A normal human being thinks rationally. The human being’s mind processes more than 50,000 thoughts per day along with a multitude of actions and decisions. Many of these are conscious and some are subconscious. But, all these actions, thoughts, and decisions have something in common – they all lead to a goal.
This fundamental truth – goals drive actions – will be the key to any organization’s success in the future. This will be true for transaction-intensive industries such as banking. Through a series of three blogs, I would like to point out why I think that Goal-Based Banking is the future.
Let us step back and start with the example of Sara. Sara goes for a jog daily and meditates every alternate day because she wants to be healthy. Or let us take Mark. He enrolls in an online full-stack developer course because he wants to get a better job. Being healthy and getting a better job are the goals that drive Sara and Mark to decide and take action. Or in other words, these actions, thoughts, or decisions form the building blocks for their goals.
The banking industry, with a rich history of more than twelve thousand years, is no different. Just like these actions and thoughts, billions of transactions form the foundation for the banking industry. In fact, a study by Capgemini and BNP Paribas points out that more than 500 billion monetary transactions are made every year. This means that more than a whopping one billion transactions are processed per day, many of them not even digitally.
The Story of a Transaction
The transaction, in common parlance, is an act of buying or selling. Each transaction has a unique story to tell. Parameters like the value of transaction, place and time of the transaction, the point of sales at which the transaction was made, the items and/or services purchased, the mode of transaction – all come together to tell the story of the transaction in detail. While each transaction in isolation will provide a wealth of information – there is a lot more to the transaction than what meets the common eye!
Customers perform each transaction to achieve a goal. Just like jogging and studying, the acts of buying a mortgage or swiping a card at an outlet are done with a goal in mind.
Let us go back to Mark and Sara. Sara takes a home mortgage, not because she aspires to take a house loan, but because she aspired for a home. Owning a home is probably one of her lifetime goals. Mark uses his card to buy a laptop, not because he wants a laptop, but because he aspires for a better job, and the laptop will help him achieve that goal.
An individual can have many goals – Owning a house, providing a good education for one’s kids, experiencing the joy of a vacation every year, ensuring a worry-free retired life, buying a dream car.
These goals are the customer’s ‘aspirations’ which drive her/him forward and the transactions that each customer does are because of these goals. The transactions are ‘what’ customers do to achieve their goals. Just like Simon Sinek says in his book “Start with Why”, it is not the “what” motivates us to jump out of bed and do something, it is the “why” that leads us forward.
If each transaction is put in the perspective of these goals, then the transaction will hold greater meaning.
It is a matter of fact that most of these transactions involve a medium of exchange in lieu of the products bought, or services availed and this medium of exchange in most cases happens to be money. No one understands the business of money more than banks. If you take a moment and think, the presence of a financial institution in most of our transactions cannot be avoided. Hence, I believe that banks are the best equipped to understand these goals and act upon them.
In my next blog, I will outline in detail why I believe that the banks are best equipped to understand these goals and how they can become invisible, immersive, intuitive, and an integrated part of their customers’ lives.