David Perrott’s Post

This month I celebrated a decade working at the intersection of applied behavioural science and retail banking. The milestone motivated me to reflect on some of the lessons I have learnt, that may be helpful for others working in the space. In the article, I share 10 of my biggest lessons, with personal examples from my work in behavioural banking over the past 10 years. Let me know how the lessons land for you and any of your insights gained from working in the space.

The banks that succeed over the next decade will be the ones that are relentlessly fixated on understanding human behaviour. If I have learnt anything from the rapidly accelerating impact of technology on banking, it is that any moat or competitive advantage that was gained at the software layer is quickly dematerialising. As a result, we see a rapid rise in the number of neo-banks entering the industry globally, decentralised finance alternatives increasing in competitiveness, and even industry outsides like Apple and Meta getting involved in retail banking. Why? Because advances in software engineering are making things easier. And with the advent of AI, and the growing capability of generative AI software engineering (E.g. Devin), we are likely to see the technological barriers to banking drop even further over the coming years. As a result of these advances, the competitive landscape has already started shifting away from software and towards the art and science of customer experience, which requires a nuanced and deep understanding of human behaviour: what drives it and what changes it. Successful banks on this new landscape: 1. Create a culture that is obsessed with understanding the customer. 2. Build teams dedicated to infusing CX principles at every layer of design. 3. Develop feedback systems to continuously learn from customers. 4. Incorporate insights and techniques from the behavioural sciences. 5. Use a wide range of research instruments for understanding customers. 6. Study the surrounding context rather than just the customer themselves. There is more I can say here but I'd like to hear from you. Do you agree with my observation, regarding the impact of advances in software on banking? Are there other big trends that may shape the new landscape? What else may improve the adaptive success of banks, in a world where even the most sophisticated feats of software engineering can be achieved at a relatively low cost?

The passing of a true intellectual giant, rebel, trailblazer and truth seeker. A wise, humble and curious man. Kind and generous with his incredible mind ❤️ What an enormous inspiration Danny was to so many, including me. Here are ten of my favourite things he said: 1. "Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance." 2. "The illusion that we understand the past fosters overconfidence in our ability to predict the future." 3. "Optimistic people play a disproportionate role in shaping our lives. Their decisions make a difference; they are inventors, entrepreneurs, political and military leaders - not average people. They got to where they are by seeking challenges and taking risks." 4. "Nothing in life is quite as important as you think it is while you're thinking about it." 5. "We think, each of us, that we're much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it's the other way around. We believe in the reasons, because we've already made the decision." 6. "True intuitive expertise is learned from prolonged experience with good feedback on mistakes. Acquisition of skills requires a regular environment, an adequate opportunity to practice, and rapid and unequivocal feedback about the correctness of thoughts and actions." 7. "We think of our future as anticipated memories." 8. "The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even if they see little." 9. "You are more likely to learn something by finding surprises in your own behavior than by hearing surprising facts about people in general." 10. "Contrary to the rules of philosophers of science, who advise testing hypotheses by trying to refute them, people (and scientists, quite often) seek data that are likely to be compatible with the beliefs they currently hold."

Client Relationship Milestone 🎉❤️ 🎊 This month marks ten years of work with Capitec Bank. Over that time, I've conducted research with almost every department, on a variety of different behavioural challenges, ranging from digital payments to savings, salary drops, card switches, credit decisions, consolidations, collections and new product launches. I've helped design better loyalty programmes, gamify financial education, build sophisticated capability assessments and improve existing service policies. It has been a fascinating and thoroughly enjoyable journey so far. I've learnt so much. Besides having a front-row seat to one of South Africa's fastest-growing companies, the thing that kept me close to the bank for all this time has definitely been the people and the culture. More than any other company I've worked with, Capitec knows how to hire and nurture great people. Leaders who listen. Team players. Innovators by nature. Individuals dedicated to their craft, and always aiming to make things simpler and clearer for their clients. Special thanks to those who have played a crucial role in my journey with the bank thus far: Piet Geustyn, William Edward Scott, Francois Viviers, Navashnee Moodley, Guy Mundell, Azhar Patel, Phumudzo Sundani, Lynne Irvine, Lesego Dwamena, Liana Justus, Carla Albertyn, Daniele Joubert, Shaun Ray, and of course Jennifer Coetzee (for taking a shot in the dark), and Jon-Louis Burke making the connection.

How might Generative AI change the way we communicate with customers at scale? In a thousand different ways, of course. But surely, one of the most exciting opportunities is the personalisation of language, which, when combined with video, creates the potential for an extraordinary service experience unlike anything the world has seen before. Now, this may start with simple translations (e.g. English to Spanish), but with time the translation will become more nuanced, to the point where an AI can model each of our unique language patterns, and so provide tailored content that syncs perfectly with our unique speech preferences and vocabulary. What next? Perhaps soon this will all happen in real time. Live stream? Remote face-to-face conversations? Perhaps in time, the service consultant will be removed completely. What are the implications of this? What happens when all the call centres become obsolete and there is no need for physical branches? Might we see retail banks emerge operating with service teams no larger than the number of fingers on my two hands? Might we see customers go through an entire year without interacting directly with a real human being? Might we see highly personalised financial products built and deployed in seconds, based on a customer's profile and their specific banking need? Interesting times ahead.

Where the name 'Pink Tank' comes from: The Pink Tank was inspired by two unrelated stories that both point at the core of the platform's mission, and my personal aspirations for creating inter-bank communities. Story One: Drunk Tank Pink The Pink Tank was partly inspired by one of my favourite examples of applied behavioural science (thanks to Adam Alter exposing it to me). In the late '70s and early '80s, a specific shade of pink was discovered to reduce the heart rate and have a calming effect on aggressive inmates when used in large jail cells. This finding led to the color being dubbed "drunk tank" pink. Subsequently, the same colour was in children's class rooms and even the visiting team locker rooms of NFL football stadiums. The intervention is an archetypal example of one of the core tenants of behavioural science. Namely, that small changes to a context and have significant influences on the internal states and behaviours of individuals. Story Two: The Pink Soviet Tank In 1991, David Černý, a Czech artist, painted a Soviet tank pink. This tank was on display in Prague and served as a war memorial. By painting it pink, Černý turned a symbol of Soviet oppression and war into a playful and non-threatening object. Initially, the pink tank caused outrage among Czech war veterans and officials. The tank was quickly repainted to its original green. However, in a defiant act of civil disobedience, Czech parliament deputies painted the tank pink again. Over time, this pink tank has become a symbol of peace and the power of artistic expression to overcome competitive militaristic narratives. The transformation of a weapon of war into a bright, almost whimsical object, serves as a powerful reminder of the potential for change and the role that art and design can play in social and political commentary. The Pink Tank is also a play on the term 'think tank' which comes from World War ll jargon, used to describe safe, secure rooms where strategists would discuss war tactics to overcome their opposition. My sense is that we need less competitively-orientated 'think tanks' and more collaboratively-orientated 'pink tanks' in the world, so I'm creating one.