Next time you walk past a phone shop, take a look through the window at some of the posters on display. Odds are that the phones in the advertisements will have their clocks set to somewhere between 10:08 and 10:10.
Why? There’s actually more to this one than meets the eye, and some important lessons to take on board in financial services as well as other industries.
Turning the clock back
To understand the science behind this, we need to take a look back at watches and how their advertising has evolved over the last 100 years. Discounting the conspiracy theories (of which there are a surprising number), watchmakers picked the time to display in shops and adverts based on several principles.
Symmetry naturally appeals to the human eye, and so a time when the hands mirrored each other made watch faces seem less cluttered. Watchmakers also wanted to avoid hiding their logos behind the hands, and they needed to find a setting which looked good from as many angles as possible. This is why if you walked around a watch or clock shop in the 1920s, you would see most of the times set to 8:20. It was symmetrical, looked uncluttered and it left the manufacturer’s logo clearly on display.
The times they are a changin’
So why the shift from 8:20 to 10:08 as is now the tradition? The answer to this could lie in pareidolia: the quirk of the human mind which means we sometimes see faces in inanimate objects. Sellers thought that the position of the hands at 8:20 resembled a sad face, so started experimenting with 10:08, which looks more like a smile.
Allegedly, shop owners found that items set to the ‘happier’ 10:08 sold better than the ones set to 8:20, and this gradually became the industry standard. Going back to our phone shop window, Apple smartwatches have historically been set to 10.09 and other providers like HTC tend to go with the more common 10.08 in line with the status quo and you will also see a lot of 10.10s. Do they sell more phones as a result? Probably not.
Adapting with change
There have of course been some major changes in technology since the 1920s, not least the shift from analogue to digital. This is significant in this case because whilst 10:08 might loosely resemble a smiley face from the hands on an analogue clock, the same cannot be said for a digital display. It isn’t doing any harm, and you do need to pick some time to show, but the traditional thinking behind this is now obsolete in this new channel.
So why do phone companies (and let’s face it, big companies) still persist with this legacy theory? The answer could simply be that they never questioned it and just stuck to the familiar without really contemplating it. Even huge organisations rightly renowned for their innovative products can be guilty of doing things the way they have always done them, particularly when there is no pressing need to take a step back and think about how you could do things differently.
Lessons for financial services
There are parallels here within financial services. Many processes have been followed a similar way for a long time because there haven’t really been any alternatives, and so no imminent need to try and do things differently. For instance, firms need to monitor their customer conversations for compliance and customer care purposes, which is done manually. This is such a time consuming task that most organisations will only be able to review around 1–5% of cases and randomly sample them in the hope that any systemic issues will be unearthed.
This has become ingrained as the status quo. People now accept it as standard without even thinking about it, but when you do take a step back and consider things holistically, the traditional methodology becomes jaw-dropping. With smartphones, no one is really affected by a superfluous theory that somehow still persists. But in the case of financial services firms, random sampling like this means there is a black hole covering 95% of the risk landscape and vulnerable customers have at best a 1 in 20 chance of being found.
With advances in RegTech solutions though, there are now alternatives to the traditional manual system. With the case above for instance, Recordsure empowers firms to review all their customer touch points at scale through bespoke AI analytics technology and teams to the cases most in need of follow up action. Whilst there are a growing number of organisations (and regulators) hungry to innovate and explore new ways of doing things, there will naturally be others more inclined to wait until they pushed.
Shifting the status quo
Outdated legacy processes are almost certainly not unique, either within financial services or wider industries. There will always be times where an incumbent traditional process can be replaced by a more modern and capable solution. When the traditional process becomes the status quo though and used without questioning, it’s all too easy to forget that there is a problem in the first place.
Business leaders can be split between the early adopters and the followers. For some, they will always be reactive and driven by external events forcing them to change the way they operate. For those who are eager to adapt, improve and innovate though, the first challenge is simply to learn from these phone companies. Rather than blindly doing things the way they have always been done because that is the way they have always been done, create a culture which pushes everyone to take a step back and ask ‘why’ at every opportunity. Being disciplined here will be a constant challenge, but the results don’t just offer commercial value: in the case of financial services it can mean fundamentally improving customer outcomes.