Banking’s Customer Experience Battlefield

The battle for the banking customer has never been more heated, with competition using the latest in data, technology and highly targeted marketing as the weapons of choice. To win, legacy financial institutions must win the hearts of customers with experiences that rival the best in fintech and big tech organizations.

There has never been a more important priority in the financial services industry than delivering an exceptional customer experience. For the past several years, improving the customer journey was at the top of both the strategic priorities and trends mentioned by our industry insider panel of influencers.

To succeed, banks and credit unions need to evaluate all components of their business model to reflect the continuously increasing expectations of customers and members. Most importantly, organizations need to go beyond lip service, to delivering measurable improvements.

Moving from product-focus to customer-focus. Consumers know the difference between an organization that is focused on selling more product and an organization that wants to genuinely help the customer. The key it to provide value and services that are aligned to customers’ needs.

Focusing on long-term relationships. The value of a customer engagement goes far beyond the initial sale. Banks and credit unions must focus on the entire customer journey and add value at every step along the way. This includes making sure the initial product sale is right for the customer, and then partnering with the customer through onboarding and advisory engagements. With the tremendous amount of data and analytical tools available, there is more opportunity than ever to recommend the right services, at the right time to form a stronger bond with the customer.

Improving ongoing engagement. The ability to collect and apply insight has never been greater. The key to a great customer experience is to be able to apply this newly acquired insight, in real-time and in a personalized manner. This also means to effectively use multiple channels to build dialogue with customers through alerts and notifications. Many organizations have had tremendous success using SMS messaging to help consumers benefit from opportunities and avoid negative surprises.

Building trust. Financial services organizations are working hard to improve transparency and increase financial education that will benefit the consumer. This includes unbiased shopping tools, budgeting software, proactive product recommendations based on stated financial goals and a focus on long-term relationship building (see above).

Adjusting internal culture. Building a great customer experience doesn’t stop at the teller line, call center or product developers. Organizations must support a strong customer experience focus from the top of the organization through all customer-facing and back-office functions. Understanding that many back-office functions have internal ‘customers’ who meet the consumer daily, all areas of the organization must be moving in the same direction. Part of this cultural shift will also mean the utilization of new key performance indicators (KPIs) that are aligned with experience goals.

Hiring the right people. It is more important than ever to find people who demonstrate the right values and behaviors, understanding the role they play in creating positive customer experiences within the organization. These people need to be more empathetic and aware of the marketplace than any financial employees that preceded them. Beyond strong product knowledge, these new breed of employees need to understand digital technology and the way customers do their banking. They also need to know how other industries are improving the customer experience, and be willing to meet quickly changing expectations.

The Fintech Advantage

Fintech firms and big tech providers are leveraging their distinct advantages to create better products and services than incumbent financial services organizations, by focusing on customer insight, digital technology and being totally customer-centric. Using simplicity and ease of use, combined with contextual personalization is the key differentiator for the new challenger banks.

Mobile delivery. Small fintech firms and large tech players (google, Amazon, Facebook, Apple, etc.) are focusing on mobile technologies for the delivery of all financial services. Targeting Gen Z and the increasing number of people who rely on their smartphones for every component of daily life, their aim is to simplify all engagements by removing friction from existing processes.

Channel agnostic. While many use the term digital-first, best players are channel agnostic, letting consumers move from one delivery channel to another without missing a beat. Instead of starting processes over, consumers can use the channel that is best for them at any specific step in a process.

Flexible and responsive. While most legacy financial institutions move like a semi tractor trailer, with wide turns and slower speeds, fintech firms and large tech providers are like a turbo sports car – agile, responsive and able to change directions without much advance warning. Traditional financial organizations are constrained by their size, the age of supporting infrastructure, and sometimes even the people at the wheel.

Time is Not on Banking’s Side

While many in the financial services industry have been concerned about the challenge from digitally-focused startups, the real disruption may come from large tech giants with brand new models of engagement. Whoever becomes the bigger threat in the future, the need to change is immediate. Accenture found that digital laggards in the financial services sector could stand to lose up to 35% market share to digital-first competition.

New competitors are innovating and delivering customer-focused solutions at every stage of their journey. Relationship models are changing, and the cost structure of service delivery is reaching new lows, at the same time that engagement is reaching new highs. The key for any organization is to move the customer to the heart of every process and decision.

The engagement and experience expectations in the future will revolve around immediacy and simplicity. From P2P money transfers to real-time payments and mobile account opening, time will be the most valued commodity. At that the same time that transactional processes are being simplified, the definition of the banking ecosystem is expanding.

In China, WeChat is combining financial services with eCommerce, insurance and social engagement. With an engaged eCommerce customer base rivaling Amazon, a huge proportion of WeChat users are now going about their daily banking activities through the WeBank platform. Differentiated financial products are able to be developed using the customer insight collected with every transaction.

Conclusions & Takeaways

Incumbent financial institutions will need to be effective at utilizing all of the digital tactics and tools being used by smaller (and larger) competitors. Open banking through APIs has the potential to provide fantastic customer benefits and new seamless experiences. From advice and offers to frictionless payments and financial management, new products and services that were previously impossible can be delivered.

In the end, it is more important than ever for financial institutions to put ‘delivering a improved customer experience’ at the top of the strategic priorities in the future.

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