Man vs Machine: How Banks Can Find The Right Balance Between Automation and Human Connection

Community and regional bankers are told at every turn that they must incorporate more automation into all aspects of the banking experience, from back office processes to frontline interactions and everything in between. There are certainly numerous benefits that can be gained from automation. Automating previously manual and paper-intensive processes can save time and money while allowing a bank’s employees to focus on more strategic initiatives.

Large national institutions have benefitted from heavy automation in recent years, like the use of chatbots to streamline customer interactions in the digital channels. However, this strategy just won’t work long-term for community-focused institutions. Too much automation can remove the human touch that has distinguished community banks for decades.

Nearly every community and regional banker will cite relationships as their primary differentiator and key to success. Over-automating risks erasing what has historically, and what will continue to, set community institutions apart.

However, in today’s increasingly competitive environment, it’s also not feasible for banks to operate with the necessary levels of efficiency and scale without some elements of automation. Technology must be used to boost productivity and optimize profits. So, that leaves bankers with the difficult task of striking the right balance between man and machine, the automated and the human. Although challenging, it can be done.

Put the personal in personalization

An obvious, but commonly overlooked, example of where automation can go terribly wrong is in customer correspondence. Banks are increasingly turning to automated email marketing to send ‘personal’ emails and messages to customers, messages like ‘thank you for creating an account’. While this, in theory, adds a great personal touch, automation can dramatically dilute the value of such sentiments.

Take a happy birthday message, for instance. It is a good idea for banks to wish their customers happy birthday, but every other service provider the customer interacts with probably has that idea as well. So, when a customer’s birthday arrives, their inbox is likely flooded with generic well wishes from their dentist, doctor, accountant and banker. Your message is likely to be quickly scanned and deleted with the rest if it lacks a genuine connection or personal touch.

Instead, imagine that same customer receiving a handwritten note from their favorite teller or the loan officer that helped them secure financing for their most recent vehicle. And, the note includes a detail or nuance that only someone that has a relationship with that customer would know – a mention of their kids or favorite sports team, perhaps. This scenario is something memorable that is far more likely to resonate with the customer long after their birthday. Such instances, however small, of community banks going the extra mile and incorporating a human connection goes a long way in building and strengthening customer relationships.

Keep the bottom line in mind

In addition to weakening customer relationships, over-automation can be detrimental to a bank’s bottom line. For example, take automated lending decisions. While automating credit decisions can save time and streamline the process for borrowers who are an obvious ‘yes’ or ‘no’, it could also create an issue for those borrowers who fall within a grey area, somewhere between approval and denial. If the conditions are automatically determined, the bank risks denying someone that could have otherwise been approved.

Small businesses become big businesses, so unnecessarily rejecting a small business loan could potentially lead to lost revenue opportunities down the road. Those businesses that receive financial guidance and capital from their institutions in the early stages of a business venture are more likely to remain loyal and continue conducting business with that same bank down the line as their profits grow. Banks should be careful not to automate themselves out of a strong pipeline.

Another example where over-automation can hurt a bank’s bottom line is fully automating the overdraft approval process. Let’s say a bank’s largest customer accidentally sends payroll from the wrong account. If payment is denied on a highly valuable customer due to automation that cannot see the link between the accounts or the larger relationship picture, the bank risks damaging that relationship.

That high yield customer may take their business – and deposits – elsewhere. If a bank employee was involved in that same scenario, they would be more likely to recognize that something wasn’t quite right with their largest customer’s payment being denied and investigate why the payment was unsuccessful, preventing the error and enhancing that relationship.

There is no doubt that the line between automation and personalization has become a delicate balancing act. On one hand, banks must incorporate some elements of automation in order to maximize profit margins and efficiently scale. Plus, modern customers enjoy the benefits of automation in certain areas, such as online loan applications and account opening.

However, over-automation poses the risk of eroding the human element in banking. Without relationships, banking becomes merely a commodity. Community banks that are able to automate the cumbersome, manual processes to boost efficiencies in the backend, while allowing the human, personal connections to shine, will be well positioned to ignite their proven differentiator and thrive.