Nothing replaces one-to-one interactions.

• Author: Triplett, Ted
• Position: Customer Retention

Technology has become a double-edged sword for the financial service industry. It has lowered the operating costs for banks and added convenience for their customers; however, it has also eroded the customer relationship. Customers no longer have to come into the bank to make a transaction or leave the comfort of their homes to find low rates and special promotions.

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Banks need to implement new technology to remain competitive. However, they also need to consider the long-term effects technology will continue to have on their business and come up with viable solutions.

With the advent of technology, the banking relationship is not as close as it once was. For years, many banks followed a strategy that virtually eliminated personal contact with their customers. Because of this strategy, customers had less contact with bank employees and more interaction with technology in the form of telephone systems, debit cards, ATMs, interactive kiosks and the bank Web site. These technologies made it possible for customers to go months without visiting a branch.

You could argue this has helped banks become more profitable--less fixed costs (staff and overhead). However, I wonder if it is wise to avoid a face-to-face opportunity to speak directly with a customer to identify and meet, their needs and cross-sell them additional products and services.

The creation of the virtual branch via the Internet has allowed customers to shop around and exposes them to competition they may never have known before. The promise of the Internet is one-to-one, near immediate, personalized communication; but the immediate benefit for customers is the ability to quickly and accurately become more informed about their choices of banking services available. This makes it easier for them to purchase products from competing financial institutions (switch brands).

Customers can now apply for loans and other services on the Internet with traditional and nontraditional banks without the "traditional" in-branch...