As the banking industry emerges from one of the most transformative periods in its history, it has been a trying time for businesses and customers alike. Along with unprecedented regulatory change, high-street banks are forced to juggle the rise of challenger institutions and fintech start-ups. These fresh-faced competitors pose new threats in an already saturated market, driving digital innovation to attract their customers. The digital revolution has also introduced a seismic shift in customer expectations. Gone are the days of the “bank for life”. Empowered customers who come across a more attractive offer or experience poor service are now more likely to switch providers than ever before – and digital accessibility has made this all the easier.
In a sector increasingly affected by waning loyalty, can larger banks gain the edge over nimble competitors or has the revolution gone too far?
The over-digitization of customer support
Over the past decade, banks of all shapes and sizes have been steadily riding the digital wave to update their customer management strategies. Digital customer-centric tools such as apps and web chat now form an essential part of any banking service. And as banks continue to lose customers to fintechs, they are racing to catch up with their rivals to provide the same proactive solutions.
But digital shouldn’t be a be-all and end-all approach. A recent study conducted by Firstsource Solutions suggests that consumers are still looking for a 360-degree approach when engaging with their banks. The customer’s channel of choice depends on the query or action itself. When dealing with a customer service query, for example, 30% of respondents would first choose to go through a branch – and just 3% to an app. At the same time, a joint report from the British Bankers Association (BBA) and Ernst & Young states that in 2015, £2.9 billion a week was transferred using banking apps.
These trends show that providing a digital-only approach in banking fails to take into account the nuances around context and customer journeys, and risks alienating customers. We now tend to use our banks’ digital services for our day-to-day activities, such as simple balance checks and transfers. However, for more important processes, we inherently like the security of a traditional brick-and-mortar model that supports in-person interactions.
A bank for all types of consumers?
In a convenience-driven market, customers want options – they want more channels to interact with their bank, rather than fewer. The best tactic for mass-market banking is to provide niche options alongside full channel coverage for those unexpected circumstances when the customer needs the safety net of a branch network. Whilst some digital natives will be happy with apps and new solutions such as chatbots 99% of the time, banks must continue to plan for unusual journeys that take even the most tech-savvy consumers off their beaten path.
Strategic partnerships to gain the edge
This means that alongside the old, must come the new. If banks are to play on the strength of an omnichannel customer-centric approach, they must make sure that they are doing all they can to level the digital playing field.
However, building a tech offering capable of competing with newer banks poses a problem for more traditional stalwarts. Developed around old, slower back-office systems, they can struggle to adapt to new technology and updated programming languages.
Creating strategic partnerships can help to solve teething problems that come with digitization. Although traditional banks are right to see fintechs as competitors, several have begun collaborating with their rivals to generate mutually beneficial solutions. Barclays, Bank of America Merrill Lynch and BNP Paribas are just some of the banks working with start-ups, trading on established brand names to develop their digital plans.
Banks can also benefit from working with customer experience partners, who can help to create tailored, seamless and omnichannel consumer journeys. Such partners can achieve that in a number of ways, such as simplifying the technology architecture and introducing automation processes to optimize and inform the workforce.
The task of replacing legacy systems is huge and will take time, but banks can find the support they need to upgrade and gradually evolve processes. Eventually though, to be truly competitive, banks will need to take the plunge and embark on a transformative journey.
The heritage advantage
In an industry emerging from a testing revolution, a large bank heritage is often perceived as a negative, particularly in the face of nimble challengers with fresh, new ideas.
But, by building partnerships to develop their digital offerings and continuing to build on existing customer experience journeys, traditional banks can gain back their competitive edge over their rivals. Although they may have made a slow start, by leveraging more contact channels and activating what is often their greatest asset – their brand – high-street banks may yet win the race for delivering the best customer experience.