank itself and onto the street, (b) making the customer do the work of the teller, and (c) allowing the banks to reduce the number of tellers and replace them and their space with financial sales processes. Of course, the charges banks levied for running accounts did not go down and the customer was charged for using the ATM. The ATM was, therefore, perceived by the banks as a way of making more money from their existing buildings, of reducing costs, and of making less account errors – and their customers saw them the same way!

The result was almost comically self-evident: the initial customer reaction was to ignore the new-fangled machine, especially if the weather was bad, and to continue to use the tellers in the bank. The rather obvious benefits to the customer of 24/7 access to their cash was not perceived as a benefit simply because the banks had failed to present it as such. It took nearly a decade of investment in ATMs, making ATMs usable by all card holders (rather than restricting their use to the customers of a particular bank), and hard-sell advertising before customers began to use the ATM in the way they do now.

But the banks were slow to learn from their mistake over the ATM and when they next ventured into extensive customerization with ‘self-banking’ (and then online banking) they were again unable to find it within themselves to sell the service as a BENEFIT to the customer rather than a simple cost saving approach to the unprofitable personal accounts that they were being forced to provide.

There are many banks that quite simply find it impossible to make money on personal accounts, especially those that are maintained ‘in credit’, and they would dearly love to abandon their provision. By transferring the transactional activity to the customer, the bank can free up their staff for revenue generating activities and transfer the entire cost of the transactions to the customer while still charging the customer the right to have an account at the bank. Self-banking and online banking are a simple win-win strategy for the banks. Unfortunately, their underlying self-interest has led them once again to fail to sell the benefits to the customers and so the services take-up has been slow, frustrating and painful and the expected positive impact on the revenue of the bank has been very slow in materialising.

If the banks, instead of charging customers for the right to have an account at the bank, were to reward the customer for conducting self-banking or online banking (i.e. for saving the banks money), the take-up would be faster and more profound but as it is, banks pursue profits even when it is evidently in their own enlightened self-interest to reward the customer for doing their work for them.

Customerization is now spreading and in my next blog on this subject I’ll look at how the airlines are getting in on the act – and making exactly the same mistakes!

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