Permanent tsb: Digitalisation's role in the ethical banking mix

The arrival of technology has been a game changer for Ireland’s banking industry. Niall O’Grady Commercial Director of permanent tsb (PTSB) talks to Liam McKenna Partner Consulting Services – Mazars Ireland, about how the bank is using digitalisation to create more meaningful relationships with customers.

Liam McKenna: Where does technology fit into PTSB’s proposition – as an enabler or a driver of ethical banking behaviour?

Niall O’Grady:  Certainly a huge proportion of the transactional activity has now migrated to digital. The customer value in this is based on transaction accuracy, convenience and speed which improve and foster a better relationship. The standards for this are set way outside financial services so we need to respond to these customer trends and quickly. The idea of applying for a loan online and getting approved in minutes is very attractive and usage is growing constantly. The experience is a challenge to add value to and base a deepening relationship on so bets to get these basics of speed and accuracy right. So it is important that we also use technology in a way that enhances the transactional experience with good solutions. One example is that by analysing the vast amount of data we hold on customers we gain insights into where they are on their financial journey and use this in an intelligent and ethical way to preempt, support, review and recommend financial solutions that are better suited to their needs.
This approach is getting a great response from customers who like the convenience of online but also value the relationship and interaction with knowledgeable financial advisors at different points in their lives where and when financial needs arise. Overlaying behavioural information is also crucial. So lifetime events – be they marriage or divorce, birth or indeed death – that an automated process will not necessarily pick up on can be identified and correctly incorporated into the need identification process. This allows technology to be used as an enabler of better ethical service. The new factor that has now emerged following all the focus on digitalising the front to drive customer engagement is that we now need to focus on digitalising the operational back end in order to ensure that the front end promises can be matched.

Liam McKenna: How does PTSB square the ethical and compliance circle with the bank’s commercial mandate?

Niall O’Grady: We’ve seen a marked shift within the industry away from selling products to providing relevant and best product solutions to customer needs. Customer need analysis has become the commercial driver as opposed to product push.  This is a more ethical approach, which is where customer banking should always have been. From a commercial viewpoint the focus is to support customers to assess their needs and to plan their financial lives better and for us to offer solutions and services that facilitate this. Few people bounce out of bed in the morning looking forward to planning their financial future – so banks have a role in providing accessible solutions to encourage customers to do this. PTSB is focused on becoming facilitators of financial solutions, whether its planning for retirement, saving and investment planning, buying a home or a car. The product itself is secondary and a natural result of the needs-based processes and conversations taking place. Providing this needs-based analysis can be a challenge as the bank must remain determined and tenacious in its ethical path as it will come under heavy commercial pressure if other financial insti-tutions are using, for example, discounts on products as their main way of enticing customers.  But in the long term PTSB believes focusing on providing a good service that helps the customer identify their financial needs by supporting them through needs-based processes is the best way to add value and ultimately promote trust and better customer loyalty. This is now a much more important focus for us.

Liam McKenna: What particular challenges do you feel the use of technology presents?

Niall O’Grady: A challenge with digitalisation and the increase in automated solutions is a narrowing of an increasingly structured customer interaction. IT systems are great at repeating the same process for many customers and they have the benefit of being able to standardise that process so that we can ensure it is fully compliant when considered through the conduct risk lens, the compliance lens and even the legal lens. However, technology doesn’t have the flexibility that human beings have to identify more complex non-standard customer situations that may affect how to identify the best financial solution. When a customer is talking directly to a knowledgeable customer service agent, it’s possible to probe for additional information. This is important if we are to offer solutions and services designed with the customer in mind. So I think whether we use technology for automated solutions or use it to influence customer behaviour for good, it’s important to put in place good ethical, compliance and training foundations to ensure we meet high professional standards designed to meet the needs of customers in the long term. A great example is a wecbchat facility which marries the best of both.