Understanding the customer experience evolution

As banks face some of the fiercest competition yet, many are revamping the customer experience to better accommodate customer expectations by leveraging technology. We look at some key considerations.

Banks are in the midst of some of the most challenging competition ever, and we’re not just talking about FinTech. Between morphing regulation and volatile customer loyalty, already-thin margins continue to shrink. As a result, many banks are stepping up the customer experience in order to differentiate and face mounting consumer expectations head-on. A report by Accenture states that nearly two-thirds of small businesses still use retail bank accounts, and whenever they do feel the need to upgrade, they’re increasingly turning to FinTech challengers.

The How Trumps the What

While product and service offerings are important, the real value lies in how they are delivered. For banks, this can be complex. The banking customer journey starts with onboarding and flows through to transactions and payments, account maintenance, issue resolution, and more. A seamless customer experience means attending to customer needs at every step of the journey and prioritizing key parts of the experience across channels and functions.

Technology

One cannot deny technology’s role in the customer experience evolution. The digital revolution and after-effects of the global pandemic have brought forth a tsunami of ever-changing technology that constantly creates a shift in customer expectations. Mobile banking apps, for example, are one of the most widely used apps by Americans. Almost 33% of users in the US preferred using mobile banking apps to check their account balances in 2021.

This same technology is spurring some of the banks’ fiercest competition yet, via FinTechs, which are more agile and nimble in harnessing the technology to create tailored products that consumers want. Companies like Amazon Cash, WeChat, and other services that excel in customer experience are increasingly disrupting the status quo. The disintermediation that banks are facing has put margins on the chopping block and made customer-centricity a priority.

Banking has expanded far beyond physical branches and into the digital realm, where consumers appreciate the convenience. However, many of these digital banking experiences are being delivered by FinTech. It’s evident in the annual churn rate for bank customers. Banks must get a handle on the digital experiences they are capable of offering, and this often begins with a look at internal technology and finding ways to ensure that legacy systems are not standing in the way of necessary digital transformation.

Personalization

Along the same lines of the digital transformation, which the entire financial services industry is undergoing, lies the need for enhanced personalization. Banks are no longer able to apply a “one size fits all” approach as customers grow increasingly picky in how they choose financial products and services—and as FinTechs increasingly offer personalized options to suit them.

Customers want to feel seen and heard by their banks at every step in the journey. Broad advertising must be replaced with customized, relevant messaging delivered to each customer at just the right time. Automation can lend a helping hand in this area, allowing banks to impress upon consumers that they matter by using massive data and sophisticated analytics to deliver personalized experiences.

The bottom line is that banks will not survive this wave of disruptions without delivering on personalization.

Artificial Intelligence / Chatbots

The use of artificial intelligence (AI) and chatbots is the perfect union of technology and personalization in action. As AI grows more sophisticated and the technology is applied via chatbots, customer service satisfaction can increase exponentially. Chatbots are getting better at interpreting and responding to customer messages with relevant, helpful responses. Not only does this contribute to the convenience factor for customers, but it also cuts down on the time customer service reps spend on the phone.

AI promises to free up staff from repetitive tasks that can easily be accomplished through applications of machine learning. In turn, customer service reps can spend their time on personalized interactions with high-value customers. The benefits of AI include reducing workload, collecting and analyzing data, streamlining risk management, and preventing fraud. The key is to be aware of the limitations of AI and to find the right balance between technology and human skills.

Closing Note

Transforming to meet new and evolving customer experience expectations requires agility and cross-functional collaboration. By focusing on both the how and the what of products and services, banks will be in a better position to meet and exceed customer expectations. Banks should view technology as an opportunity and leverage partnerships with FinTechs where possible, to accelerate the transformation and improve customer engagement and retention.

While technology is a key component of customer experience transformation, personalization is also a ranking factor. Consumers expect personalized messaging and tailored offers meant just for them; banks that do not cater to this will likely experience unnecessary churn. Through technology, AI provides a mechanism to address this need. Not only can AI process and analyze large data sets to facilitate personalization, but it can also increase operational efficiencies and drive down costs. Finding the sweet spot between technology applications and human skill sets will give progressive banks an edge in this wildly competitive and disruptive era.

Know more about the payment trends from our experts.

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