Luddites,
reverse-Luddites,
and value

$?Luddite” sounds like an indestructible substance over which wars are fought in the Marvel Universe. 

The word originally referred to workers in early 19th century Nottinghamshire, England, who protested low wages and poor working conditions by destroying their employers’ machines. Today, Luddite has morphed into a reference to people who oppose technological advances.

Contemporary Luddite-type voices arise with nearly every innovation, from smartphones, to digital music, to self-driving cars, to gene splicing. Concerns range from “it’s bad for character” to “you shouldn’t mess with nature” to “it’ll put people out of work.” The first two have yet to hold up, but the last often does. It’s difficult to name a field where technology has not eliminated jobs. To be sure, technology also creates jobs, though it is by no means a lateral shift. It’s not as if the average laid-off assembly line worker can move into a newly created animator job at Pixar.

Job loss is, unfortunately, a brutal reality of progress. Despite what some politicians aver, the majority of phased-out American jobs have not gone to immigrants or overseas companies, but to automation and digitalization. That doesn’t lessen the heartbreak and very real consequences of losing a job or a once-thought secure career. It only explains the underlying why.

When grocery chains install self-checkout lanes, not a few customers express a bit of indignation. In something of a reverse-Luddite concern, some feel they are taking over a task once performed by employees and thus entitled to a discount. It’s more complicated than they realize, of course. If there are savings, they may come in the form of an avoided or delayed price increase rather than a discount. Perhaps more important, the if in if there are savings is a sizable if. According to the academic journal The Conversation, self-scanners do not reduce a store’s costs at all. In fact, The Atlantic recently reported that for many stores self-scanners increase costs by providing a too-tempting, easy way to steal.

Yet “we deserve a discount for doing the store’s work” may not reflect economic naiveté so much as not seeing value in a brand. That should be of concern to all, not least the financial services industry. 

It goes without saying that digital technology has eliminated or reduced the need for many a position in the banking industry. Outside of investment advice, consultation, and large commercial deals, fewer and fewer banking transactions require interaction with a live body. Portable devices, PCs, and ATMs pretty well cover the gamut from account set-up, to loan applications, to deposits, to payments, even to cross-selling. Today, a loyal customer might realistically have no need to set foot in a bank lobby for years. Clients using a bank’s technology might, like grocery shoppers, begin to wonder if they, not the bank, are doing most of the work—and, therefore, if they’re really getting enough value for fees paid.

That, of course, can lead to price-shopping, a brand’s worst enemy.

Banks in general have long faced the challenge of the parity-product, utility, or necessary-evil perception. Slogans like “The friendly bank” do nothing to help and, worse than going unnoticed, risk inducing eye-rolls. 

Client-banker relationships can offer an effective differentiator, but are inconsistent and tend to build loyalty not to a bank but to an employee—who may move on and take clients along. More disconcerting, however, is that client-banker relationships today are giving way to technology that becomes the client’s primary point of contact with the bank

Replacing bankers with screens requires a user interface that conveys perceived brand value. As I have written before, it is difficult but not unattainable. One need look no further than the fierce loyalty users have for their Android or iOS devices, which are, with all due respect to your smartphone of choice, all but parity products.

Every digital banking innovation deserves to heralded as a significant step forward in efficiency, accuracy, and service. From a marketing standpoint, it’s important to communicate the advantages of technological advances often—and convincingly—in order to ensure that clients continue see value. That can help ward off potential Luddites and reverse-Luddite protests.

Of course, it bears remembering that ensuring clients see value begins with ensuring that financial institutions first deliver it.

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