Posted November 22, 2016
Standalone ATMs are among some of the only evidence that brick-and-mortar bank branches once stood in Northern Europe as the countries of Denmark, Finland, Iceland, Norway and Sweden are becoming increasingly cashless societies.
In these locations, it’s perfectly acceptable to use a bank card to pay for a pack of gum at the convenience store or a meal at McDonald’s, and pizza delivery people gladly accept tips via mobile-to-mobile transfers.
Why are these countries so far ahead of North America when it comes to going cashless? The Nordic cashless movement accelerated, at least in part, due to the greater security and traceability enabled by government efforts to move away from paper in issuing bank statements and confidential correspondence.
Also supporting this trend is a unified system of personal identification applied to financial transactions called NemID, a log-in solution common in many financial transactions that combines an individual’s social security number with a private password and series of expiring code of numbers. Government-funded telecom infrastructure also enabled Nordic countries to digitize personal IDs.
But even in countries where cash has gone the way of the dinosaurs, the human-to-human interaction of traditional customer care remains critical in fostering the confidence people need to move money from traditional institutions over to financial technology (fintech) companies.
Innovation in customer service
Excellent customer service allows financial institutions, both fintechs and traditional banks, to expand their business with less infrastructure, says Kristian Gjerding, CEO of CellPoint Mobile, a global fintech firm from Denmark. “I can be a bank of 10 people or 100 people. If a bank provides excellent customer service and the best technology, customers will find it,” Gjerding says.
By responding quickly and personally to customer calls, established institutions like Denmark’s Danske Bank ensure that customers still feel cared for as they did in the days that branches were the primary point of contact. Each customer who calls in to make an inquiry related to their accounts is identified immediately by caller ID. This eliminates the need for individuals to reveal sensitive details for authentication and makes the caller feel recognized.
Account managers correspond via email with their clients, and digital banking platforms include query forms which make it easier for bank representatives to answer customer questions without forcing the customer to explain their needs each time. “Financial institutions really need to improve their game and have a 24/7 presence where customers can conduct banking and payment business electronically and through call centers,” says Gjerding.
Though technology has improved personal identification, issues of trust remain when it comes to money-management. That’s why old-fashioned voice-based customer care can offer a critical boost to customers’ confidence.
While mobile applications are expected to rise in prominence over the next five years, customers still expect personalized service when problems arise. According to a recent study by PricewaterhouseCoopers, call center support is still in demand around the world, with 46 percent of respondents saying they prefer person-to-person interaction when reaching out for customer service.
The same PwC study reports that four out of 10 participants said they believe fintech will increase customer interactions because of the greater number of possible customer touch-points. A majority feel that the most important impact of fintech is how it will “affect the ability to meet changing customer needs with new offers.” Through simplifying money management, transactions and financial services, these young banking firms are generating greater consumer engagement. This has impacted the margins and market share of traditional financial institutions enough to make them take notice and, in some cases, consider collaborations.
A recent report on fintech published by KPMG suggests that a need to build customer confidence is an important motivator for collaboration between fintech firms and traditional banking institutions. “Part of the competitive advantage banks have over new market entrants is trust. But to fully become the real-time, innovative and modern trusted adviser, they have to be willing and able to plug and play with fintech companies to provide customers with an amazing, personalized, secure, easy and inexpensive experience to better manage their financial lives,” the KPMG report states.
Many paths to cashlessness in the U.S.
At the industry level, major companies operating in North America look as though they’re ready to play ball. Android Pay, Apple Pay, Samsung Pay and Amex Express Checkout are all major-league offerings available to Americans looking to go cashless.
But despite the popularity of online shopping, peer-to-peer payments via platforms like PayPal and Venmo and the general societal push, Gjerding suggests that the U.S. will need added infrastructure to support a cash-free economy. Among these are smarter customer service systems which help authenticate identity to avoid delays on the phone.
The benefits of a cashless society — reducing fraud risks to retailers and individuals alike, ensuring better government oversight of financial transactions and simply making life more convenient for the individual consumer — will push the digitization of cash and innovative approaches to customer service far beyond the Nordics’ borders in the future.
In areas where older infrastructures threatens to slow the adoption of such technology, customer service may make all the difference in boosting consumers’ trust. And in the business of money management, whether it’s cash or cashless, people put their money where their trust is.