// June 2nd, 2011 // No Comments » // Uncategorized
In 1943 Abraham Maslow wrote his seminal paper “A Theory of Human Motivation”, which introduced us all to the notion of a Hierarchy of Needs. Maslow’s theory, which has become one of those occasionally referenced (but seldom fully appreciated) analyses of human behaviour, identifies five key urges that drive us. 
At least two of those basic human needs (self-actualisation and self-esteem) have direct and surprising relevance to marketers in general and the banking industry in particular.
Brett King takes up the story in his 2010 book “Bank 2.0: How Consumer Behaviour And Technology Will Change The Future Of Financial Services”:
A staggering 90 percent of daily U.S. banking transactions are executed electronically today. Institutions that hold on to the belief that physical branches remain at the core of what the brand does, will not adapt easily to the customer of tomorrow who rarely visits a branch or the customer who sees no need for an over-the-counter transaction with cash or cheques.
There are two major factors at work here in creating a behavioural change, namely the psychological impact of the information age and the process of diffusion of innovations. Each of these factors contributes to create a paradigm shift in the way financial institutions need to think about service and engagement of customers.
[As consumers, we] understand through the introduction of new communications channels that if we can do something via phone or online, we are essentially wasting our time by persisting with a traditional interaction [e.g. going into a branch] that is far less time efficient. This, in turn, increases our self-esteem because we are using our time more wisely.
Secondly, the execution of a transaction or a purchase without the assistance of a person, as long as it works well, gives us a feeling of control and self-achievement that cannot be achieved in a traditional interaction.
King shares an HSBC Mortgage Case Study which illustrates just what those insights can mean in practice for banking institutions:
In 2002 HSBC embarked on a revamp of its mortgage website, looking to engage customers online more effectively and facilitate more leads for follow-up. The redesign team determined that lead generation could be improved by simplifying the customer experience and not asking them for irrelevant information that was simply not required just to make an appointment. The biggest challenge was helping the legal and compliance team to understand the difference between the online “make an appointment” form and an actual application form — and the significantly reduced compliance requirements of the online tool.
The redesign was launched in November 2002 [without any marketing support]. It was just turned on.
In the first month of the new site being activated, traffic was roughly the same as the previous months, and yet the new site generated close to 800 leads (an 8,000 percent increase).
As there was no marketing or promotion of the site, it is reasonable to assume that those visitors or “prospects” were already coming to the site to research mortgage products, but they were not using the old lead generation tool because it was too complex. By simplifying the tool, the impact was immediate and overwhelming.
It wasn’t a case of build it and they will come, because they were already there. It is simply a case of “think of how the customer behaves” and you will get the benefit.
As King goes on to note, today’s rapid diffusion of innovation has its own implications for financial institutions:
New technologies and initiatives such as the iPad and Facebook are now being adopted by consumers en masse in a period measuring months, not years. Simply put: if we aren’t introducing innovations into the customer experience at the same rate with which customers are adopting these new technologies, we are at a considerable disadvantage and we risk losing our customers as more intermediaries and third parties capture the benefit of the innovation.
It’s a stark warning, particularly as more and more banking services migrate to mobile and social platforms and new technologies such as mobile wallets and stored value cards threaten to disrupt customer behaviour even further. The danger is that digital natives such as PayPal, Google and Apple, with their comprehensive knowledge of customers’ needs, desires and expectations, will meet customer transactional and financial requirements far more effectively in the online space than the more-traditional banking institutions.
