Philip Bush, Amazon Connect Lead, North America, Capgemini’s Business Services
The retail banking landscape is undergoing enormous changes. Bricks-and-mortar branches are slowly being replaced by online banking. As a result, incumbent banks, a sector that was once set in stone – literally and figuratively – are being forced to rethink their approach.
The rise of challenger banks such as Monzo, Revolut, and Starling have pulled incumbents out of their comfort zone. However, neither side is perfect. While FinTechs have one up on incumbents in terms of personalized customer services, they lack the established legitimacy that traditional financial institutions have spent years building. Therefore, if banks want to remain competitive, they must strive to create tailored, hyper-personalized banking experiences for their customers.
The value of personalization
FinTechs may not possess the same history as traditional banks, but they have leveraged approaches such as gamification to establish an emotional connection with customers since their inception. This can clearly be seen in 52% of respondents to the World Retail Banking Report, which states that banking was “not fun.”
While there is an argument to be made that banking should always focus on safety rather than “fun,” customers are increasingly being drawn to banking services that are fast, easy to use and available anytime, anywhere. In fact, 75% of customers have indicated that they are attracted to FinTech competitors that offer these services.
To this end, a next-generation banking customer service strategy must provide tailored, customizable, omnichannel products and services. This can be delivered through a cloud-and platform-based contact center that drive the customer insights. Banks need to break down silos in their legacy systems and transition to a Frictionless Enterprise.
Harnessing data, analytics, and AI
For incumbents, catching up with FinTechs will require them to leverage properly implemented artificial intelligence (AI) robotics, cloud elasticity, and the efficient allocation of resources to ensure they get the best out of their existing systems and tools. An effective and robust data and analytics strategy is critical to help transform traditional banks into data champions. Thankfully, FinTechs are not short of data, and possess vast and varied amounts of consumer geospatial, financial, social, media, lifestyle, and behavioural data within their systems.
However, the World Retail Banking Report 2022 found that despite this, 73% of executives surveyed stated that they struggle to transform data into useful insights. For personalization to be meaningful, actionable, and value-driven, it’s important that data ecosystems deliver accurate data analytics to customer service agents. By leveraging AI and smart data analytics, analysts can mine, understand, and create actionable behavioural insights that can add value through customer service contact centers – offering consumers the tailored service they want 24/7.
Legacy system migration to cloud-based solutions
The introduction of open banking regulations such as PSD2[i] in 2016 forced incumbents to open their application programming interfaces (APIs) to support new-age institutions in their path to digitalization. The adoption of open APIs enables third-party developers to tailor applications and services around financial institutions, which, in theory, opens traditional banks up to a much larger customer base.
However, financial firms are still lagging behind in terms of cloud adoption. Many banks are being held back by their commitment to outdated legacy systems, that struggle to capture important data and retain it in siloes.
By switching to cloud-based data, analytics, AI, and machine learning, banks can remove the historical hinderances that have trumped progress:
- Customer service innovation is underway in the contact centers of various banking institutions. As such, we are witnessing a rise in the Contact Center-as-a-Service (CCaaS) model as a route to delivering personalized customer experiences
- The role of the contact center is critical. They should act as experience hubs that provide individualized interactions, while reducing costs
- By harmonizing customer service agents with technology, companies can seek to improve customer satisfaction ratings, reduce the cost per call, and improve scalability of their operations
- A cloud-based, pay-as-you-go approach frees companies from per-seat and fixed upfront pricing models.
Open Finance
Open Finance is used to access partnerships, opportunities, and related offerings. One method for achieving this is cross industry partnerships. NatWest recently partnered with Tink, a Swedish open platform provider to enrich its data and help synchronize insights across multiple channels. The information that was garnered enabled NatWest to create an actionable newsfeed on the mobile app, generating 1.3 million responses in its inaugural months. This, in turn, enabled NatWest to understand what matters to the customer most.
Open Finance enables banks to share customer information with trusted third parties so that they can tailor their offers to their customers. Open platforms, such as Amazon Connect, allow for seamless integration with existing or third-party platforms and native tools, which can be used to send validation emails (such as a password reset bot that sends confirmation of a transaction).
Now more than ever, communities are turning to their banking organizations for up-to-date information. As community members are trying to stay informed and make decisions in response to the recent global pandemic, website visits and call volumes have grown exponentially. Organizations’ infrastructure has been put to the test to scale with the increase in demand.
Banking and finance organizations have had to quickly develop new ways to share information or improve on their existing systems so that people can get the information they need, when they need it.
[i] Payment Services Directive Two (PSD2) is a directive issued by the European Union that came into force in January 2016, but EU member states had until January 2019 to bring it into national law. PSD2 is a piece of legislation designed to force payment services to improve customer authentication processes and to also bring in new regulation around third-party involvement.
