Banks hope friendly talking robots won’t push consumers’ buttons

Now that Hayne has basically let the banks off the regulatory hook, attention must turn to where it belongs: customers.

Now that Hayne has basically let the banks off the regulatory hook and potentially given them a big margin free kick by sentencing mortgage brokers to death, the banks’ attention must turn to where it belongs: customers.

The question they all are now grappling with is how to make peace with customers and the community while preserving the expense-to-income ratio, and not letting it blow out again.

Over the past 20 years the average ratio of costs to income of the big four banks has fallen from above 60 per cent to 44 per cent, allowing profits to be maintained as net interest margins declined and, more recently, credit growth dramatically shrank. Institutions have given them a big tick for this, but it has come at a terrible cost: the standard of customer service has collapsed, and along with it their relationship with customers and, more broadly, the community.

It’s not just the big banks that have suffered from this. All big customer-facing businesses, especially Telstra and the energy retailers, have seen a decline in customer satisfaction as they respond to shareholder demands to cut costs by offshoring call centres and distancing themselves from those they serve. Customer service has been the great corporate failure of the past few decades. CEOs have all talked customer focus, but very few have walked it; the gap between aspiration and reality has been so great that there has been a fundamental breakdown in trust and confidence in the corporate sector.

A lot of that breakdown is due to actual misbehaviour of course, in part thanks to having a royal commission specifically into misconduct which has naturally found some, but the problem predates Hayne and is much wider and deeper.

It goes back to when companies stopped answering the phone and made us press dial pad menus that led to offshore call centres.

Dial one for this, dial two for that, three for something else, four for something else again, and five to hear these options again, and please enter your four-digit pin number, and after all that you end up in a busy foreign call centre, where you trigger the use of a script, according to the number you pressed, and where you quickly travel to the outer limits of the operator’s knowledge and need to be transferred to another call centre, or somebody else in the same call centre with a different script. I used to insure my cars with AAMI purely because they answered the phone — quickly — and a nice concierge directed me to the right person to speak to, but they have also now succumbed to the dreaded impersonal cost-saving menu system. Not happy, Michael (Cameron).

It’s the endless tension between cost, scale and profits. The focus on total shareholder returns, supported by incentive schemes that reward executives for hitting TSR targets, has led to customers being thrown under the proverbial bus as the number of them grew.

The result has been boiling anger at companies, because each individual customer has no sense of being one of millions and couldn’t care less about the many challenges of dealing cost-effectively with so many people, often all at once.

Happily for the banks, and other big customer-facing businesses, help is at hand in the form of conversational technology — that is, robots that can hold a conversation and seem human.

The home computers that talk like Alexa and Google Home have been around a while, but one gets the feeling they haven’t really taken off because, well, once you’ve got past “what’s the weather like outside” and “play Eric Clapton doing I Shot The Sherriff”, there’s not much to say.

Or at least I haven’t bought one yet and feel no urgent need to do so. Maybe everyone else is chatting away to their Alexa and discovering the meaning of life from them, except me, which would be typical.

But I suspect the real revolution from conversational artificial intelligence is going to be corporate, not household, and soon: it will be customer service AI. As it happens, one of the leaders in this space is Geraldine McBride, a former senior executive at SAP and founder and CEO of an AI start-up called MyWave. She is also a non-executive director of NAB.

I spent some time with her this week and after playing a straight bat to my bouncers about the NAB board’s removal of the chairman and CEO, she explained what MyWave is doing: “You can use natural language, you can talk to it. ‘Help me get a concession. Am I entitled to this discount? Help me get a better energy plan, Help me move my money to a better interest-bearing account. I’m looking for a home,’ which then drives a mortgage outcome. These will be all things in a natural language.

“It goes to its brain, what do I already know, then it draws on information that it already held in all of those old-fashioned legacy systems that typically are very difficult to get at, brings that knowledge together and then it will also ask the customer permission if it needs to now go outside of itself and outside of where it is today to get further information to be able to fulfil that outcome.

“It will offload between 50-80 per cent of call centres because nobody likes to go into call centres because they’re annoying anyway. We can handle the bulk of things that would normally be in call centres but we can go beyond what call centres can do.”

The most rapid take-up of any technology comes when it removes costs, and taking out 50-80 per cent of call centres is big enough to be called revolutionary.

Stand by for all customer interactions with companies to be with a friendly talking computer who will know so much about you already and will be so nice that you’ll ask him or her to marry you.

Pity about the jobs.

Alan Kohler is editor in chief of InvestSMART