Why The Banking Industry Must Get Digital CX Right

Despite a clear understanding of what most consumers expect, most legacy banking organizations fail to leverage basic data sets to create positive customer experiences. What causes this performance gap? What will it take for banks and credit unions to provide the experiences provided by fintech firms and big tech organizations?

The growth of digital banking continues, largely due to the convenience of using a computer or mobile device as opposed to visiting a branch. There is no reason to expect this growth to stop at a time when consumers of all ages use their smartphone to purchase consumer goods, book restaurant reservations, interact with friends and family and even monitor physical wellness in real time.

As usage of mobile banking increases, the expectations of how traditional banks or credit unions should engage with customers and members also increases. Consumers are aware of the power of their identity and transactional data, and how this data and insight can be used to deliver a higher level of  financial relationship support.

Instead of simply delivering monthly statements of what has occurred with an account, consumers know that their bank or credit union can provide updates in real time and can even predict financial needs in advance using historical data and behavior, upcoming scheduled events, and/or geographic location. I like to say that consumers want their financial organization to provide a “GPS view” of their customer journey as opposed to a “rear view mirror” perspective.

As a retail banker or credit union executive, now is the time to upgrade your institution’s digital banking experience. Now is the time to use data analytics to deliver the type of engagement that consumers receive daily from other digital partners in other industries.

When was the last time you redesigned your mobile app to improve ease of use and increase engagement? How do you use data to show your customer that you know them, understand them and are willing to reward them for their loyalty? How do you avoid situations that appear that you only are trying to reduce costs as opposed to helping your customers and members better manage their money?

Here are some of the digital banking basics that must be provided by all financial institutions in 2020.

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Don’t Force Consumers to Use a Specific Channel

Despite research that appears to say differently, most consumers do not want to visit a bank branch. In many cases, we force them to do so to complete a transaction. No engagement is more guilty of this than the opening of a new account.

In the 71-page Digital Banking Report, “Digital Banking Customer Engagement,” sponsored by Harland Clarke, we found that while the majority of financial institutions say they have a digital account opening process, more than 80% of these organizations require the new customer to visit the branch to complete the transaction. This is unacceptable in a world where you can apply for a consumer or home loan, book airline tickets, make a major investment or purchase almost any product without visiting a physical facility.

Adding to this gap in delivering an exceptional customer experience is that the vast majority of financial institutions don’t track the entire customer journey or measure the negative impact of forcing a consumer to visit a branch to complete at least part of the account opening.

Help Customers Avoid Unexpected Surprises

Nothing is more frustrating to a customer than to be charged a fee … even if the reason for the fee is because of an error on their part. In almost all financial institutions, an officer of the bank has the ability to override a potentially bounced check or reverse a fee.

If a customer has a longstanding relationship, has multiple accounts with the bank, or isn’t a habitual offender, is the $25-$50 fee more important than an opportunity for a positive experience? To the customer, the fee (or bounced check) is harder than ever to understand where there are so many ways to inform the customer about the situation and rectify it immediately. An SMS text, mobile phone call, an alert via mobile banking app and/or an email to the customer all prove that the bank or credit union is looking out for the customer.

At a time when more organizations are looking for ways to leverage advanced analytics for a better contextual experience, asking a customer at what balance level they would like to be notified about potentially bouncing is antiquated. How is a customer supposed to provide a minimum balance alert level when it changes daily? (Is it a couple of days before a mortgage or tuition payment, a direct deposit of a paycheck, etc.?) The combination of historical transaction data combined with advanced analytics is a better way to determine when a customer should get a warning.

Today’s  consumers are looking for a partner for their financial journey, not a traditional bank or credit union that appears to place the institution’s interest in front of theirs.

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Provide Easy Ways to Save Money

Consumers have less and less time to manage their own financial accounts. The vast majority would welcome ways to save money or reduce costs to improve their financial wellness. There are hundreds of fintech firms that are filling the gap that most traditional banks and credit unions have missed. Some easy ways to help consumers manage their money better:

  • Automate transfers from checking to savings regularly based on advanced analytics that views inflows and outflows and finds opportunities to build savings “painlessly.”
  • Provide analysis of all subscription services that have monthly or annual payments to determine if the consumer wants to continue making these payments. (Most consumers have no idea the subscriptions they have done in the past.)
  • Analyze digital and check loan payments to other institutions to determine whether your organization can save the consumer money on their lending obligations.
  • Major borrowing triggers should be monitored. There are ways to monitor credit bureau inquiries to determine if a customer is about to purchase a car, home, etc. If you used these insights to provide your customer a better lending option, you have improved their loyalty to your organization.

Be Aware of ‘Silent Attrition’

Many financial institutions look at customer relationships like an “on/off switch” – an account is either open or closed. Is anything in the world of banking that clear cut? With the wealth of historical behavior data and daily transaction data, banks and credit unions must dig deeper into their customer relationships.

Does the consumer have obvious fintech relationships? For instance, are all of the deposits into a small business account made from a fintech payments provider like Square, PayPal, Stripe, etc.? Are the majority of outflows to contractors, employees, etc. made through the same fintech providers? If so, your organization may have the funds, but the “relationship” is elsewhere.

Monitoring activity levels is the best way to determine the ongoing strength of a financial relationship. Major changes should immediately prompt proactive communication to customer to save the business. Beyond reacting to changes already taking place, ongoing personalized advice and recommendations to customers using advanced analytics will help cement relationships.

Get The Basics Right

None of the recommendations above are rocket science. They all require a change in traditional banking practices which have become too steeped in outdated business models and policies. And this just scratches the surface of opportunities. Most institutions could easily double the number of ways they could improve the customer experience and generate satisfaction levels that can be a differentiator in the marketplace.

Remember, your bank or credit unions is no longer being compared to other traditional banking organizations. You are being compared to fintech and big tech providers who do not have legacy back offices, outdated policies, pre-digital cultures or a focus on cutting costs and fees. Digital organizations focus on improved experiences. Banks and credit unions must respond accordingly.

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