A few years ago, a bank in Oman asked me to examine the problem of heavy consumer traffic and congestion at some of its branches. Oman, home to 4.15 million people (roughly 56% of which are expatriate residents), makes for fascinating studies on consumer behavior, given its diverse sociocultural makeup [2].

We began with selected bank branches under our microscope: these branches were gasping under the brunt of heavier consumer traffic than they were built to face. Early-stage analysis pointed us in the direction of cash withdrawals and deposits of small denominations.

Imagine an individual needing the equivalent of 50 dollars in cash. She could avail herself of a speedy ATM withdrawal, or wait her turn in a long branch queue to withdraw cash over the counter.

What’s more, she had to conduct an online transaction worth 50 dollars, she could use a mobile or laptop — reasonably ubiquitous devices, particularly for economically able consumers.  

Despite these options, vast hordes of consumers preferred queuing for over-the-counter withdrawals. It seemed like the time these consumers lost whilst queuing was less than the benefit they felt from interacting with a red-blooded human being.

Interestingly, the Omani nations who preferred over-the-counter transactions for smaller amounts (despite hailing from different income segments and ethnic groups), possessed one common trait: they were largely over 40.

Phone-savvy millennials, however, had a greater affinity for ATMs and mobile banking: perhaps unsurprising in a market with a smartphone penetration rate that trumps the global average by 12%.

As our team familiarised ourselves with these behavioral patterns, we found ourselves asking: how can we encourage customers to use ATMs or eChannels (eBanking/ Mobile banking), instead of waiting in the queues (which, let’s face it, was rather unpleasant in our view)?

If successful in our endeavour, we could reduce queuing times, alleviate branch congestion, and improve ‘customer experience’ in one fell swoop. Right?

We shall address whether our theory was correct later. For now, here are the factors we took into account when weighing this decision.

First, we considered the type of move that would be termed ‘neoclassical’ in economics circles: slapping a fee on customers withdrawing from counters. In other words, the same customer who wanted to withdraw the equivalent of 50 dollars would now find it more expensive to do this over the counter, less expensive over a mobile, and free at the bank’s own ATM machines.

When doing this, we asked ourselves a few questions:

• On Revenues: What happens if we successfully move people away from the branch, but overall, make less money from the fees we charge customers? How do we construct a fee based on the customer’s willingness to pay (WTP), such that we know the exact price at which it is no longer beneficial to them to transact over the counter?
• On Framing: Can we frame the move in a way that makes customers more likely to behave in a specific manner?
• On Fairness: Charging someone at a counter is like taxing them for using the service. Yet, they are customers after all, and ought to be entitled to the service. Is this fair?
• On Customer Experience: What would make the customer happier: interacting with a human or a machine? Are we placing too much of a cost on lost time, and too little of a benefit on the happiness amounting from human interaction?

Second, we considered a move that was less overtly intrusive. What if we had a ‘meeter-greeter’: a red-blooded human at the branch door, redirecting customers to an ATM, if needed? Would the fact that this move is less intrusive and still offer the customer ‘freedom of choice’ make it fairer?

And finally, we considered moves from the seemingly daft (handing out ice cold popsicles during Oman’s sweltering hot summers, whilst standing next to outdoor ATMs, to induce customers to use them) — to the seemingly mundane (branch redesign).

Have you ever wandered into a bank, seen an ATM stare you in the face before you reached the service counter, and been drawn straight to the machine? If so, you were just ensnared by the magical clutches of behavioral science.

It would be massively unfair to have this discussion and not broach the subject of fairness. Many believe that what they call ‘libertarian paternalism’ is permissive in both the private and public spheres, as long as there is no compromise with respect to either consumer welfare or freedom of choice.

I still find myself struggling with the question. To me, for instance, standing in a queue is even less stimulating than watching paint dry. Yet, is it acceptable for an organisation to manipulate my behavior, even if directed at mutually beneficial ends?

Richard Thaler, in a 2015 article, gives us a 3-step guide on this front:

"Nudges should always be transparent, offer an ‘opt-out’ alternative, and improve the welfare of the target population [3]."

This seems like immensely sage advice: yet, some of my quandaries remain. The main one being- how inherently acceptable is the idea of paternalism by a private actor with its own motivations, even when consumer welfare is in play?

I am sorry that I proffer no definitive answer.

All I can do is fervently hope that I have made things a little more interesting for the next time you find your car halting at a red light, or groaning in a bank queue.