Against geopolitical and economic uncertainty, many companies continue to make tough decisions. They’re re-evaluating what matters most and making strategic investments, and yet, the fundamental services offered by the financial services industry (FSI) haven’t changed for decades. What has changed, though, is service delivery. It is one of the few industries that has had to consistently reinvent itself while striving to deliver experiences that dazzle its customers.
Customer attitudes toward financial service providers have changed dramatically since the turn of the millennium. Today customers want their firms to go beyond the traditional products and services — they want them to function as personal partners and advisors. From retail banks to asset management companies, customers want relationships focused on their lifelong financial wellbeing.
Recent research from Forrester found that half of consumers wish their bank was more proactive in advising them and wanted their financial provider to alert them to issues that might impact their financial health. These new consumer expectations place significant demands on organisations whose business models were not originally set up for digital, interactive customer relationships.
Digital banking and what’s to come
Digitisation is not just driven by a strong customer need but also the opportunity to drive customer experience. This presents an immense opportunity for existing and new players to enter the arena and play the customer engagement game on a level playing field.
McKinsey defines a digital bank as a deposit-taking financial institution that provides products and services through a digital-first or digital-only business model. Digitisation at scale in the wealth management sector has traditionally been viewed as a harder nut to crack because of its bespoke nature and the large sums often involved.
According to Adobe’s 2023 Digital Trends Report, half of the marketers and customer experience (CX) professionals in the FSI admit their digital CX sometime lags behind their customers’ needs. The number of financial institutions that admit that their digital CX lags (50%) have nearly doubled since 2022 (28%), rather than shrinking.
As per Boston Consulting Group, only 13 of the world’s 400 digital banks are profitable—10 of which are in Asia Pacific. The common denominator for profitable players is the backing of established companies with significant business experience and substantial ecosystems, which lends strong brand recognition, an established customer base, and rich data to drive customer insights and customisation.
Through the years, retail banks have been early adopters of technology. Banks are now a truly omnichannel experience for every consumer. Some may prefer to lean more heavily on physical branch networks; others may crave a digital or even mobile-only experience. The certainty is that every customer interacts across multiple channels, and banks need to ensure these experiences connect and make sense.
Digital is never done
FSI marketers and CX professionals agree they must generate more value-added and holistic customer “lifestyle-hype” experiences to avoid becoming transaction portals. Especially as non-FSIs like technology platforms and fintechs continue to steal market share. To achieve this, FSIs must maintain a delicate balance between working on the quality of their existing services while introducing new ones.
With the rise of digitisation in banking, there are four key areas that banks must address:
- Consolidate product lines and make the conglomerate work
Banks are one of the few service organisations that are a part of their customer’s journey from cradle to grave. They have a unique opportunity to gain a higher share of wallet with a consistent engagement model which considers the varying and evolving needs of their customers at various life stages. They need to understand their customers and offer relevant products to them at the right time.
- Modernise the bank and not the silos
A connected enterprise is most important for a bank or a financial conglomerate. The amount of data a bank has on its customers has always been enviable. They have to derive the right insights from it to drive personalised experiences across their channels and offerings. A customer will always be looking to engage with the bank as a whole and not just as a division, so it’s important not to show a disconnected front.
- Use customer experience to drive business and not just engagement
The damage to a brand for not knowing its customer and not having a complete view far outweighs the apparent advantages of an enterprise-level customer view. Banks need to start creating real-time, unified customer profiles for personalisation and cross-channel activation so the same customer can be identified instantaneously and precious time isn’t wasted in offering the wrong products/services. It’s a crucial task if a bank wants to build loyalty and customer trust.
- Speed is all you need
Digital technology is evolving at a very fast pace. What was new just a few months back is obsolete now, and banks are having to overcome the challenges associated with the need to keep up with the evolving digital options and stay on top of their game. It is very important to have the right enablement, adoption and change management within the organisation to get the best outcomes from the investments made in this area. It’s just not enough to own a race car, it’s important you learn how to drive it.
As with every other industry, the pandemic catalysed a major push towards digitisation even in the banking sector. Yet there is still much work to do to meet customers’ digital expectations. CX professionals almost unanimously agree that there is a need to deliver consistent, personalised content to more channels. Banks have always innovated around digitisation, and today, it is settling into an uneasy hybrid world of service delivery—one that is completely digital, driving highly personalised experiences and ease of service delivery; the other being physical supported by digital, enhancing relationships and trust.
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