The financial services industry's efforts to suppress paper will be limited until it delivers a digital lifestyle that offers consumers more control, easier accessibility, better information, more personalization, and more safety than they get from paper-based services, according to a new report from Pleastanton, Calif.-based Javelin Strategy & Research. In order to achieve a truly "paperless" institution, banks must not seek to simply to displace paper, or to replicate the utility of paper, but create something better than paper, according to Javelin. Banks can begin to achieve this by thinking even more broadly about how to put the customer's interests first, the report states, and implementing the Javelin seven-point "customer-driven architecture" plan.
According to the firm, the plan recognizes seven "phases" of digital consumerism that banks should target and cater to. These are: Recognizing that customers are always "on" (they will have access to financial account information anytime and anywhere), interactions will be in real time, they will be transparent, the customer will be in control and be able to customize how they receive information, information will be integrated, interactions with financial institutions will be secure and their relationship with a FI with be goal-fulfilling.
Mark Schwanhausser, senior analyst with Javelin and co-author of the report, says that while banks have not yet achieved delivering a full delivery of digital banking as described in the customer-driven architecture plan, the key is to be proactive and invest in technology to enable this experience "at the right time of impact."
Schwanhausser says that banks who achieve this level of customer-focused delivery can change the dynamic of the relationship between the consumer and financial institution. Banks who do so can assume more of a role of service provider and trusted advisor.
For example, he says banks who cater to these seven points can offer a new and more effective kind of PFM.
"Imagine a world where your bank can tell you how each of your expenditures affect your stated financial goals, in real time," he says. "With each swipe of a card or tap of a phone, your bank can help you have a greater understanding of how it affects your larger goals. You can tackle 'unconscious spending' and see how miscellaneous expenses add up. PFM can change from just budgeting to helping you get closer to a financial goal."
Schwanhausser says that nontraditional financial institutions now coming on the scene will embrace these tactics and banks need to stay a step ahead.
"There are new guys coming on saying 'why is the old way of doing banking unassailable?'" he adds. "Bankers ignore what's going on at their peril."