Rob Harris | 30 January 2018
When asked how transitory fashions and trends might influence his business, Henry Ford often shot back: “You can’t learn in school what the world is going to do next year.” What he could perhaps be more certain of was that Americans would continue to have journeys to make, and that if his assembly lines continued to produce well-designed cars they would likely do so in a Ford.
Ford’s grounded approach to strategy echoes through the decades and is perhaps more relevant than ever today as the debate between physical and digital delivery is played out.
We live in an era where certainties arrive, are anointed and then dispensed with at bewildering speed. No sooner have the digital marketeers and online retailers declared long-term victory than Amazon is snapping up retail units across Manhattan and busy inviting us in to complete our real world, weekly grocery shop. At the same time, the New York Times is reporting the highest number of vacant retail units in New York City since the late 1970s.
No wonder Ford hesitated.
Binary version
Financial services companies have tended to sign up to a binary version of digital vs physical. One where, ultimately, there needs to be a winner and a loser.
Under those rules, either hiring capable fortune tellers or technologists that can build in almost limitless flexibility into delivery systems becomes essential. The sheer volume of investment capital flowing in and thoughtful customer insight and creative invention flowing out from the Fintech community has ensured a permanent state of “Best in Class” improvement in digital service.
It’s impossible to underestimate the shift they have driven in customers’ perceptions and definitions of good service – particularly in retail finance and amongst SMEs. However, there is increasing evidence that those definitions might be more nuanced than popular opinion perhaps imagines.
A 2017 US Retail Banking satisfaction survey completed by JD Power pointed to a complicated set of service preferences. Whilst the appetite for mobile banking continued to grow inexorably, satisfaction levels were highest amongst those who also made regular use of a branch network.
Intriguingly, amongst Millennials satisfaction rates were 20 points higher for those who used both mobile and branch than those that just used a branch, and 37 points higher than those solely using mobile.
In the UK, Metro Bank are making great strides building out a model that combines both a high-profile commitment to a network of high street branches and material investment in an increasingly effective suite of mobile solutions. In part, the aim of an investment in a branch relationship is brand trust – a commodity essential for banks seeking to persuade customers to interact at scale and across products online.
Personal touch
Underneath this debate is a subtle distinction between the service of structuring product and the service of delivering product.
Most UK SMEs are run by owner managers. Their businesses, often built up over generations, frequently support networks of surrounding family and friends. As a consequence, they tend to be conservative in outlook. They want to procure sensibly. They want to ensure that products essential to the health of their business are correctly matched and configured.
This is the world of face-to-face service – one that doesn’t readily transfer to an exchange with a Digital Assistant homed in the corner of a screen. By contrast, this is also a group that understands the small business imperative to control costs whilst delivering exceptional customer service. Once products are configured they have a huge appetite for low cost digital delivery – safe in the knowledge that they have a point of real world support should anything go wrong.
If Henry Ford were given to second guessing, then he might sense 2018 as a year where increasingly businesses seek a better balance between the physical and the digital. He would of course have been too shrewd to enter the debate…