" class="no-js "lang="en-US"> Staying relevant - Fintech Finance
Thursday, May 30, 2024

Staying relevant

James Smith, Director of Digital at Nationwide, is responsible for one of the biggest digital change programmes that Nationwide has ever seen.  But the technology is in service to only one goal

Ask any fintech fan to list the benefits of an incumbent as opposed to a challenger bank and their response will almost certainly be: what benefits? In the eyes of the fintech community, being a mature institution established during a bygone financial era has nothing to recommend it. After all, it’s difficult to remain competitive while simultaneously shelling out for the maintenance of lethargic legacy systems and bricks and mortar facilities.

On the other hand, incumbent banks hold one of the two key attributes of a healthy, competitive financial services institution as a direct result of their prolonged presence in the market – trust. It’s something that the fresh-faced challengers are fighting to gain, and the venerable incumbents are seeking to protect at all costs.

Nationwide, the UK’s largest building society, has accrued its fair share of trust over the years. But James Smith, its director of digital, says that in this ever-changing digital landscape, consumer confidence is not the only thing necessary for incumbents to ensure continued success.

“At the heart of any institution that offers financial services there are two really key components,” he says. “The trick for traditional players is maintaining trust, which has been earned through years of service, while also maintaining their relevance.

“While they may not possess the same levels of trust, some of the newer players are really starting to make a drive for relevance,” says Smith.

“In a world where 80 percent of the population have smartphones, and people are spending huge amounts of time-consuming new forms of services, relevance is proving to be the key battleground. For institutions like ours, then, evolving our services to ensure they meet our members’ needs is going to be absolutely crucial.”

Protecting its presence

Judging by the alarming rise in the rate of pedestrian collisions as a result of smartphone fixation, one would presume that Nationwide would be looking to downsize its number of branches in accordance with those changing customer desires. But the society has, in fact, recently made a promise that every town and city with a branch will still have one in May 2021, safeguarding its 650 or so high street contact points.

“We firmly believe that forcing people into a particular way of interacting, for example by mobile, is not in our members’ interests,” says Smith. “The key is to provide customers with choice. With regards to channels, right now, a large proportion of our members rely on a mix of branch and digital interactions. There are certain circumstances where digital interactions make perfect sense – for example, conducting an account balance check on the go or cancelling a card in an emergency. However, at other times our members require a degree of empathy and understanding in their interactions with us that can only be delivered by a human being. In circumstances such as these, our branches are still proving to be extremely valuable in terms of remaining relevant to members.”

The problem is, if the last two decades are anything to go by, that this balance is a tricky one to maintain and consumer behaviour can tip the scale quickly, throwing a logistical spanner in the works for organisations such as Nationwide.

“If you go back 20 years, people were just about comfortable looking at their basic transaction information online,” says Smith. “Very few people would’ve bought a mortgage online. Nowadays, however, we do a significant proportion of our most straightforward mortgage business online. As technology evolves, and people’s acceptance with it, we’ll see interactions that today would be conducted in branch or over the phone, moving to digital.”

So, in a bid to make its digital moves at just the right time, Nationwide has created in-house teams whose job is to uncover exactly what members want and expect in terms of contemporary banking experience. These teams employ a technique similar to method acting – only hope they’ll be winning customers instead of Oscars.

“As we design new systems and experiences, our teams think about them from a member perspective,” says Smith. “They ask themselves questions such as ‘what do I actually want to achieve through this service?’.

“Referring back to the previous example, getting a mortgage is no one’s goal. Instead, what people want is to buy a new house. Having identified the true customer goal, our teams go on to consider how best to optimise the journey that leads to it. Is it easiest to interact with us in the branch, on the phone, or digitally to achieve the target outcome? What pain points currently exist in the process that is causing frustration for our customers and driving up our costs, and how can we eradicate them? This is the approach we’ve adopted when it comes to reengineering all of our core customer journeys to be as streamlined as possible.”

One such customer journey that has already received Nationwide’s streamlining treatment is its mortgage application process. The society recently rolled out an app called My Nationwide to guide first-time buyers through the perilous process of financing a home.

“For somebody who’s not been through the house buying process before, the whole thing is slightly bewildering,” says Smith. “’ Where do I start?’, ’what type of mortgage do I require?’, ’how much do I need to save?’, and ’what level of protection should I aim for?’ are typical questions they ask. Within the My Nationwide app, you can instantly discuss all of these queries with a specialised chatbot – and also get access to a real person via a new WeChat-style messaging service.

“Currently, about 70 per cent of questions are being answered successfully by our artificial intelligence (AI), but should you wish to explore things further you can simply hit a button and immediately be put through to a member of staff. Once you reach a certain point in that conversation, the operative you’re speaking with can book an appointment for you to talk things over in person at your nearest branch. After visiting us, you’re free to return to interacting via My Nationwide’s chatbot as the record of your conversation is kept up to date, no matter which communication channel you choose. It’s just one example of how we’re blending physical and digital to continue to provide our customers with the warmth and humanity that we stand for,” says Smith.

Nationwide has no intention of stopping at AI chatbots. In fact, in September last year, the society announced a top-up to its digital transformation investment strategy, taking it to £4.1billion over the next five years. As well as overhauling legacy systems to pave the way for new digital platforms, Nationwide plans to use the funds to deliver a unique face-to-face service experience, integrating video and social media into high street branches. Where some digital transformation programmes seem purposely designed to eliminate the presence of humans, Nationwide predicts that its strategy will create between 750 and 1,000 new jobs, and a UK-based technology hub will be built with the purpose of training and re-skilling existing staff.

While £4.1billion may seem like an awful lot for any institution, incumbent or otherwise, to spend over the course of five years, it’s worth remembering that this isn’t just any old digitisation pursuit. This is one of the world’s largest cooperative financial firms striving for something far more valuable than a handful of shiny new technologies to prove it’s still in the game.

“Whether it’s in branch, at our contact centres, or in any other part of our organisation, our mission is to retain our relevance at whatever cost,” says Smith. “To do this, we need to implement a technology stack that is quick and easy to maintain and upgrade. We also need to ensure our workforce is familiar with agile ways of working, so that
we can initiate something new, monitor it, check its relevance and make any refinements in the hope that it never stops adding value to our offerings. When it comes to relevance, there’s no point at which our work is done.”

This article was published in The Fintech Finance Magazine: Issue #12, Page 48 & 49.

  1. American Express and Ecobank Group Sign Agreement to Expand American Express Acceptance in 21 countries in Sub-Saharan Africa Read more
  2. Axis Bank and Mastercard Collaborate to Launch NFC Soundbox Read more
  3. Papara Acquires SadaPay Read more
  4. ABN AMRO Announces Acquisition of Hauck Aufhäuser Lampe Read more
  5. DTCC, Clearstream, and Euroclear Develop Framework to Advance Adoption of Digital Assets Read more