”In this setting, recognizable and simple services win,” Bo Harald explains the future of banking services.
After over 37 years in banking and IT, Harald now works as an executive advisor. He gives an example from the Finnish banking world that other countries are vigorously attempting to copy: ”In Finland people can use their e-banking codes to log on to public e-service sites, it is an incredible advantage. Economy of repetition – learn once, use everywhere.”
”Before, services were built based on what banks wanted to offer. Now we have customer driven service creation so we can answer customer needs. In previous banking restructurings banks taught customers how to use self-service, and banks organized courses on using e-services, now our customers are showing us the way,” says Ari Häll, Danske Bank’s director in charge of developing e-service. “Today, the best apps available for smartphones leave people literally gasping in awe. In order for a bank service to succeed in this competitive environment, it needs to be extremely intuitive and very simple to use.”
A smartphone is a payment approval device
Harald hopes banks understand that a smartphone is a payment approval device. Consumers are not willing to enter lengthy codes with such a small screen. ”Service should be a real time suggestion. For example: e-invoice, pay immediately, or on the due date? If I answer A for accept, the payment will happen right away. If I answer N, it will not be charged from my account until the due date. I use a service like this and after starting I would never go back.”
”Danske Bank has a new, somewhat similar service: MobilePay,” explains Häll. He presents a smartphone application, with which you can transfer money to anyone’s account without any other information apart from the person’s phone number.
”We are going to experience a payment revolution. MobilePay is built upon existing banking infrastructure; money is transferred between banks, just as if you were to pay a bill online from Danske Bank to Nordea. The service has three simple features: paying with a phone number, requesting a payment with a phone number and sharing a bill with phone numbers. A good bank service helps customers create value. MobilePay does that,” Häll underlines.
”We have showcased MobilePay in places where people naturally need it, for example the Kattilahalli flea market at Helsinki Suvilahti. If you are out of cash or don’t have the exact change, you can safely and easily pay with MobilePay. All you need is the seller’s mobile phone number.”
New banking services are making commercial trade cheaper both in online and traditional stores. Bo Harald explains how mobile services will soon be competing with credit card payments.
”Imagine a merchant who wants to sell me a pair of special hiking boots. He would prefer not to pay the 4 % charge some credit card companies take, so he offers me an alternative: he will give me an additional discount of a few percent, if I pay him directly with a mobile payment with my phone. All I need to do is answer A, for accept. The merchant gets his money right away with no credit risk – and while he gets immediate cash flow, I get a discount.”
”With this kind of payment, the merchant’s bookkeeping will be updated automatically. The merchant’s VAT reports, cash flow prediction, and reporting tools will also be updated in real time. As these services develop, customers will have their own bookkeeping automatically updated as well. Micro entrepreneurs will probably get this service first and individual clients will soon follow,” Harald predicts.
The traditional bank branch office is history
Finland’s banks were once world leaders in banking services, and these extremely simple, real time, customer driven services which Harald and Häll describe can help push Finland’s banking sector right back to the top. Häll adds one more element to the vision: the death of the traditional bank branch office.
”We used to rewards customer service personnel when they lured customers into the bank or sold specific products. I am glad this is no longer the case,” Häll says.
”Last year we turned the entire consumer service upside down at Danske Bank. From the customers’ perspective all banks offer multi-channel services. The problem has been that inside most banks, there has been complete chaos – which channel approaches the customer, who owns the customer and how can congruent services be developed.”
”We decided to think in a new way. We still serve our customers in multiple channels, but internally we only have one channel, the web. The change in our culture is significant. Our customers experience the change as improved and more consistent service.”
Häll hopes that the next thing to go will be the traditional network of bank branch offices. He knows that for many customers, it makes no difference where the nearest bank office is. The distance to a bank is measured in service speed and expertise, not kilometers. In fact, the next generation will not understand the concept of a bank robbery, for the idea of a branch office full of cash will be absurd.
”A time of light offices is coming. Soon pop up branch offices can be set up and down in a day. Vaults and cashier services will be history,” Häll describes.
”Danske Bank has already moved to virtual meetings to such an extent that during good months, half our customer meetings are held online. It is so much easier meeting a bank representative from your summer cabin’s pier with a tablet, than drive to a branch office, search for a parking place and use up a good portion of your day to take care of your bank business,” Häll says. “Today many consumers would be surprised if they heard about applying and receiving a loan decicion online. Soon it will be the norm.”
Not far from the top
Häll emphasizes that for Finnish banks business models are a competitive asset, which can help them back to the sharpest edge in banking business.
”We had the bank crisis in the 1990s and then the internet revolution. As a result Finnish banks have agile business models and an inherent ability to think out of the box. We know things can be done differently. We have the flexibility, now we simply need to break boundaries in an even more radical manner than before.”
Harald mentions that Finnish banks are not that far from being world champions again. ”In online and mobile banking we are still competing for medals; in B2B e-invoicing we are the best in the world and improving all the time – and in identification and e-signature services we are also in a class of our own.”
”In my own work I emphasize a great idea brought forth by Simon Sinek in his book Start with Why. All business operations should start with the question: why does this company exist? Customers do not buy what you do – they buy why you do it. This is the ticket that can take Finland back to being number one in banking services.”
”I claim that the banking sector’s reason for existence is responsibility. Banks are responsible for ensuring monetary flow. Banks are responsible for giving loans to customers with the means to pay back – and not lending too much too easily,” Harald says and reminds that improving the productivity of society can also be seen as a responsibility banks hold.