In recent years, technology disruption has forced companies in many industries to rethink their digital strategy. Some, digital-first companies are able to identify and exploit service weaknesses in markets from travel to retail. Others, traditional companies, are fighting to stay relevant in a rapidly changing digital environment.
One industry that has avoided extensive disruption so far is banking. The walls are beginning to close in on banks, however, as both startups and digital giants target the financial services industry. Traditional banks risk marginalisation if they don’t develop richer, more meaningful engagements with their customers.
This isn’t to say that banks haven’t been making strides in addressing the needs of a digital economy. Through ebanking platforms, banks have made great headway in understanding customer needs and cross-selling within the environment. But the migration to mobile banking, while convenient for customers, risks trading higher frequency of interaction for reduced quality and depth of relationship with customers.
Banks need to examine every opportunity to re-engage with those customers, to create a new connection and add value to relationships that have swung far away from any form of human or tactile touch. The solution should be clear. The same digital technology that risks weakening the relationship between customers and their banks offers an unparalleled opportunity to engage and start conversations with customers.
Understanding customer needs, likes, and dislikes is the beginning. But what banks need to do to truly converse with their customers? How can they expand the conversation to a point where the bank can give them exactly what they need?
Providing customers with an intuitive and convenient mobile app has become essential for any financial services provider. This is the first step, but banks should think beyond basic “me-too” mobile banking. This means developing banking applications that will engage customers beyond checking their balance and transferring money.
To do this, banks should take inspiration from technology and retail companies. A transaction should not be the end of a conversation with the customer, but the beginning.
A banking platform should offer customers a way to engage with their bank both before a transaction takes places as well as after the event. Currently, many mobile banking applications don’t give their customers the opportunity to interact with their banks, or to tell them exactly what they want or think.
Moving customers to a mobile banking platform may drive more interactions and lower costs for banks, but loses out because it becomes increasingly harder to understand the real needs and wants of customers. CIOs should develop customer-facing applications in a way that ensures the data they’re mining from these interactions adds value for both the customer and the business. To do this, they need to contextualise customer conversations and leave channels open for further discussion.
Data and analytics
In many industries the role of big data and analytics has increased significantly. However banking lags and many banks still need to build platforms that deliver valuable and usable contextual customer data, and consequently end up doing little more than guessing what their customers actually need. Too often, banks will test the likelihood that a customer will want a service, like a new credit card or a loan, based on irrelevant or out of date data, resulting in customers receiving offers for services they neither want or need.
It’s at this point of contact that banks should be initiating meaningful conversations with their customers. By giving customers the option to provide easy and intuitive feedback through a communication channel of their choice, banks can build far more valuable customer insight. Was the offer relevant? If relevant but not interesting, why not? What would have addressed the customer need?
Banks who are serious about understanding their customers will also begin the conversation much earlier on in their journey.
The conversation could take place within a mobile application. For example, the bank provides their customers with a simple planning tool linked to their transaction accounts which allows them to seamlessly forecast their cash flows over the coming months based on their past spending. Customers may use this insight if they’re saving up for a big purchase item, such as a car, with the bank offering alternative options to bridge any short fall in funding and allow the customer to achieve their goal of a new car. .
Whatever format or approach the conversation may take, banks need to start opening communication channels between them and their customers and determine how those channels can be used to gather information that can enhance the customer’s experience.
By Alistair Newton, Research VP & Banking Service Director, Gartner.