David Titterton, Engagement Director, Banking, Insurance and Financial Services, Monstarlab
Turning challenges into opportunities for accelerated growth
Digital disruption and technological innovation have been a game-changer in today’s retail banking market. The rise of digital-only neobanks has fundamentally changed the way that many consumers interact with their banking providers, encroaching on traditional retail banks’ customer bases. To keep up with the pace of change and meet their customers’ evolving needs, retail banks, building societies and credit unions must transform the way they empower their employees, serve customers, adapt to change and get ahead of the curve. Gaining a competitive advantage in this environment will require speed and agility on the part of traditional banks, but also investment in technology and services.
As online and mobile-only challenger banks showed what could be done with digital platforms, and the impact of the global pandemic only sped up the need for innovation, we’ve seen banks trim business costs through re-organisation and branch closures, reallocating budget to focus on their own digital transformation journey and not get left behind in the competition for customers. As emerging technologies enable new business models, more engaging customer experiences and updated products and services, banks must embrace these changing market conditions or risk becoming obsolete. But while technology can offer business solutions amidst employee and branch reductions, they need to go hand-in-hand with purposeful strategies to create, and maximise, services that truly meet customer requirements.
Below, we take a look at some of the digitalisation strategies that will help banks and financial institutions to help go beyond the legacy migration of digitised core products and services. By marrying the more traditional elements of their heritage with new digital experiences they can provide value, enable a seamless user experience, convert consumers, and remain visible in the face of digital disruption.
Localise and curate digitised experiences
The vast majority of large and mid-sized companies in the sector have already leveraged mobile and online applications for core products over the last few years in line with KPMG’s prediction that digital platforms will become the preferred and dominant business model for banks and financial institutions. But as going digital becomes the norm, what can banks offer as a solid differentiator in the market?
While consumers have come to know and love the efficiency and mobility of emerging digital touchpoints, research shows that there is still a demand for that ‘local feel’ and friendly ‘human touch’. Particularly true to patrons of regional banks, the local in-branch experience is still a significant asset and a valued factor across the industry.
Consumers enjoy immediate attention and being on a first name basis when in-person with their banks. Replicating this within the digital space will therefore be a critical transformation factor. Apart from the ongoing effort of banks to compensate for closing physical branches, recreating these intimate, engaging interactions will ingrain a higher sense of satisfaction and connection on the customer side.
Improve identity verification – or your competitor will
When it comes to improving the consumer experience, banks can also expect good results by changing their approach towards Identity Verification (IDV), more popularly known as the Know Your Customer – or KYC – process. With studies indicating that ease of registration or application represents a critical success factor for online banking and fintech access adoption, safe and frictionless IDV through open banking or data-sharing initiatives will be key.
Digital IDV solutions are capable of verifying a wide range of official documents in seconds while analysing relevant user records from accredited databases in minutes. Because of this, banks are accommodating on-the-go consumers, in addition to catalysing complete consumer conversion by shortening the time between application and approval – a strong selling point for potential customers.
Maximise hyper-personalisation
Closely related to the banking customer’s expectation for direct personal connection, they also expect a personalised and seamless customer experience. This can be actualised through hyper-personalisation. Every individual manages their finances differently which creates unique preferences, and hyper-personalisation takes these preferences to provide users with the seamless, bespoke experience they expect.
Providing AI-led, tailored suggestions for unique consumer groups, like the option to automate repeat transactions such as autopay or autosave, allows the bank to put each customer first. Maximising and utilising knowledge of customers beyond the minimum ‘Know your Customer’ approach detailed above can cultivate a solid and long-lasting relationship with each and every client.
Integrate (and perfect) cross-platform services
Digital finance transactions frequently intersect with other industries, from retail to healthcare or utilities. The emergence of third-party providers such as PayPal has largely capitalised on making the most of this crossover, often at the expense of online banking direct payments.
Because there is usually a lengthy (and tedious) transfer process of back and forth between banking apps and other business sites, many customers have turned to third-party payment providers that have already made themselves available in growing digital spaces such as e-commerce.
By embedding payment services such as developing mobile pay or hybrid wallets in cross-platform transactions, banks can win this business back. Integrating services such as payments or transfers as a bite-sized app means finance vendors can increase awareness and potentially raise their total revenue outside of interbank transfers. This highlights the fact that as digitisation spans the financial sector and the industries it serves, visibility will be vital in remaining relevant.
Learn to ride the digital transformation wave or miss the boat
Digital transformation has the power to fundamentally change how a business operates and delivers value to customers. When harnessed appropriately, this can lead to increased efficiency, greater business agility, and the unlocking of new value for employees, customers and stakeholders alike. Circumstances have opened up the opportunity for banking and finance companies to reinvent themselves and future-proof their businesses, with technology and digital providing the ticket to ride. However, gaining (and maintaining) a competitive advantage in this environment takes speed, agility, and investment in the right technology and services.
The traditional bank’s inherent strengths are the key elements to getting back on track against digital-first competitors. They should always frame their digital future by leveraging expertise, especially the human element, and carrying it into the realm of digital. Selecting and successfully implementing the best-fitting technology with the right strategy and service design can help banks turn today’s challenges into opportunities; catching up with their neobank rivals and even getting ahead of the digital curve to accelerate their growth – while also responding to and exceeding changing consumer demands.
