It’s time to get real in retail banking

It’s time to get real.

Digital banking is here to stay. And it’s rapidly reshaping the way that retail banks interact with their customers. 

Customers have been using online banking and mobile apps to manage their finances for years. Behavior that has only been accelerated by the pandemic. And yet, when it comes to engaging effectively online, retail banks are a little behind.

The industry suffers from an over-reliance on legacy technology, stiff competition from online-only challenger brands, and a persistent lack of trust from customers. Banks must implement innovative solutions to effectively compete in this environment but are hindered by the need to comply with constantly changing and growing regulations that require an enormous amount of time, money, and resource to address.

To survive in the modern retail banking industry, you need to find a way to navigate these complexities and get real with your customers. It’s time to start delivering real customer experience.

Let us show you how.  

So, what do your customers want?

They might not want to visit a physical branch as often as they used to, but that doesn’t mean their standards have fallen. If anything, the opposite is true.

Empowered by digital transformation and the ease of doing – well, everything – that it brings, customer expectations have skyrocketed in the last few years. 

Customers want – and expect – instant, seamless, and tailored services. Not to mention consistent service, meaning a consistent level of service across all channels and touchpoints, at all times. They want engaging with you to be easy, effortless, and enjoyable. They want to feel safe and supported. And, perhaps most importantly, they want it to feel genuine. Human. Real.

With physical branches closing and operating at reduced hours, the online experience is more important than ever.

And when it comes to customer experience, your competitors are no longer just those in your industry, but every other online business. We’re talking Amazon, Netflix, and Apple. And those are some big shoes to fill. According to McKinsey, “three-quarters of consumers switched to a new store, product, or buying method during the pandemic”. 

And the Zendesk Customer Experience Trends Report 2022, found 61% of consumers have higher customer service standards following the pandemic 

There are a number of factors that are holding banks back from delivering the delightful customer experiences that help to foster long-term relationships.

1. Trust

Customer loyalty is hard to come by.

When it comes to retail banking services, customers have a wealth of options available to them. Mortgages, insurance, savings…people can choose the best deal for them for each individual service. They have a choice.

And with easy access to comparison sites, the offer of better deals for new customers, and the tools provided by banks themselves to make switching easier, changing banks is an attractive option.

On top of this, trust in banks varies greatly. The 2020 Accenture Global Banking Consumer Study found that only 29% of consumers trusted their bank “a lot” to look after their long-term financial wellbeing, down from 43% two years previous.

However, EY reports approximately 70-80% of European consumers trust their banks “completely” or “mostly”.

Such varying results indicate that banks cannot rest on their laurels. Especially as there is more than one form of trust that affects how consumers feel about banks: cognitive and social.

Cognitive trust is centered around belief in a bank’s reliability. Trusting that the bank will transfer money when you ask them to, pay a bill when you’re supposed to, and generally keep your money safe. 

Cognitive trust took a hit after the financial crisis but has, for the most part, now recovered.

Social trust is about believing in the honesty and integrity of a bank. Essentially, believing that banks have your best interests at heart. 

This is where the retail banking industry is struggling.

Banks need to elevate the conversation from concerns of safety and service to ease-of-use and easy access to assistance. And they need to add value at every touchpoint, whether it’s digital or human. 

The industry is already seeing a rise in value-added services. Cashback, 24-hour customer service, budgeting tools…the list goes on. Services like these are relevant to customers’ needs and make their lives easier. They might not bring in revenue, but they are invaluable for building trusting relationships and loyalty. 

2. Legacy technology 

The accelerated shift to digital, alongside the emergence of new, online-only banks, has completely disrupted the industry. 

Such dramatic changes, as have been experienced in the last few years, have not been seen in the lifetime of many retail banks. The systems they built their businesses around are outdated. More aligned to 9am to 5pm, in-person transactions. 

There is now a threat to “digitalise or disappear”. But this threat is causing some companies to fall into the “technology trap” – implementing technology for technology’s sake, rather than anchoring it to a business strategy or opportunity. This leads to a focus on getting the tools to work, rather than improving customer experience.

And on the flip side, some banks are unwilling – or simply unable – to upgrade their core platforms and apps at all.  Where core systems have been pieced together over decades, detangling that technology is a huge undertaking, with the risks almost impossible to predict. This makes innovation exceedingly complicated for such risk-averse companies.

According to a report by the UK’s Financial Conduct Authority (FCA), almost 50% of banks do not upgrade legacy IT systems when they should.

This is why companies are now increasingly looking to composable architecture, which allows for each component of a system to be replaced and deployed independently.

3. Online-only banks

There has been an influx in recent years of online-only banks. Banks that purely offer services online, with no physical branches.

The biggest advantage of online-only banks is their embedded digital-first strategy. Every customer journey that has been created and every service that is offered, has already been optimized for digital. It’s quick and easy to sign-up, 24/7 in-app support is standard, and monthly spending reports are easily accessed. 

Whilst many of these services are now being adopted by traditional banks, the fact that challenger banks have always offered them has allowed them to build a substantial level of social trust with their customers. And this means customers have become advocates. The holy grail of brand loyalty!

However, the Financial Times have said  “While millennials are more likely to open an account with a digital bank, they are still reluctant to use them as their main bank account”. Traditional banks with local branches have a huge advantage here. When combined with seamless online services, it puts them in a position to provide added value for their customers.

Banking is an industry built on human connections that have historically been formed face-to-face.

To rebuild trusting, long-lasting relationships with customers, and deliver the experiences they demand, banks must focus on replicating these connections digitally through personalization.

Personalization is about presenting the right offer, to the right individual, at the right time, and on the right channel. Wherever the customer engages with a company – in-person, a chatbot, email – it is key that that touchpoint is empowered and able to communicate the right messaging.

For example, one customer may prioritize getting on the property ladder and be focused on saving for a mortgage. While another, may want to secure a loan to enable them to build a business. The “right offer” for these two customers would look very different and the ability to determine that next best offer would rely on going beyond demographics. Only by knowing who your customers are and what’s driving them, can you begin to understand what that offer should look like.

Why focus on personalization?

Because our clients who do, see results like these:

• $150M added revenue per year
• 53% increase in net promoter score
• 7x increase in conversions

How could you achieve such results? 

By implementing a solid strategic plan, you can benefit from a wide range of benefits, both operationally and commercially.

Operational services are streamlined by encouraging digital-first behavior and adapting a personalization strategy with existing technology, whilst ensuring your organization is in line with new regulations and open banking guides. With composable options and quick ROI metrics, a modern personalization solution can help achieve these operational goals. 

And internally, it can provide real-time agility that is both intelligent and secure. Solutions such as secure data uncoupling can avert concerns and allow you to enjoy real-time decisioning, across all channels, in parallel with the latest customer insights. Implemented well, this will provide rewards in the shape of winning new customers and building greater trust, meaning customers are retained.

The knock-on effects of increased engagement rates mean that you’ll experience across-the-board improvements in customer satisfaction, up/cross-sell, product usage, retention, and win backs.

Delivering a personalized experience that is the best fit for each individual customer can help to create a community of advocates. Advocates who share their positive experiences, building a community that remains loyal. 

Of course, the ultimate goal of implementing a personalization strategy is that your customers are rewarded with delightful experiences, peace of mind, and a bank they can trust.

Get in touch and talk to us about your personalization requirements. It’s time to get real.