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The banking shake-up

A personal reflection on the human crisis produced by the 4th Industrial Revolution.
Tech-friendly banking simply has to be possible – but by automatically reverting to fine-print Ts&Cs, banks miss an opportunity to demonstrate genuine care and become more familiar with the increasing sophistication of criminals. Picture: Shutterstock

It is common cause that the real crisis to humanity on many fronts of the explosion in technology is the impact on human relationships – between individuals and between individuals and institutions. So much so that we are witnessing a serious rewrite of classic economic and organisational theory.

At the forefront is perhaps the most important sector of our transactional lives: banking and financial services. It has a lot to answer for, and not only for its global handling of money, which arguably led to the great depression 10 years ago and has still left the world in a precarious position. It is a moot point whether the next major crisis – bigger than any experienced before, and closer than many may believe – will again not be sparked by a big banking collapse.

But that rash arrogance, encouraged by size, of US deregulation and reckless pursuit of self-gain by the lowest value-adding sector in economics, has not been confined to the investment sector. It has spilled over into what used to be the bread-and-butter of banking – retail and everyday banking. What is remembered with deep sadness by those of my generation was the personal touch, easy access to authority and an adherence to the most basic unwritten contractual principle: that of institutional custodianship of your money. In that, it was implied that the bank would act as protector of your financial interests within the confines of the services they offer.

Of course that was largely counterintuitive to the growth of technology, which created self-help banking and could bypass much of the personal contact and personal service that was the hallmark of ‘good banking’ of the past. Most South African banks until fairly recently failed to recognise that despite the advantages to clients of the self-help revolution, there was and still is a deep nostalgic void in the area of ‘We genuinely care’.

Some have recognised this and have been trying to ensure that innovation does not mean dehumanisation.

Capitec, for one, deliberately addressed that void and quickly made ripples in the industry to become the country’s largest bank in terms of clients. The new entrants to the sector are no doubt a further response to that.

It is not easy for technology driven institutions to avoid seeing themselves simply as managers of that technology for ‘outside parties’; moving money from those who have it to those who want to use it, or as an instrument of facilitating transactions – milking innovation as much as possible for maximum self-gain, and reducing accountability for anything other than a failure of the technology itself.

Gone is any semblance of custodianship of the financial well-being of clients. Clients are held virtually fully accountable for managing sometimes complex, obscure and confusing terminology and processes. Criminals, on the other hand, not only fully understand the technology, sometimes even ahead of the institutions themselves, but – and this is a very important but – they understand the emotional make-up and vulnerabilities of clients far better than the banks themselves do.

The cost of losing the personal touch

There can be little doubt that the success of retail banks in future will depend largely on their ability to inject a much bigger scale of sound personal relationships with clients. One that is arguably very far behind in this evolution is Absa, having lost hundreds of thousands of accounts over the past few years to fall from the country’s biggest bank to number four.

Much of what went wrong with Absa has been captured in a Moneyweb article by Hilton Tarrant here. What caught my eye was the following: “The principal challenge for Absa is that most of this ‘struggle’ is internal. Most of this change is ‘cultural’ and will need the bank to change from an ‘authoritative culture’ almost entirely reliant on the ‘back-office’, to a ‘market-facing one defined by results, learning, enjoyment and caring’. Plus, the bank has always been focused on products, not customers and their actual needs.”

I recently had a personal insight into this. My Absa credit card was cloned in November and drained to its limit. A few weeks ago my nearest neighbour had the same experience, adding to others in this area recently. In each case, the bank rejected any liability at the outset citing client disclosure of critical information. From a legal perspective this may be true. But what I found quite astonishing was the automatic reverting to fine-print Ts&Cs without exploring some highly relevant extenuating circumstances – robbing the bank of an opportunity to: understand its clients better; become more familiar with the increasing sophistication of the criminals themselves; and, of course, demonstrate genuine care.

I’m not going to use this column as a client’s grievance against a supplier or as a defence of my own naiveté. Rather, it should be seen as a cautionary tale about how easily a ‘reasonable person’ can be duped, and how defenceless some institutions will leave you.

This age of digital tyranny

But it does raise some issues that have emerged in this age of digital tyranny. I accept that not all banks are the same, and the remarks below may be somewhat over-generalised and perhaps overstated.

  • In largely abrogating their role as custodians of clients’ financial welfare, the banks have exposed clients to inordinate risk while shouldering no risk themselves.
  • The industry by and large does not understand its clients well enough to appreciate the emotional position they are put in and how a ‘reasonable person’ would react to such incidents.
  • The sector has not done enough to ensure that clients are fully equipped to deal with highly sophisticated criminals beyond their self-preserving fine-print Ts&Cs.
  • The default position of, in most cases, passing the buck to clients simply discourages the banks from ensuring greater awareness promotion. They should consider shifting some of the billions they spend on marketing to ensuring client preparedness.
  • Notwithstanding the mistakes clients can make – small ones with big results – the routine response of converting clients from victims to perpetrators while the real criminals get off scot-free unless pursued independently (no doubt hopelessly) leaves one with a deep sense of injustice and outrage.
  • This default position is counterintuitive to thorough forensic investigation in bringing the real perpetrators to book and curtailing cybercrime.

Our economic evolution has to find a way of embracing technology without disrupting healthy, empathetic human relationships. It has to at least be a joint journey between institutions and clients. Technology cannot leave our humanity behind. That will tear society apart.

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Thanks Jerry for a thought provoking article. It should be compulsory reading for bank officials.

I judge banks by the experience when entering my local branch. Also important is the experience when accessing their web services.

Unfortunately we are now very dependent on the internet with all associated risks. It would be nice to see a consumer survey covering risk protection provided by banking and telecommunication companies. This is probably a good guide on which companies to do business with.

Do yourself a favour and ask your bank for the terms and conditions relating to your contractual arrangement to use online banking. Then try to find one instance where the bank obliges itself to refund you in the event of a loss. Good luck.

Thx Gerry for voicing my exact uncomfortable feelings over the past few years. The dehumanizing of all people by institutions through technology.I do personal online banking and never had a problem but the lack of human contact makes it a little degrading and depressing. The Govt Dept like SARS etc abuse this terribly.

SARS has become terrible. Their callback service has been discontinued. When they make an error on an assessment and an objection is in place they still send an SMS threatening legal action for non-payment.

The way a company reacts to a customer’s problem is a DIRECT reflection of the ethical persona of the executive suite.

Would Raymond Ackerman of Pic ‘n Pay – if he ran ABSA – allow ABSA to behave in this arrogant, see if I care attitude, towards his customers ?

Not a chance!

The problem is that the executive management of ABSA (and MANY other large companies) live a life completely insulated from the experiences of their customers engagement with their company.

These managers sit in fancy air-conditioned offices, and are too busy doing important “executive” things to actually step out of the cubicle, and go make the time to work on the shop floor, or in a call centre, and develop real empathy for their customers.

Those companies that do so, stand out immediately.

Having personally dealt with problems that affected me, I can definitely point to the management of FNB and Capitec (and Pic ‘n Pay) as being a cut above the rest in this regard.

This difference in leadership is ENTIRELY due to the PERSONAL attitude at the top.

ABSA, and now Vodacom, have a loooooong way to go before they can credibly embrace ethics as more than just a cute mention in the annual report.

Ethics, for most SA management, seems just some sort of old-fangled (or is it New Age?) PR joke.

Just have a look at the comments for the casual acceptance of Vodacom’s utterly disgusting behaviour towards the Please Call Me Inventor.

I cringe when I imagine these people dealing with customers and staff problems.

End of comments.

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