The Importance of Being Human

There is a belief that banking can become purely digital. During the pandemic cash usage fell and we couldn’t visit bank branches. Banks were quick to close ATMs and branches, justifying this as customer choice. Apps were downloaded and most of the population went online. It seemed to work.

This assumes we are now all ‘digital humans’ able and willing to interact with our banks through apps and online banking. Is that really true or is life more complex, more chaotic than that?

JP Morgan, which has 60 million digital customers worldwide, has just held an investors day where it made the statement that ‘our branch network is our core strategic asset’. It was referring to the US, where it has almost 5,000 branches under its Chase brand. In the US bank branch proximity is key for why customers choose a bank across all channels. In 2021 75% of its balances were held by customers who regularly use its branches, 25% of Chase branded cards were opened in branches and banker referral to One Chase partners were up 20% year-on-year.

In March 2021 Deloitte surveyed 3,000 Americans. They found evidence of a major shift to digital banking but found that it is ‘very much context dependent.’ While digital works for the routine activity, people want in-person interactions as soon as there is complexity. Tailored services seem to be as important as speed, convenience and flexibility. The Deloitte report says, ‘Irrespective of the banking channel they use – the branch, phone, or a mobile app – one factor continues to remain important for them: the human touch.’ 

A second survey from Accenture found the need for ‘digital humanisation’. The big challenge being how to put humanity into digital in order to keep in touch with customers, to be able to have conversations and ask questions.

Separately a recent article started with the statement that cash ‘helps businesses to focus more on customer engagement rather than payment management.’ When bars moved their tills to face the customer they did so because they understood the value of interacting with customers. Maintaining eye contact was core to happy customers. Whether in the retail or banking sector, it looks like a lesson that is having to be relearnt.

The value of cash

A recent article in the MIT Review ¹ says ‘cash is gradually dying out. Will we ever have a digital alternative that offers the same mix of convenience and freedom?’ The problem for cash being that it doesn’t move at the same speed as the rest of our data driven lives. Equally cash is not part  of the monopolistic and controlled world of platforms that charge us fees and takes our data while we communicate and spend.

Before addressing that question, the article suggests that we will end up in a place where we are ‘cash-lite’ rather than being totally without cash, and that those who use cash will be those who must use it (and a very small number who choose to use it).

Those forced into that position will not transact on the same basis, or level, as the rest of society. We see it already with people being forced to use pre-paid cards for on-line transactions with prohibitive fees, applied to the very people who can least afford to pay those same fees.

In the early days of the US before the Federal Reserve currency was universal, the well-off had access to bullion, sound banks and redeemable letters of credit. The poor had to get by with low-value bronze or copper coin or depreciated banknotes. The risk is that this happens again.

Despite all the benefits of the digital world, the article argues that cash remains the ‘best transactional tool for increasing community and individual autonomy that we have invented so far.’ It can’t be frozen in your account, reversed by a scammer, have fees eat away at your balance or require brittle infrastructure to work at the point of sale. It does not decide where, when and on what you can spend. It carries no fees.

Irrespective of whether we are talking about a Central Bank Digital Currency or today’s electronic money, they struggle to match what cash offers, ie. being low cost, difficult to censor and private.