The world of banking is unrecognisable from a decade ago and this market disruption and transformation is likely to accelerate. The traditional role of the bank is disappearing, as customer lifestyles, new technologies and new forms of competition continue to influence the sector. Currently, there is still work to do to improve digital experiences and reduce the gap between the rapid evolution of consumer habits and the slower evolution of banking. After all, a smooth and satisfying customer experience is the key to success to winning customers’ hearts.
Each customer journey is composed of a unique set of touchpoints across channels that must be designed to optimise customer convenience and satisfaction at any time. Improving the customer experience starts with understanding the use of the channels and specifying them, says Aurélie Fon, Product Marketing Manager Digital Banking at Worldline. Here she answers the question: what is the best way to build a compelling value proposition for your digital customers?
Digital consumer expectations
Digitalisation is a key factor – as it is for most industries. Investment in new technology is valuable and must be treated as an enabler, rather than as a pure cost or a forced purchase. There is a large opportunity for financial companies to both enhance the customer experience and create cost-efficiencies with the right use of digital channels and processes. The knock-on effect from more digitally enabled markets is that consumers’ expectations and preferred interaction methods in banking are far more demanding than ever before. They expect to be able to transact and communicate with their service providers anytime, anywhere, using any device. Being continuously connected is becoming more and more important. Consumers have become used to seamless, highly personalised journeys across digital goods, retail and social media experiences, demanding an always-available service with a choice of channels.
Consumers keeping control
Consumer behaviour in banking has already changed significantly, with customer interaction patterns sending a clear message to banks that consumers expect the financial services industry to follow suit. An increasing number of banks, for example, are already offering their services on mobile channels, allowing prospects to open new accounts and customers to subscribe to additional products 100% online. However, it is important to keep in mind that customers do not care about the channels itself. Consumers want to keep the choice between digital and human interactions, they want to keep control. They care about experiences, about solutions, about ease and simplicity. Besides that, they favour a mix of interactions. Understanding why a customer would prefer one channel over another is essential. Use the latest devices but always focus on convenience for the consumer.
Market disruption and disintermediation
With consumer preferences shifting, financial players must now compete on customer experience. This challenge has become greater still with the wave of new market entrants and the rise of FinTechs and BigTechs in the financial services ecosystem. The agility and speed to market of these new offerings mean they are bound to capture consumers’ attention and present a threat to traditional banking players who have not sufficiently invested in their customer experience capabilities. This means that banks, as well as other financial players, will need to push their boundaries and business models to rethink the way they approach their transformation roadmap. Big names from other sectors are busy building a digital-first, customer-centric offering from the ground up, often alongside more traditional players in the banking space. For example, Google is now offering payment accounts (with Citibank), Amazon is hyper-focused on developing financial products (with JPMorgan) and Apple has successfully launched its Apple Card (with Goldman Sachs). Competitors evolve quickly, it is important to evolve along with them.
The era of open banking and platform models
Both within and outside the payments industry, platform models are gaining traction and new integrated ecosystems are blossoming. While creating compliance and technical challenges, PSD2 has also helped to sketch out the first contours of the incoming ‘Open API’ era in banking. It offers a way to unleash the value of banking and payments data, opening up a new type of economic model for banks who want to build out new services by leveraging open API connections and partnering with other providers to bring new innovations to their customers and better serve end-to-end customer journeys. Soon, end-customers will benefit from a wide array of integrated services to cover their long term, personalised journeys, completely agnostic from individual providers or even the banking industry. Bank incumbents might still perceive multi-brand ecosystems as a major threat – but they may actually greatly serve to support a more customer-centric strategy. This Banking as a Platform (BaaP) approach will undoubtedly provide a strong route for banks to circumvent some of the constraints of legacy platforms and build stronger customer relationships.
Ultimately, the fast pace of digital adoption among consumers has set unreasonably high standards for most financial institutions who are often hampered by their ageing legacy systems, inadequate IT resources and constrained budgets. These issues can make it difficult for incumbent banking providers to drastically rethink their digital strategies as they look for ways to compete. Financial institutions must now cope with new (digital) banking habits and find ways to adapt and respond more quickly to market changes. What banks may need to do is look at the changes they have to make due to compliance necessities and find ways to leverage the assets that these changes can create. This may provide access to new opportunities and innovations.