Four trends reshaping banking experiences

The 2018 Digital Banking survey by Efma and BCG revealed that four out of five financial institutions believe digital will fundamentally change banking and transform the competitive landscape, and yet a whopping forty-three percent admit they do not have a digital strategy in place. 

In this blog post, I explore four prominent trends reshaping banking experiences. I also talk about the digital foundation banks need to make their customer experience and engagement stand out.

The customer is more powerful than ever

This is the age of the empowered customer. The connected, digitally savvy, and informed customer is remarkably aware of digital possibilities, thanks to the everyday experiences with digital services in industries such as retail, hospitality, transport and e-commerce. Although evolving constantly, banking has largely been playing catch-up with the rapidly evolving expectations of the customer. A simple use-case comparison illustrates the gap – the ability to track the delivery of merchandise purchased on Amazon or Alibaba gives the customer a sense of control and the satisfaction of being informed at all times. Now consider the case of a mortgage application in banking where a customer has no self-service mode to keep herself informed as the application passes through the various stages of the process. 

Modern technologies are shaping new digital realities

I would again like to allude to the example of new age digital experiences. The likes of Amazon, Google and Facebook, with their personalized recommendations, tailored search results, and individualized timelines, have pioneered and continue to elevate their personalization game with the use of advanced and emerging technologies. The slew of new technologies such as natural language processing (NLP), blockchain, augmented and virtual reality, Internet of Things, and advanced analytics, are revolutionizing the way banking is consumed. Consider how ‘touch’ is metamorphosing into ‘talk’ as NLP enabled smart assistants act on native language voice commands to get tasks done for the user. 

Devices and channels are multiplying

The number of channels and devices on which banking can be consumed has multiplied visibly. Conversational experiences driven by AI and natural language based interactions are emerging as the new frontier of customer engagement. Many businesses are already developing applications that can talk to machines for a future of intelligent things where machines will transact on behalf of humans. And this growth of channels for consumption of banking services only makes delivering on customer expectations harder. Customers expect a frictionless multi-channel experience with any provider they interact with and expect banking to be integrated with their everyday experiences, which demands that banks reimagine customer journeys for meaningful engagement and value.

Customer engagement and transactions are shifting

There is a clear shift from bank-owned channels to new third-party channels, and the shift is only going to accelerate with the emergence of new channels in the future. According to a 2018 research by EY and ICICI bank, the bank branch which was home to 50% of the total number of transactions back in 2001-2002, today hosts only about 10% transactions. Findings of the recent Efma Infosys Finacle Innovation in Retail Banking survey endorse an accelerated shift away from traditional bank-owned channels. The study suggests that banking organizations worldwide see branches as one of the least preferred delivery channel in the future. 

As the four trends stated above continue to reshape banking, the good news is that banks are exceedingly aware of the ongoing changes and the need to transform themselves for these changes. However, the challenge remains that most banks are not ready for new digital realities. Banks have by and large adopted a fragmented approach as channels and touchpoints evolved over the years. With the emergence of internet banking, most banks resorted to the convenient approach of adding a wrapper around their core to serve the netizens. As a bulk of transactions shifted to the ubiquitous mobile, they went about replicating the approach for mobile. But this approach will more than fall short of being viable, with the rapid pace of evolution and emergence of digital channels. 

What’s more, these isolated initiatives and approaches have left banks with distinct channel silos fit for failure in an omni-channel digital world. Imagine the discontent of a customer who switches from a voice assistant to a branch mid-way through a fund transfer and is made to repeat all the steps such as providing the required account information and IFSC. Experiences like these are a result of inconsistent customer journeys where individual touch-points may fare well on the customer-service index, but the cumulative experience is far from contextual. 

Some of the other mounting challenges of the stop-gap and remedial approaches over the years include the high cost of ownership and maintenance as a result of disparate technology stacks, most of which are not built for the more contemporary multi-cloud environments, and don’t lend themselves to automation. Cloud, automation, and analytics form the bedrock of digitally agile and intuitive experiences that customers demand. And finally, an essential component of any bank’s digital strategy is the ability to build digital ecosystems, but the legacy estates and closed systems at most banks are an impediment to transforming for open banking shifts. 

To succeed in the digital future, banks need a strong digital foundation, one that supports consistent cross-channel journeys and customer-centric processes. It’s time to break the old habit of disparate face-lifts and piecemeal integrations in favour of a unified digital engagement hub that enables unified product design and works seamlessly with all back-end applications and channel applications. Banks also need to be mindful that as they strive to meet existing customer expectations, the customer is being exposed to fresh and new digital experiences. The goalpost is continuously shifting, and clearly, peripheral and fragmented approaches will not help banks collapse the distance. It’s time to depart from the old and embrace the new.