Recently, I made a decision to acquire a supplementary broadband Internet solution for secondary use outside the office. Since my primary Internet service provider (Let’s call them ISP A) did not offer a competitive solution, I had to do a bit of window shopping.
Report by Omen Muza
As it turns out, an ISP (ISP B) that recently came to market happened to be establishing a presence in the vicinity of our offices as I was making that decision. On the day they commenced operations, I saw technicians from ISP A milling around, apparently trying to figure out the best way to prevent us, their existing customers, from being snatched by ISP B. Interestingly, the last time I had seen anyone from ISP A visiting our site was when we signed up to their service more than two years earlier. Now suddenly, they re-appeared talking about “bringing connectivity through fibre right into your office”, though I have not heard from them again since that day.
In the meantime, the plot thickens when on the very same day; a salesperson from ISP B comes knocking on my door persuading me to buy their new broadband solution, all the while castigating all other ISPs under the sun for promising what they can’t deliver on a sustainable basis. I pointedly tell him that our present Internet solution still functions reasonably well and can meet most of our connectivity needs, so there is no need to fix what’s not broken. As for my requirement for home use, I tell him that he is a bit too late because I recently bought a dongle from ISP C. By the way, in the vicinity of the office, we have a Wi-Fi hotspot for yet another Internet service provider — ISP D — and I can also connect to the Internet through my mobile phone service provider.
So what exactly is my point, boring you with all this technical detail, you might be wondering? Well, it’s all about choice, isn’t it? And my point is that four ISPs are vying for my attention and have positioned themselves as close as they possibly can to me such that I can interchangeably use any three of them from the comfort of my office. Effectively; I can switch from one to the other at will, at no extra cost and without needing to terminate any contract or entering into another. The net result can only be better service levels. My experience with these ISPs within these few days made me wonder when this cut-throat competition in the broadband arena would be coming to the banking arena where it is apparently sorely missed. It made me realise that banks have a few things to learn from ISPs in terms of competitive posturing and customer service support and I couldn’t help drawing some parallels.
Responsiveness: Incumbents — whether in banking or ICT — are always typically responding too late to competitive threats and because they are usually “forced to respond” instead of “planning to respond”, they typically reposition at a higher cost. Why wait for someone to move your cheese before deciding to do something about it? Banks do it all the time, apparently.
Incentive strategy: As part of its introductory offer, ISP B offered 12GB of free bandwidth valid for 30 days with each new purchase of an indoor/outdoor unit, while yet another ISP offered 25MB of free data for six months when one purchased their dongle. Banks don’t have to hand out free money, but in order to encourage customers to open accounts and use them, they could at least waive bank charges on selected types of transactions, with the impact of improving transactional activity and in the long term, income.
Contractual flexibility: Most broadband offerings now don’t lock you into long-term contracts, so you buy the data bundle that suits your user profile at the time of purchase, but banks will penalise you if you decide to close your account before a predetermined time period, even after you have concluded that their service stinks. Effectively, this amounts to building restrictive switching costs into the product offering, causing some consumers to avoid taking a chance by opening the account in the first place.
Follow the money: Considering that more and more of their product offerings are migrating onto online platforms which are available 24 hours a day, such as mobile or Internet banking, the concept of call centres should now become a viable proposition for banks as it has become for some ISPs. Banks’ have to follow the money onto these online platforms and through vibrant call centres, ensure customer support is available on a 24/7 basis.
Speed of service: As availability of bandwidth improves, ISPs are increasingly competing on the basis of the speed of their offerings. Banks should similarly think of the speed at which they serve clients as their bandwidth, measured by how soon a customer gets out of the banking hall from the time he enters it.
Gone are the days of the ubiquitous TV set perched deceptively in the banking hall, meant to cheat you and me into a false sense of comfort by supposedly entertaining us when we are, in fact, being distracted.
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- Omen N Muza writes in his personal capacity. He is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd, a Harare-based financial advisory, research and training company with interests in banking, technology and agriculture as well as the convergence area among them.