How Digital Transformation is Shaking the Banking Customer Experience

The big picture

• According to McKinsey, A seamless customer experience can be worth at least as much as a superior product or efficient process — building customer loyalty, reducing costs, making employees happier, and boosting revenues significantly.

• Today, the majority of customers contact a brand via chat.
• Covid-19 forced the entire industry to provide consumers digital options where they did not exist previously.
• The quality of the CX is paramount to younger generations as the stickiness of banking tends to fade with time.
• In the UK, 57% of Gen Z adults switched their main account within two years of turning 18. By comparison, only 26% of millennials and 19% of generation X switched banks within two years of turning 18. The generation most likely to stick with their banks early into adulthood were baby boomers, with only 16% moving banks in the two years after they turned 18. (Granted they turned 18 a long time ago..)
• The rise of digital banking as an essential feature has disrupted the banking landscape in Europe
• Online banks have taken the market by storm and forced incumbents to significantly step up their
• Starling, Monese, Nickel, TransferWise, created modern banks with slick user interfaces and intelligent messaging communication that matched the experience of their customers’ favorite mobile apps.
• Monzo, a challenger bank that emerged in late 2010 saw a sign-ups boom, because of simple features such as offering real-time balance updates or the ability to freeze and unfreeze your card with a push of a button in the app.Millennials loved the UX and Monzo’s fun use of emojis.
• Monese captured its market share with an account opening process that can be completed on a customer’s smartphone in under three minutes.

Be smart

• Natural Language Processing (NLP) is a subfield of artificial intelligence which deals with the interaction between humans and computers.
• NLP allows gaining meaning from text data and enabling human-machine interaction in the simplest possible manner.
• The objective of the algorithms is to teach a computer how to understand human language.
• The technology is used for chatbots
• AI provides responses and resolutions in minutes, and reduces the customer service agents’ workload, and allows them to deliver quick service.
• Value is in the automation of repetitive tasks, 24/6 with no pause, eliminating human error and allowing for personalization
• As the chatbot is trained he can recognize patterns to client segments or particular and adapt his responses to match the identified client style and demands

Why it matters

• As costs rise and revenue decrease, banks margins get thinner
• Regular return in the news cycle for regulatory troubles have hurt reputations
• Fintech firms of all shapes are attacking banking institutions
• Customer experience improvement is an “easy” fix to a slew of challenges
• Of the 50 largest global banks, three out of four now pledge themselves to some form of customer experience transformation

Yes but

• Offering great customer experiences through digital channels is hard
• Customers value the end to end journey, not just the quality of each individual touchpoint
• This means that Banks must clearly define and integrate every touchpoint so that the customer journey is satisfying from the first point of contact to the last
• Amazon, Google, Facebook are the ones that set the standards for online experiences
• Customers want as seamless and as qualitative experiences, like the ones, they have on these apps
• It becomes very hard for nonpure tech players to offer experiences as well thought and executed as companies entirely specialized in providing online services
• Wechat, Alipay, Messenger, Amazon have all launched payments and finance-related services as they realize that they know their customers, can deliver on onboarding and customer support, and face incumbents that struggle to be as nimble and as innovative as they are

What’s next

• Whatsapp payments, Facebook and Instagram bank accounts, Amazon bank, Apple Bank, Google Bank will become reality
• They have the data, the know-how, the capital, and the will to launch their own financial services branch
• The regulator will pounce them, as we saw in China, regulators will certainly stymie some of those initiatives
• As tech companies become savvier at navigating the regulatory environment, they will soon be able to offer compliant, safe, and up to par products as “super-Apps”

By the numbers

• The global digital experience platform market size is projected to reach USD 15.80 billion by 2025, expanding at a CAGR of 10.9% from 2019 to 2025, based on a new study conducted by Grand View Research
• 63 percent) of consumers would switch to a company that offered text messaging as a communication channel.
• 89% of financial services companies say they implemented new tools or processes last year, while 62% were managing remote staff, according to the Customer Experience (CX) Trends Report.
• Financial service companies have seen a 19% increase in customer engagement over the past year,
• 69% of support agents in the sector report feeling overwhelmed.

What I think

• Transformation of Customer Experience is more than just technology deployment
• It’s a cultural shift, that’s the hardest part, new tools do not change a company culture
• Companies that do not have a culture of “customer obsession” will struggle
• Placing the customer at the heart of the processes is hard
• The process is on, Covid has succeeded where years of CTO evangelization efforts have failed
• It will be a journey

What people say

• “By overcoming outdated legacy mindsets and adopting Banking-as-a-Service, financial institutions will move beyond their core banking products, create new offerings, and provide their customers with personalized experiences,” says Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board Member. “Banks must focus on how they can add value to their customers to retain and engage them. Through platformification and by leveraging data, banks can better cater to the needs of the modern customer as well as create new revenue streams.”
• “The Apple card is a great example. Apple is an organization that is well known globally for making things easy and sanding off rough edges. Now, they have a credit card that can be applied for on four screens, and as little as three pieces of information — in less than a minute. It’s not that huge of a stretch to say, ‘how about opening an Apple checking or Apple savings account with a single click?’ Apple has set the standard for all industries.” — Jay Baer, founder of Convince & Convert

This post is part of Convergences by Melvine. A series exploring how software is changing every corner of human activities. Melvine Manchau