Digital dementia: have banks forgotten about their customers?

Have you ever driven a route that you’ve done very often, but still rely on GPS to get you to your destination, or felt lost because you had no GPS signal?

In the race to optimise cost and efficiency through technology, let’s not forget to ensure a human touch remains

Do you know your closest family and friends’ phone numbers without looking at your address book? I used to know all these and more, like my NI number, passport number/expiry date and card pin numbers. Now I just know where on my phone to find them. I initially put this down to getting older until I found out about “digital dementia”, a term I read about for the first time this weekend.

This term is attributed to German neuroscientist Manfred Spitzer, who in 2012 used it to describe the effects on our brains from an over reliance on technology. The internet and smartphones have made access to information near ubiquitous. The 2023 GSMA report says 55% of the global population has access to the internet via their phones and by 2030 there will be over 5 billion 5G connections.

Over time, we have effectively delegated or outsourced things we once remembered to our smartphones. Increasingly, instead of knowing/learning something, we are reliant on being able to search for it on the internet. This I’m sure will get worse with AI as well. The impact of this on us humans is much more than simply forgetting how to get somewhere or forgetting somebody’s phone number.

According to a study titled How Has the Internet Reshaped Human Cognition? published in 2016, we are losing cognitive flexibility as we commit less to memory because of our reliance on being able to find information instantly when we need it. Therefore, the core issue is we are losing our ability to learn things.

For me, this presents a massive problem. For years I’ve believed that it’s more important to learn HOW you learn than WHAT you learn. This is something that Jim Kwik, author and brain training guru to the stars and big corporates, also espouses.

I’m sure you’re wondering why I’m writing about this. What does this mean to your fintech, bank or even for core banking, the topics I normally cover? The question I’m posing is that through digitalisation, have you developed an over-reliance on technology that is making you forget about the customer? This could be called “corporate digital dementia”.

For example, banks’ multi-channel strategies used to focus on providing choice and flexibility so you could bank how you wanted to. Banks used to have targets like:

• A branch on every high street
• All calls answered in three rings
• Martini banking – any time, any place, anywhere

Many neobanks don’t provide phone lines, and those that do typically don’t attend the phones after 6pm. Some that have a digital presence on social media only use it to push information/products and don’t respond to customer feedback quickly. Ordinarily, this might not be an issue, but if your account has been locked or you’ve been hacked, you want to be able to contact the bank quickly and have an urgent response time.

While many banks now have systems in place to understand what products a customer has (single customer view), this rarely extends to knowing what interaction the customer has had with the bank. For example, do banks allow their staff to easily understand what letters, what last transactions or what last call a customer has made? Or their last visit to a branch? Yet online, most are able to track customer behaviour to help them sell further products.

From a customer perspective, another challenge is the way you identify yourself to your bank, which is often different if you use a call centre rather than your internet or mobile banking credentials. To make matters worse, you’re often expected to memorise a nine-digit user identifier as well as a password that has digits and symbols.

This week, and as much as I have been a strong protagonist for digitalisation, I’m just saying that in the race to optimise cost and efficiency through technology, let’s not forget to ensure a human touch remains. That customers can easily get hold of a human when they really need to. That we treat customers as humans and not expect them to have to remember things that makes the bank’s life easier, not the customers’ lives.

About the author

Dharmesh Mistry has been in banking for more than 30 years both in senior positions at Tier 1 banks and as a serial entrepreneur. He has been at the forefront of banking technology and innovation, from the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).

He has been on both sides of the fence and he’s not afraid to share his opinions.

He founded proptech start-up AskHomey (sold to a private investor in spring 2023) and is an investor and mentor in proptech and fintech. He also co-hosts the Demystify Podcast.

Follow Dharmesh on Twitter @dharmeshmistry and LinkedIn.

Read all his “I’m just saying” musings here.