Why Most Banks Struggle to Deliver a Killer Customer Experience

Banking execs are starting to realize that CX is just the beginning. Any "digital transformation" strategy prioritizing the customer experience also requires new business models focused on back-office efficiency and operational excellence.

Building a digital banking organization is more important than ever, with the cost of falling behind growing every day. The process of digital banking transformation is extremely complex, with the demands of the marketplace requiring a review of every component of legacy business models.

Financial institutions are realizing that they need more than technology upgrades, improving back-office execution to provide new avenues for business efficiency, customer experience improvement and value creation. In other words, while the focus on customers remains as strong as ever, the underlying components needed to create compelling experiences have changed.

At the same time that real-time data and customer insight can enable highly personalized interactions and proactive recommendations and offers, it is imperative that the operations that support these engagements allow the customer to execute the desired actions with speed and simplicity. By delivering seamless experiences that are not negatively impacted by slow legacy processes will provide the potential for emotional engagement and increased loyalty.

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Transforming Operations Requires Culture Changes

Simply enabling a customer to process a transaction or execute a process like opening a new account or applying for a loan is no longer enough. Customers expect to be able to engage with their financial institution seamlessly, with the same digital speed and simplicity delivered by the digital giants. This can’t be done with legacy back-office processes and operations created decades ago. Now is the time to transform back-office operations with a supporting shift in culture.

Organizations must start from a clean sheet of paper as opposed to trying to digitize outdated process flows. To reach the full customer experience potential and achieve operational efficiencies, organizations must take advantage of new advances in robotic process automation (RPA), cloud technologies, sensors, machine learning, and even the internet of things (IoT). These technologies will impact all elements of existing business models and help to future-proof the institution.

Fighting the Status Quo:

Sustaining and spreading a culture of continuous improvement requires fighting inertia and the reluctance to change existing routines and processes – especially even bad ones.

The rethinking of internal operations and processes will require a change in the existing culture that will support the adoption of new workflows enabled by these new technologies. Because of the significant change to status quo that has been in place for decades, employees must be involved in and prepared for this transition, acquiring new technological competencies and skills to become part of the digital future. Involving employees in the process will help inspire the innovative thinking that will be the foundation of this operational change.

To deliver the changes desired, strategic alliances and partnerships are also suggested to simplify business operations, utilize data, improve revenue and enhance the customer experience. These partnerships with third-parties provide both an outside perspective as well as tested solutions that will enable the execution of changes to be done must faster (and usually with less expense) than trying to transform operations entirely in-house.

Embracing Intelligent Process Automation

Intelligent process automation (IPA) seeks to remove repetitive, replicable and routine tasks that are part of all back-office operations. This is achieved through process redesign using robotic process automation and machine learning. It can significantly improve customer journeys by simplifying interactions and speeding up processes. That said, automating processes without rethinking whether existing processes are even required can result in bad results delivered faster – not the desired result.

“The goal of IPA is radically enhanced efficiency, increased worker performance, reduction of operational risks, and improved response times and customer journey experiences,” states McKinsey. Executed well, successful banking automation should result in humans being able to refocus their available time for pursuing innovative growth strategies and finding new ways to improve customer experiences.

“Determining the best way to integrate smart automation technologies such as RPA and AI in a way that effectively promotes customer loyalty, operational success and employee satisfaction is a balancing act.”

— Bain & Co.

The challenge for banks and credit unions is how to integrate smart automation to produce real value for both the organization and the customer. Many institutions have IPA programs of some sort in place, but most have not driven value at scale or gone beyond efficiency improvements to significantly improve customer experiences. There is also tremendous opportunity for institutions to apply state-of-the-art automation to better manage data and insights, support compliance and fraud detection, enhance conversational banking, and maximize employees’ talents and contributions.

Leveraging Data-Driven Decision Making

More than ever, the basis for operational improvement has shifted from backward-looking reports to real-time data. With the combination of increased data flows, machine learning and AI capabilities, connected devices, new ways for instant experimentation, and the move to cloud computing, faster and better operational decisions are possible.

In the most progressive financial institutions, data-driven decisioning is impacting marketing communications, product development and enhancement, strategic decisioning, and even new business models. The ability to integrate operational-based data for improved strategic decisions and organization-wide innovation is defining digital banking transformation leaders.

Building a strong data-driven operational foundation for transactions and processes will define the digital banking winners going forward. By simplifying the back-office to support fast and simple customer experiences – creating an ongoing flow of insight – will provide the flexibility and agility required to compete with digital native challenger organizations.

According to an article in the MIT Sloan Management Review, “As companies have had to move quickly to adjust to the realities of a global pandemic, their leaders also need to take a longer view. They need to consider how digital technologies can be used not only to enhance their products and processes but also to reinvent their businesses.”

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