We can potentially get to every New Zealander that has got access online
Jeff Greenslade was at an international conference, where one of the speakers presented on the behaviours of millennials when transacting online.
The speaker reported on a recent survey showing 75 per cent of millennials would rather see a dentist, than a bank manager.
That is illustrative of how this group thinks, says the CEO of Heartland Bank.
But he believes being called a millennial - the term encompassing people born between 1982 and 2002 - is not related to age.
“Those behaviors are stretching out,” he says. “We see millennial as a behaviour, not an age thing. They want what they want and they want it now.”
“They would like to do things online where it is much easier, and they can shut the screen down anytime.”
Thus, he says, “Speed is our key thing...everything we are doing, we want to make it frictionless, clear and fast.”
Dealing with disruption and competition
Greenslade joined Heartland Group as CEO of MARAC Finance Limited in 2009 and subsequently became chief executive of Heartland Bank.
Heartland Bank is New Zealand’s largest reverse mortgage lender, and owns Australia’s leading reverse mortgage provider, Heartland Seniors Finance.
Early on, Heartland Bank’s focus was on products, but shifted to delivering innovative products to markets underserved by other banks. The next phase of the bank's strategy, is focused on channels to deliver its products, with an emphasis on digital distribution.
“We are finding niche markets and new channels,” he tells CIO New Zealand on how the bank is working through the digital era.
He explains the bank's strategy is to provide 'best or only' banking products in niche markets in the household, business and rural sectors.
This is done by providing frictionless digital experience to the emerging millennial market, a high touch personal service to the growing senior market, and a fast and responsive online service to small businesses.
The bank has launched a number of digital platforms (including www.openforbusiness.co.nz, www.openforyou.co.nz and www.openforlivestock.co.nz), which he says are designed to deliver a fast and simple customer experience.
“If you found Open for Business, it means you are interested in working capital, then we can take you through the stages.
For working capital, customers can present the necessary details through their smartphone and in a few minutes will know if they are approved to borrow $50,000 straightaway.
It is targeting SME owner operators.
“We think up to 75 per cent of our products could either be originated online or completely online. That is great for a small bank like us."
He sees online as a distribution channel with very low marginal cost.
“We can potentially get to every New Zealander that has got access online.”
"We have a philosophy of just having a simple product design platform. You land on a page and it is just one product.
“The surveys we have seen show millennials don't like cluttered lending sites,” he states.
He says it will not work for them to go to a landing site, which has 50 different products and 10 different rates.
Millennials will say, "I just want this, where is that?"
A consideration is that some millennials may be doing transactions, like getting a motor vehicle finance, for the first time.
"We just direct them to a site that is dedicated to what they want."
This is also the same approach with another customer base, those aged 65 and over, who are taking out a reverse mortgage.
"When they come to the site, we make it simple and obvious what to do next or they will drop off," he says.
The bank has an in-house multidisciplinary group that thinks of the solutions, develops the inputs and codes the updates.
"Previously we had to go an external provider, put in a job and they will finish it in four weeks."
He says work on the user experience aspect of the website is an “ongoing exercise”, which he participates in.
It is like looking into a funnel, he says.
"You may get a thousand people visiting your website and from there get you 50 applications. At various points along the way, people are jumping off, they are not getting down to the bottom of the funnel.
“We spend a lot of time examining why they are jumping off."
He says what their customers find valuable is they can jump to a phone number, and speak to an actual person.
“We have a 'high touch' telephone base and for some of our products like reverse mortgages and deposits, we need to talk to a person for regulatory reasons,” he explains.
Some people are happy to just leave a message and for a person to pick up their call later. Or, if they have dealt with a certain person the last time, they will ask that person to give them a call.
He says it is not only the older generation that would like this 'high touch' service.
High touch telephony, alongside the digital platform, has worked well for us, he states.
This way, he says, the bank will be adding hours to people’s day.
“The hours you used to spend queuing in a branch or organising an appointment with a bank manager, we are now giving back to you.”
We’ve partnered with three fintech lenders and built eight of our own online lending platforms
Working with fintechs
Greenslade says it is important to look forward, not back, when tackling digital disruption.
This is the approach it takes with the rise of fintechs.
“While the past might be enticing and comfortable, the future of banking is definitely about looking forward and either emulating fintechs or collaborating with them,” he says.
“Heartland has responded to our customers’ growing desire to transact online and quickly," he says.
“We’ve partnered with three fintech lenders and built eight of our own online lending platforms. Put simply, fintech is our new best friend."
He says Heartland sees fintech not as a product or a process but a distribution channel.
“It’s about maximising the low cost distribution offered by the internet and coupling it with fast risk decisioning tools that allow you to get to the customer quickly and cheaply. While at the same time, providing them with what they want, before they know they want it.
"We get to New Zealanders we couldn't get to otherwise,” he says.
Asked about industries he is looking at as models for what they are doing, Greenslade says these are industries that have taken a physical distribution and turned it online.
One of these is Amazon, which started selling books online.
“The product is not different,” he points out. “It is the mechanism to deliver that product to the customer, those sorts of entities, that have transformed the distribution from bookstore to Amazon platform.”
As to emerging technologies, he states: "We are interested in AI in search engines."
“Everybody thinks artificial intelligence are these robots that know how to think.”
The reality is, it is an algorithm searching to get the right answer, he adds.
“AI is around searching to identify our perfect customer and their needs five minutes before they need something.
"They are searching and saying, 'you need to speak to this customer.' Have a conversation with her because she has demonstrated these behaviours which suggest she may want to buy a car.
He believes “by making it relevant” to the customer, the latter will not find this action intrusive.
“We do not play the direct marking odds because [conversion] percentages are too low and you annoy people.
"What we are more interested in doing is analysing data for more intent," he says.
We are developing our programmes where we can model behaviours or characteristics that suggest if they are planning to buy a motor vehicle or they need working capital or a reverse mortgage.
"So we can get to them at the right time, when they are thinking about buying a motor vehicle or taking a reverse mortgage.”
''Say, you have just been on the website looking at motor vehicles and you own a car that is five years old. Then if we know those two factors, that means you are probably thinking about buying a motor vehicle and you are thinking about finance.
"What we do is get the data sorted by what we call intent, and that is the most important thing around data as against the value of raw data.”
“The conversion rates of those clients is quite enormous.”
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