The 'James' Banking Experience

How would you describe the financial technology (fintech) landscape today and how does the James banking experience fit in?

Steve Muylle, Professor of Digital Strategy, at Vlerick Business School: The fintech landscape today is increasingly benefiting from rapid advances in various domains such as machine learning and distributed ledger technologies. Fintech introduces data-driven, customer-centric user experiences built around digital technologies and ups the ante for established financial services institutions. At the same time, the latter regard fintech as “TechforFin” and not only adopt digital technologies but also raise the stakes by leveraging their customer bases and domain expertise. The James banking experience is a case in point. BNP Paribas Fortis recognized early on that customer behaviour was shifting online and developed a personal investment advice service that was both human and digital. The case study details the development and adoption of the technology-mediated service, and allows for vivid discussions on the role of human advisors vis-à-vis robo-advisors, which drops the human element from the service provisioning.

Willem Standaert, Postdoctoral Research Associate at Vlerick Business School: An additional factor is regulation. The financial services industry is preparing for the implementation of Payment Services Directive 2 (January 2018), which enables customers to engage in open banking and combine fintech with traditional players. As such, traditional banks can become platforms for banking services (banking as a service) and it is key for them to control the customer relationship. The case study focuses on the role of the personal advisor in building the customer relationship online.

What makes BNP Paribas Fortis: The “James” Banking Experience an ideal case for business students to unpack in the classroom?

Willem: First of all, the case is controversial. In a class discussion, there are typically business students that believe in the James banking experience and would love their own bank to offer this service, while there are others who do not see the value of the online personal advisor and would not be happy to entrust their assets to a robo-advisor. Hence, this case tackles an important issue in the digital era, which is the role of the human in portfolio investment advice.

Steve: I would like to add that business students can look at the case from many perspectives. Continuing on Willem’s point, various service provisioning models can be discussed, ranging from fully personal models, technology-mediated models, fully automated models, hybrids (e.g., personal advisors backed up by a robo-advisor). Furthermore, the case offers counterintuitive insights. For instance, while the business students may think that BNP Paribas Fortis introduced the service for efficiency reasons, it turns out that customers benefit too thanks to high-quality advice and a close, long-term personal relationship with their James advisor, resulting in higher customer satisfaction and profits.

In the case, Anseeuw comments that “banking services are one of the last industries not to be digitally disrupted; we are the mammoths of the world. But don’t be mistaken, the barbarians are at the gates.” Can you elaborate?

Steve: The head of retail banking clearly understood that the biggest threat to the bank was not only its direct competition but the onslaught of financial services initiatives of both tech behemoths such as Apple, Facebook and Google, and promising fintech companies.

People tend to be guarded when it comes to personal financial information. Is AI the solution we have been waiting for, or are there larger ethical considerations?

Willem: AI can offer automated advice based on algorithms that take into account the investment profile of the individual customer, at a lower cost than a personal service model. Banks have a choice here: offer this to the customer directly or have a personal advisor as an intermediary, helping the customer to interpret the automated advice and offer emotional support.

Steve: The benefits of data analytics and AI cannot be ignored. Leading banks such as BNP Paribas Fortis have large customer bases and can turn to behavioural segmentation to offer different service models to specific target groups.

What is next for James?

Steve: First of all, the bar is raised. After hitting the goal of having 100,000 James customers by the end of 2016, an even more ambitious target was set for the end of 2017. The bank is taking the James banking experience to the next level by broadening the customer base and balancing the digital and human elements of portfolio advice. What is more, as stated by Peter Vandekerckhove, CEO of retail and private banking, in the case study text, “James is set to become the banking model of the future.”

Do you have any advice for potential case authors (e.g., how to choose a case or protagonist, the writing process, etc.)?

Steve: Try to develop a case with executives with whom you have a good working relationship. We developed this case through the Vlerick Business School - BNP Paribas Fortis Chair on Technology Banking, which involved both research for business projects and executive education, with the aim of jointly turning knowledge into action and action into knowledge.

Willem: One of the research projects was part of my doctoral dissertation on the use of technology in business meetings. Hence, we advise case authors to start from their research interests, and work with companies that share those. This approach allowed us to interview the key executives at BNP Paribas Fortis as well as a broad sample of the James advisors and their customers, which provided us with rich, multi-faceted insights for writing up the case. We would definitely recommend this approach.

Steve: It is key to have case protagonists that are engaged in the case development and beyond. Michael Anseeuw has been very engaged and has shared his insights at many sessions in which the case was taught, which was highly appreciated by the business students.