Technology is not about new devices, it’s about new customer experiences. Sara Perria speaks to internet psychologist Graham Jones to understand what the payment industry can do to engage with the public and what it’s getting wrong
We may know what technology can enable us to do but somebody is yet to give us the miracle-answer to what customers will really embrace. At a crucial stage of development for the banking and payment industry, stakeholders are eager to find not only an answer, but the correct one. Getting it wrong is not an option, as banks have to plan their investments for the future years ahead and start-ups could risk putting a quick end to their projects.
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Internet psychologist Graham Jones believes the password to success is made of two concepts: instant gratification and a dramatic improvement in customer care.
Internet has not changed the way we communicate, it has changed our mindset and psychological mechanisms: "The internet has reduced our attention spans and has made us realise we can get an instant answer to anything: if you want to know how tall The Shard is you can get an immediate answer now by typing it into Google," Jones says.
Banks and the whole payment industry have to adjust to this. Easier said than done, as to keeping the pace financial institutions need to change not only their internal systems but the way they work: "Many businesses are not ready and their internal processors and systems are not geared up to manage what the internet brings in terms of behaviour, namely the desire for instant gratification."
In Jones’s analysis, banks are not providing an answer now, because they are caught up with regulations and the weight of the structure, which includes getting everything approved: "A practice that does not match the online customer behaviour requirements: it is about not just understanding that that is what their customers want but working out how they can meet the requirement for instant gratification," the psychologist insists.
"Banks are improving but the improvements are incredibly slow: it is a very conservative industry, and they are pretty slow at getting things done," he says.
Jones recalls when he "sat down with a bank" that wanted him to "come up with a method of convincing their staff that they should not use Twitter."
Not exactly what you would call a cutting edge strategy in the era of social networks: "They did not want the staff to inadvertently say things on Twitter, and they felt that they could not control their people. Plus they felt it would encourage customers to talk to individual bank staff via Twitter rather than going through the proper routes."
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By GlobalDataJones’s answer was clear: "I told them that they were living on another planet."
"That was not going to be possible: they certainly could not control what their staff do in their private time. If they wanted to have Twitter accounts they are going to have Twitter accounts, you can’t stop them, in the same way you can’t stop them talking about their jobs when they go down to the pub," he says.
"You hope that your staff, when they go down the pub and talk about their job, do not talk about confidential matters, competitive matters that they should not talk about. But if you have got staff that do that, that is the fault of human resources for employing the wrong kind of people in the first place," the psychologist concludes.
Eventually the bank understood and it is now actively using Twitter as a business, "but it took about two years to put all that in place before they got Twitter: it really should have taken them two weeks but it took them two years."
This is not a strategy that financial institutions can pursue, whether we are speaking about current accounts, mobile payments or data management.
Yet, many players are still far from putting in place an adequate strategy that reflects new customers’ needs. The use of the website is another example provided by the psychologist. Jones is convinced that the typical retail bank’s website does not target customers as it should, "trying to be all things to all people." If you go on one of these websites, it will have all the things the bank does, while when people land on a webpage, they are focused on one specific issue and they want to deal with that, not with the rest." In theory banks would need not one website but dozens of different ones.
But how realistic is that idea? "Here lies the problem: how do they manage that? This is what I mean about the internet causing internal turmoil." This could have serious consequences, as data show that any e-commerce website – and a bank’s website – has four seconds to convince the person who is looking for the information – for example, how to pay their child’s university fees – that this is what they can get from that particular website.
Instead "what banks do on the internet is literally pour everything out and hope that the visitor can find it for themselves: this is why people don’t stay, they go and find a website that is far more specific to their needs," Jones says.
The psychologist is also convinced that the issue has not simply to do with the weight of the structure but with not seeing the internet as important as it really is.
Mobile payments
The way stakeholders relate to technology applies to payment innovation as well. After much talk, probably only a psychologist could give a correct insight into what companies and financial institutions should do to succeed in the next technological challenge.
The problem with mobile payments is down to two issues: it is hard to identify if customers perceive a real need for it; and users have to trust their mobile phone as a secure tool to pay with.
"People will use mobile payments if it’s convenient for them and it gives them a service that they could use. What they need is to trust mobile payments and the solution is to increase the trust in the company that offers mobile payments," Jones says.
And, even here, the missing point is not to release tons and tons of research on this, but "it’s about focusing entirely on the customer."
The case of Africa is clear: here it is much harder to get hold of cash, due to the long distances and the large unbanked population. At the same time, the penetration of mobile communication is incredibly high. Here it is clear that using mobile phone to transfer money really represents an advantage in Africa . In developed economies things change: if I want cash, I’m two or three minutes from a cash machine in any direction. Getting cash is easy and psychologically, says Jones, we do not perceive the need to use mobile phone technology to pay for things. And, most important, people trust that tool.
"One of the biggest issues for anybody dealing with money and dealing with payments is trust: there are still people nowadays who do not trust direct debits, for example," he says.
Jones also explains that the most effective way of generating that trustworthiness is customer care.
"Companies that don’t demonstrate complete and total focus on the customer are much less trusted than those companies that demonstrate customer focus," he adds.
The problem has also to do with a financial services sector that has decreased levels of trust. Against this backdrop, it becomes even more difficult to introduce a new technology, which is less trusted anyway.
"It is really, really difficult for the banks to get those new technologies introduced. The simple way to do that is to dramatically increase customer care, and to do that they’ve got to do things they don’t want to do like stop paying big bonuses, stop focusing on share price and do all the things that they believe to be central to their business," the psychologist says.
Having said this, is there a way to generate the need for mobile payments, following the Apple example? The straight answer is ‘no’.
"People will use mobile payments if it’s convenient for them. And the industry might be able to generate the need but it is going to take a lot of effort."
For this reason the conclusion reached by the psychologist is unexpected: "All the money and effort in trying to generate that need could be better spent in creating loads of separate, individual, highly targeted websites that meet specific needs for the bulk of people for what they want."
In some markets internet banking will be the future, not mobile banking, says Jones.
Loyalty programmes: an insight
Loyalty programmes are often identified as an important feature that will drive the change in how people pay. Could this be the convenience-element people are looking for? The issue here is to understand how willing consumers are to sacrifice part of their privacy in exchange for a better deal.
"There are ‘promiscuous shoppers’, people who are willing to move around change to get the latest offer on something, but they’re relatively few. Most people’s loyalty is not loyalty to the business; it is loyalty because it’s too complicated to move."
However, generally speaking, "people are very willing to give up part of their privacy in return for an offer of some kind," Jones says.
"Millions of people do so already with big brands. People realise there is a trade off between letting a company know more personal information and receiving something personally beneficial. Some people are not prepared to give out much personal information and realise they will lose out on those deals. Yet other people are motivated by the deals and are happy to release information."
The truth is that the big change will happen when the new generations is in charge. So, what will happen next?
"We don’t know. But what we do know is that if we don’t research how our customers are behaving then we are not going to get it right," the psychologist concludes.
