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 fintechs. 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. McKinsey notes that 75% of the 50 largest global banks are pledging some level of customer-experience transformation.
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 not only attending to customer needs at every step in the journey, but also prioritizing key parts of the experience—across channels and functions.
One cannot deny the role that technology has played in the customer experience evolution. The digital revolution has brought forth a tsunami of technology that is ever-changing and that is constantly creating a shift in customer expectations. Mobile banking apps, for example, are one of the most widely used apps by Americans, according to Citi's 2018 Mobile Banking Study. Of the 2,000 surveyed adults, 31% reported that they use their mobile banking app the most. GOBankingRates’ 2019 survey showed that 76% of Americans said they wouldn’t open an account with a bank that doesn’t have a mobile app.
This same technology is spurring some of banks’ fiercest competition yet via fintechs that 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 have 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 fintechs. It’s evident in the annual churn rate for bank customers, which currently hovers around 20-25%. 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.
Along the same lines of the digital transformation 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 the 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. Accenture notes that one-third (33%) of consumers who abandoned a business relationship in 2016 did so because personalization was lacking, while almost half (48%) consumers expect specialized treatment for being a good customer.
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 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 limitations in AI and to find the right balance between technology and human skills.
Transforming to meet the 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 transformation and improve customer engagement and retention.
While technology is a key component to 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. AI provides a mechanism to address this need through technology. 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 of technology applications and human skill sets will give progressive banks an edge in this wildly competitive and disruptive era.