A decade of unprecedented change has altered the landscape of the financial sector. Learn the top banking industry challenges and their opportunities for success.
Like most industries, retail banks fast-tracked their digital transformation initiatives when COVID-19 hit. Digital banking became the top priority.
This year, banks must assess the progress they’ve made against business goals and determine how they’ll differentiate themselves in an increasingly digital world. With online banking now mainstream, customers have a lot of choices. How does a retail bank get competitive edge?
The answer lies in the customer experience. By focusing on delivering digital banking services that help their customers, banks can build loyalty and pull ahead of the pack.
5 ways to improve the digital banking experience1. Ramp up the convenience factor
Online and mobile banking are no longer simply nice to have. They’re table stakes. In fact, customers now consider the quality of websites and mobile apps when choosing a bank. They’re looking for features that make it easier to manage their money from anywhere.
This includes self-service capabilities like alerting financial institutions of travel plans and filing a card transaction dispute, as well as capabilities that improve ease of use like fingerprint scanning and even facial recognition for logging in on the go.2. Add smart speakers to the mix
According to Forrester’s “The State of Digital Banking, 2022” report, in 2021, 30% of U.S. adults with a bank account checked their account balances using a smart speaker such as Amazon’s Alexa or Google Home.
Delivering basic banking services over a smart speaker can make it easy for customers to complete simple tasks when their hands are full — think a nursing mother or a busy family scrambling to get out the door on a weekday morning. It’s all about convenience.
Customer engagement for banks is becoming more challenging in the digital era, and the industry must adapt with modern approaches.
Speaking of convenience, embedded banking makes financial products or services available at the time of need. A common example are buy now pay later (BNPL) loans offered during checkout on e-commerce websites. Other examples of embedded banking include personal loans offered by home contractors, veterinarians, dentists, and lawyers, or mortgage loans on a home real estate site.
Embedded banking improves the customer experience because it delivers financial products and services at the right time and place.
People don’t typically have an opportunity to shop around for a loan to cover big-ticket expenses like veterinary or dental care, for example.
Offering financial services onsite or at the point of sale saves customers the time and hassle of finding a lender and enables them to get the care or services they need right then and there.4. Help customers boost their financial health
Banks can also improve the customer experience by helping them to avoid accumulating debt. The 2021 FinHealth Spend Report found that 95% of consumers who paid overdraft fees in 2020 were “financially vulnerable.” These charges can cause customers to miss rent, mortgage, and utilities payments, driving them further into debt.
A real-time notification to alert customers when funds are low or allowing them to choose how a debt will be paid can improve the customer’s experience as well as their financial health.
Other opportunities to help customers include personalized insights for understanding and improving their credit score and spending analyses to get visibility, for instance, into recurring costs that can be eliminated.
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.
The explosion of digital services provides cybercriminals with more opportunity to commit fraud, and they’re getting better at it. The Association of Certified Fraud Examiners found that 77% of survey respondents have seen an increase in fraud events since the pandemic outbreak.
Banks can help protect themselves and their customers while improving CX by making it easy to validate purchases and report fraudulent activity — at any time of the day and any day of the week. (Cybercriminals don’t keep banker’s hours.) Banks can also give customers the tools to protect themselves, like the ability to put a credit or debit card on hold.
Being the victim of cyber fraud is bad enough. Banks should look for ways to give customers peace of mind and make it easy to get back to life.
The customer relationships banks need to grow take effort, and in retail banking the winners are applying that effort in creating day-to-day value.
The key to digital banking success? Make things better for your customers
Giving customers digital services without taking the opportunity to improve the customer experience by solving real problems is short-sighted.
Differentiation comes not from adding the latest bells and whistles to your website, but from asking, “How can we leverage technology to better help our customers?” Banks that take the time to understand their customers and invest in technology to address their needs will build the loyalty that fuels long-term growth.
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