Why ‘Trust’ Is The New Battleground
Changes in the competitive landscape is about to make ‘customer trust’ the defining game for CEOs to focus on. Here’s why.
Respecting privacy isn’t just a ‘nice’ thing to do. Compliance with GDPR isn’t just a means to stay out of regulator trouble. And, responsible use of customer data isn’t just about avoiding compensation payouts. Responsible use of data will be one of the most important sources of competitive advantage.
Consider the diagram below:
Companies that are trusted are able to gain explicit and informed consent to use their data (a GDPR requirement).
This data fuels Intelligent Tech.
Let’s imagine there’s a start-up bank, called Polidor. Polidor uses Intelligent Tech to deliver a set of game-changing banking services:
- Sue needs to replace her credit card1. At a regular bank, she would call the bank, receive a form via email, fill in the form manually, and then she’ll probably need to present the form at a branch. However, Polidor is a smart bank. Polidor uses the biometrics capability on Sue’s phone to identify her (i.e. no passwords). Sue speaks to a chat bot. The chat bot knows which account Sue is referring to, and brings up a pre-filled form on her phone. Sue can manually type in the details or she can use her voice to fill in the form. Polidor’s chat bot knows where she is and offers Sue the nearest location where she can pick up her replacement card, which turns out to be a convenience store 20 metres away.
- Craig owns a medium-sized enterprise with 2,000 staff. Polidor uses artificial intelligence to help Craig optimise liquidity by predicting cash flow and automating transfers (virtual account pooling). Other digital-savvy banks offer these services also, but Polidor’s AI does a better job (in the same way Google was better at search than Yahoo, Excite and Altavista). The key to Polidor’s success is data: Polidor’s AI considers pipeline sales, inventory levels, spending patterns of every employee etc.. Once a month, Craig and his CFO meet with a business banker and Polidor’s chat bot to talk about their financial status. Polidor is a good listener and learns of major financial events, and offers Craig the choice of using their existing funds or to increase the overdraft. Craig choose the former, and Polidor automatically sets aside money to fund these events.
In these fictional examples, Polidor will build more trust and gain more consent, which enables them to deliver more value. And so, the upward cycle of trust continues.
Banks that fail to gain this level of trust are destined to become irrelevant.
Consider the following chart:
Banks that are less trustworthy are deprived of consent from their customers to use their data. Without data, these banks can’t offer the same insights and value-added services as a smart bank such as Polidor.
In effect, they are out-competed.
With open banking regulation coming into play, it will be easier for customers to take their data and their business elsewhere. Polidor wins.
Implication for banks
Incumbent banks have an advantage in the form of brand equity. Despite reputational damage of late, people continue to trust their bank with their money and their data.
The challenge for banks is to maintain this trust. How do CEOs accomplish this if every employee poses a misconduct risk? How can board members trust that the right decisions will be made as new technology changes the banking landscape? How can banks move with agility, overcome voices that stifle innovation, and still maintain the trust of customers?
We’re working with banks to help better prepare their teams tackle these challenges. Speak to us for a demo.
1Credit cards may be an anachronism in the future. For the purpose of illustrating this point, lets assume credit cards in their current form remains in use.