Customer Experience: Banks start digital catch-up

Customer Experience: Banks start digital catch-up

Many financial institutions are struggling with digitization. It’s all about the customer experience. […]

The pandemic has once again given a strong boost to the digitization of almost all areas of our lives. And so it is hardly surprising that this also applies to the way we interact with our bank: naturally, we expect an equally uncomplicated customer experience as, for example, when shopping online. Especially during the crisis, we all realized how important digital interactions are in our daily lives.

At the same time, the last year has shown that banks are also quite capable of accelerating their digital transformation – like so much else, digitization is also a matter of priorities. When the stores are closed everywhere, there is no choice but to use digital channels. Bank employees were quickly empowered to serve their customers remotely. Much remains to be done, but a fundamental cultural change is also emerging in the banking sector, which goes hand in hand with technological progress.

Today, customers expect easy access to financial services and instruments, regardless of time and place. Above all, this requires a fundamental redesign of the customer experience. To meet customer needs in the digital world, banks need to rethink their business model, embrace innovative technologies, invest in their people, grow their partnerships, and reduce their service costs at the same time. But despite positive developments, there are still weaknesses in the customer experience and in the operational transformation of banks.

In the current Global Banking Benchmark Study, the consulting firm Publicis Sapient in cooperation with Longitude Research evaluates the maturity of digital transformation in the banking industry. More than 1,000 executives from private and commercial banks in 13 countries were interviewed for the study. In addition, a series of qualitative in-depth interviews with decision-makers from JP Morgan Chase, HSBC, ING and BNP Paribas were conducted.

According to the study, 83 percent of banks have a clearly formulated digital transformation strategy, but more than half of respondents complain that they have not made significant progress in implementing it so far. In addition, 70 percent said that the pandemic had exposed weaknesses in their customer experience. For the vast majority, namely 81 percent, Covid-19 has increased the urgency to improve their digital capabilities.

Established banks are aware that they need to do more to keep up with digital first players, fintechs and technology companies. For 85 percent of respondents, customer experience is an important measure of success, but less than a third prioritize data integration for a 360-degree customer view. The banks know that they need to improve their customer experience and operational business in particular – areas in which competitors from the fintech sector score highly.

The study classifies the banks into four groups, depending on the respective degree of development in the areas of customer experience and operational transformation. Only 14 percent of the participants were classified as “transformation Leaders”, the majority (71 percent) belong to the circle of”slow starters”.

In order to be successful in the future, customer orientation must no longer be the sole responsibility of the bank’s marketing, sales, product development or service functions. It must be understood as the central cultural component. Every core process, and therefore every area of the bank, must use customer metrics to make meaningful decisions about strategy, roadmap and related investments. The banks can learn some success factors from innovation leaders such as Google, Amazon or Netflix:

  • 1. A customer-oriented culture: Banks need to recognize the potential of new technologies for their customers and learn the ability to put this vision into practice. This requires a profound cultural change in the entire organization, but also suitable training measures.
  • 2. A 360 ° customer view: By shifting customer activities from the store to the digital, the customer experience is more important than ever. However, according to the Global Banking Benchmark study, less than a third of respondents still see data and its integration into a 360-degree customer view as a top priority. To this end, it is more important than ever to overcome the still existing silo structures both organizationally and technically.
  • 3. A platform-based approach: In addition to the fintechs, which often also act as cooperation partners, the big techs in particular are positioning themselves as potential new competitors of the banks. For the established financial institutions, it is therefore crucial for success to make the transition from a comparatively rigid traditional structure to a flexible and scalable banking platform that allows them to work together with partner companies in the ecosystem.
  • 4. Omnichannel Services: Customers expect to be able to interact with their bank on different channels as needed, and to do so seamlessly and without any information delay or loss. Therefore, fully integrated omnichannel services should be a core component of any transformation strategy.
  • 5. Personalized experiences and products:Banking experiences and products should anticipate customers ‘ needs and be personalized accordingly. They should make customers ‘ lives easier and ideally allow them to manage their finances in a single ecosystem.

The banking sector may have been a little slower than other sectors in adapting to the new normal. However, as the jump in digital offerings shows, financial institutions are also making great strides in customer experience and operational excellence. Almost all banks have now invested in a robust mobile platform to enable at least basic services such as account balance queries and online payments also via the smartphone.

In addition, there are more complex transactions such as consumer loans or construction financing via digital channels, without the need for manual intervention in the bank. It also requires a robust data and API infrastructure that enables banks to make data available on all customer channels while connecting directly to other ecosystem partners.

Banks now have the opportunity to fully exploit the potential of cloud-based technologies and artificial intelligence to create maximum customer value. A clear strategy and collective efforts are needed to overcome existing organizational and structural hurdles and to implement this profound cultural change.

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