Banking managers unanimously agree that the branch will survive the digital transformation underway, albeit in a new form. Mohamed Dabo reports that customers are becoming more important in the transformation process as branches evolve to cope with changing customer habits
Until recently, the banking sector was not known for its willingness to embrace innovation. But now consumers are demanding change. In response to the challenges of balancing automation with the human touch in customer service, banks are reassessing, rethinking, and redesigning their branch offerings.
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Banks all over our increasingly smaller planet are embracing the latest technology in order to offer their customers new experiences and improve their overall branch experience. Customers are increasingly demanding that their banks address their unique needs, refusing to be treated like just another person.
This new paradigm calls for a re-evaluation of customer relationships. Banks that fail to adapt their approach to the evolving customer demands will easily lose out to the completion.
In a recent survey by professional services firm Ernst & Young, 40% of customers express decreased dependence on their bank as their primary financial service provider. The same customers used nonbank providers for financial services in the previous 12 months.
A further 20% of customers who have not yet used nonbank providers plan to do so in the near future.
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By GlobalDataPutting customers at the heart of the transformation
The survey reveals four critical areas where banks must focus their investments and efforts to restore their central place in the lives of customers:
Build customer trust
Nowhere is trust more important than in banking. Unfortunately, only 26% of customers express complete trust that banks will provide truly unbiased advice.
“The erosion of trust is worrisome, even if it has not yet become a full-fledged crisis,” the survey authors say. “To regain lost ground, banks must take strategic actions aligned to the distinct views of trust and its importance for the business.”
The steps they recommend include: inspire a customer-centric culture; deliver transparency in product features and transaction fees; proactively protect customer data and defend against cyber security threats; radically transform the frontline’s ability to provide unbiased, high-quality advice.
Enhance customer understanding
How well do you know your customers?
“Deep insights into behaviours, attitude, life stages and lifestyle factors are necessary to gain a nuanced understanding, to build actionable strategies,” the report notes.
Analysis of the survey demonstrated four segments of customers:
The pros (confident self-managers of their finances); the digital stars (value 24/7 access to service staff. These are the most receptive towards nonbanks); the traditionalists (least confident about their finances. Worry about data security and digital channels); and the financial stars (comfortable self-managing their wealth. They value the expertise and services of traditional banks).
Rethink customer engagement and distribution
“Engaged customers are likely to view banks as trusted advisors, share personal information and turn to banks more often for advice on financial matters,” according to the report.
The report furthers notes two key dimensions for achieving better customer engagement:
One, developing relevant and tailored content and propositions that add value for individual customers. Two, sharing them through the right mix of channels in a consistent, convenient and contextually appropriate manner.
Innovate customer experience, such as fintechs
Banks today compete primarily on customer experience, rather than price, product or scale, the survey reveals.
They used to compete largely on price, product and scale of the branch network. Those days are therefore over.
Bank are under such intense pressure to master the customer experience for two reason: increasing commoditisation (i.e., traditional banks are all the same), and new competition (i.e., fintechs and other new market entrants have used superior experiences to capture significant market share in some markets).
To innovate customer experience, banks need “a new emphasis on simplicity and convenience of interactions across a variety of channels, responsiveness to consumer request and a proactive approach to continual engagement with customers—all aimed at helping consumers increase their financial well-being”.
