The concept of empathic banking is becoming popular. You can tell it is because more financial institutions are talking about it. Whether they understand it or not is another thing.
Financial institutions are good at crunching numbers and analysing risk. To demonstrate their understanding of the importance of customer relationships, they write a brief for a marketing agency, which then takes care of the “soft sell”. It’s a cynical view, granted, but FIs’ collective lack of true empathy when it comes to developing real, lasting relationships with their customers is decades-old.
In the last few years, we’ve seen more emphasis placed on the habits of different generations, particularly Gen X (1965-76), Gen Y (millennials, 1977-95) and Gen Z (centennials, 1996+). According to The Center for Generational Kinetics, “The three key trends that shape generations are parenting, technology, and economics”. Of course, the last two are of most significance to the readers of this post, but I would argue that parenting should be considered by FIs too.
What is a bank or credit union if not the guardian of our trust? Are they not the keepers of our wealth, providers of financial guidance and arbiters of our identities? Could they not realistically be seen as being parental? Of course, there are good parenting skills and bad ones. Financial adviser Audrey Dawson argues the case for banks and finance companies being “deliberately designed to keep you in debt forever”, and as such reinforce negative behaviour. A good parent wouldn’t do this, so what gives?
New financial startups have taken a different approach to parenting, understanding Gen Y and Gen Z more because many of them already are! Their pitch to the customer comes from a good place, exemplified by using APIs, good design and good practise to help simplify the process of managing money. In turn, this leads to developing good habits, such as saving, avoiding debt and credit traps. Everything’s good, right?
Advanced banking solutions
Where the wheel falls off the parenting wagon is when we talk about collaboration, arguably one of the most overused words of 2018. The concept is sound: If traditional banks collaborate with youthful startups, amazing things will happen. And they should happen, but there’s also the potential for things to stagnate very quickly, as described with refreshing frankness by writer and speaker, Duena Blomstrom: “As time passed and I was getting deeper in the belly of the beast, getting to know those banks’ innermost workings, it was becoming clear there were no secret labs and no bankers in white lab coats tasked with caring.”
Perhaps the difference between succeeding or failing in this new world of advanced banking software is wanting to evolve or simply survive. It’s a big decision for a financial institution to make, yet it’s so important. Are you in this to evolve or survive? A fruitful collaboration between any company is based on the foundation of give and take; what can one get from the other to make things better, and what can be reciprocated? It’s the basis of any good relationship, whether it’s between companies, friends or parents, and it’s how a good collaboration will bear fruit. ‘Co-parenting’ might better replace ‘collaboration’.
This brings us back to empathic banking, and an understanding of what empathy actually is. Businesses don’t have empathy, as they are not human. Machine learning doesn’t have empathy, because it isn’t human. Only humans have empathy, and humans evolve and adapt to change through good leadership, clear vision and strong direction. It is my view that empathic leadership will be the most significant element of a successful business from now on, and it’s up to all financial institutions to test their skills as a parent.
Read about how ieDigital Interact debt collection software takes a more human and digital-first approach to debt recovery.