Banks have played a central role in society for centuries. Their function as a safe place to store money and valuables, combined with their diverse portfolio of payment, lending, and investment services, has made them prominent fixtures in cities and towns around the world. But in the era of digital, customer engagement for banks is becoming more and more challenging.
They have reinforced this image through their physical presence, as well. A bank building often stands at the intersection of major streets at the epicenter of the community. While modern glass towers have replaced colonnaded granite, every iteration has continued to bolster their image of permanence and strength.
These physical representations now take on a different symbolism as the world of retail banking in the digital age shifts from product-centric to customer-centric.
How often do you go to the bank? By that I mean go into a branch and speak with a banker. I’m guessing not too often. Herein lies the problem for banks. How can they engage with their customers if they don’t have as much face to face contact as they used to? The digital…
Banks are just as important as they ever were, but the importance of bricks and mortar has faded as the customer, rather than the institution, takes over the dominant role.
Today’s banking clients have more options than ever before. Each customer has become the focal point of their own retail lives in what is rapidly becoming a “Bank of One” experience. Thanks to online and mobile technology that allows the bank to travel with them wherever they go, they rarely need to set foot inside a branch.
The only way to keep your customers is to anticipate their individual needs and be their trusted advisor
With rare exception, there is nothing a bank can offer individuals that they cannot do for themselves online.
In fact, when making financial decisions customers now have access to much the same information and data as the bank.
Comparisons are simple – there are no secrets. Unconstrained by bricks and mortar and the bankers within, customers can now shop just about anywhere (and at any time) that’s convenient for them, whether they’re researching a mortgage, selecting a savings account or managing their finances.
What may be the most significant change of all is the way retail banks must now manage their customers. Once unthinkable, they are starting to follow the lead established by retailers in other industries like telco and consumer products. These industries are also responding to a simple fact— in this mobile age, every customer expects a personal, highly tailored experience.
Fintechs threaten the status quo. Unlike banks, they are unencumbered by legacy, regulations, and in most cases, even the need to make money. Retail bankers need to adapt and focus on customer relationships to compete.
Personalization can be difficult for banks to deliver however. Not because they lack the desire, but because legacy systems, regulations and their own bureaucracies confine them to the traditions of the past. These forces hold them back, even while they recognize that location and products alone are not enough to attract and keep empowered customers.
Delivering a more personalized experience means understanding the needs of each client in a far more granular way. It’s not just about structured data that lists balances and other hard data. It’s also about unstructured information from social media and customer activities that can lend insight into understanding people’s individual needs and the context of what’s driving them. Only then can banks start down the path towards a more proactive and engaging experience.
Banks must answer the call for customer-centricity by becoming advocates rather than just service providers. It is not the frequency or quantity of contact that needs to be increased, but rather the quality and personal relevance of that touch. There needs to be a shift of focus away from simply selling products towards providing relevant and contextual financial advice—in other words, bank need to demonstrate genuine interest and commitment to the customer’s financial wellbeing.
More than most industries, banking has a unique opportunity to do just that through the regular customer interactions that characterize the industry. Who doesn’t check balances or make online bill payments at least once or twice a week?
Perhaps the best new competency a customer centric bank can master is to quickly identify the individual financial journey that each customer is on, and proactively anticipate the likely twists and turns that may come with them. While “death and taxes” are still a certainty, a single predictable and linear life of financial product purchases is not. In the digital age each customer journey has become an individual one: skipping back and forth between the steps of the once linear and familiar process of awareness, interest, desire, and action.
If banks dedicate themselves to providing a more personalized and advisory relationship to their customers, customers will beat a path to the bank’s door, or in other words, to its website. Banks that fail to change their ways will find that while their grand buildings may still dominate the landscape, the offices inside will be empty.
The world has changed. Not only is there a competing bank across the street, there are hundreds more just a click away.
