How banks can rebuild customer service with the Internet of Things

Gino Zucca has a very big job.

His official title is director of Internet of Everything (IOE) strategy and marketing development at Cisco Systems Inc. It basically means he’s overseeing Everything about Cisco’s IOE vision. Zucca flew in from Silicon Valley recently to talk up that vision at the FinTech Toronto conference, specifically how IOE will change banking.

Zucca argued that banks have to embrace IOE now because their customers are more than ready for it.

“(Businesses) have gotten away from that customer experience and we need to drive that back with personalization within context,” Zucca said.

If banks don’t do this, he warned, their customers will just find alternative providers that are already offering more digital options. It’s a phenomenon that’s already playing out, according to IDC. It estimates that two per cent of global payments will be routed through “alternative payment networks” in 2015.

Zucca cited Cisco’s own survey of 7,200 bank customers in 12 countries, released in March. Seventy-five per cent would switch their money to other providers if they “offered digitally delivered services that made their interaction and transactions easier, faster, more convenient and productive,” the accompanying study suggests.

Pointing to that sort of data, Zucca implored the Toronto audience: don’t just go digital to save operational costs and create internal efficiencies; do it to transform things for your customer.

At this stage of the IOE game, do the banks really ‘get it’?  And if so, what are they doing about it?

They do seem to ‘get it’ when it comes to the need for improving customer experience. In August, American Banker released a survey of 50 CIOs and senior technology officers at banks. About 75 per cent said customer-facing technology had strongly or moderately increased as a priority.

So yes, the banks do seem to recognize the urgency of their situation.

Are they taking action on it?

Yes, according to another survey done by American Banker and Verizon. Although this one’s from August 2014, it does look specifically at how banks are adopting IOE (or machine-to-machine, as it’s referred to in the report).

At the time of the survey, only 13 per cent of banks were implementing an IOE solution. Yet about 30 per cent planned to adopt IOE within the following 12 months – and for very customercentric purposes: to manage or authenticate customer identity, capture social media interactions or capture mobile interactions. Among the larger banks surveyed, 42 per cent planned to deploy video chat for teller-to-customer interactions within the following year.

So banks are moving on this IOE thing and they’re doing it for customer-related reasons.

Even more revealing, perhaps, is the part of the survey asking the bank CIOs to name the biggest challenges they face involving IOE adoption. Of those who hadn’t yet adopted IOE solutions, the top reasons given were security risks, implementation costs and lack of information about IOE itself.

Among banks that had already implemented some IOE enablement, 69 per cent said their biggest challenge was “lack of data management strategy.” Their single worst pain point? “Complexity,” named by 92 per cent.

In Toronto, Zucca summarized his own list of the key IOE challenges facing banks. Digitizing business processes, connecting them and making them more flexible for customers. Making decisions based on data. Making sense of the data. (“How do you synthesize all this data?” he asked our suit-clad crowd.)

“The hardest part of all of this,” Zucca said, “is changing people and changing mindsets … changing how people and companies have done things for a long time.”

Complex, in other words. And for CIOs and senior IT managers at banks, a very, very big job.

Image courtesy of hywards at FreeDigitalPhotos.net