The tech revolution in banking was kicked off 50 years ago when Barclay’s Bank in London installed the world’s first ATM.  Consumers were thrilled when they could get cash or check their account balance without having to visit a branch, and they weren’t required to organize their schedule around bankers’ hours.

Financial institutions, of course, loved ATMs too, because pushing customers out of their lobbies into electronic, self-service transactions could cut the cost of transactions by 90%.

While it may have been hard to spot at the time, that first ATM in London sparked a consumer revolution and helped ignite a disruptive wave that would ultimately reach seismic proportions. You see, ATMs raised people’s expectations about what they should expect from a bank. Given this taste of convenience — the first major advancement in banking services in decades — consumers learned to enthusiastically embrace any service that would let them skip a bank visit (i.e., scratch another chore off the list). People adopted one electronic service after another until they finally had their bank right where they wanted it: in the palm of their hand… literally.

But financial institutions misread consumers. Banking executives confused consumers’ enthusiasm for greater convenience for an unsatiable appetite for all things tech. This was an easy lie for financial institutions to swallow — they wanted it to be true because the cost-savings associated with more self-service tech solutions would benefit their bottom lines. So they eagerly rushed out more techy features and gizmos with more bells and whistles.

Unfortunately, banking execs failed to grasp the implications of pushing consumers out of the door. Think about it… People aren’t loyal to their banking providers, and they would switch to Amazon- or PayPal-style competitors if they could. Why? It isn’t just because most people believe that “all banks are the same.” It’s because people don’t feel the love anymore. How could they? After all, banks pushed them out the door!

 Bankers who view technology as “the primary force disrupting banking” risk building their strategy around flawed assumptions and dangerous misconceptions. A tech focus is never as important as a consumer focus (just ask The Financial Brand’s Ron Shevlin). Consumers don’t like technology; they tolerate it. They may learn to love it if integrates seamlessly into their lifestyle, like Facebook. But by itself, “superior technology” is basically irrelevant.

Reality Check: If you aren’t making people’s lives easier by solving their problems and simplifying things, then having all the “best tech” in the world won’t matter.

Banks and credit unions tend to overvalue the importance of technology while neglecting consumers. We are more comfortable measuring ROI and navigating spreadsheets than delving into the vagaries of consumer research. Celebrated technologies like self-service branches, AI chatbots and robo-advisors are not designed to improve customer satisfaction but rather to boost corporate profits.

The cost-savings that spring from digital banking solutions can blind those of us in banking to the importance of happy customers. When we lose sight of our priorities, that’s when customers start thinking about their options and eyeing competitors. Relationships become strained, and we allow fintechs to creep in with more convenient, lower-cost alternatives.

Fintechs realize that the only way to win market share in banking is by listening to the customer then creating intuitive, consumer-friendly services people want. Despite nimbleness and lower costs however, finetchs must still fight an uphill battle because the system is rigged to protect and advance the interests of traditional banking providers. The biggest payoff for fintechs will likely come from the deep pockets of big banks too lazy to find their marketing moxie and too stuffy to create their own innovative products.

There’s still time. Banking execs can learn that the winners and losers are determined by consumers, not technology.

Bottom line? Technology isn’t enough. Banks and credit unions can’t afford to become a digital version of what they have always been.

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