Is Digital Banking Really Boosting Customer Experience?

The future of successful banking depends on delivering memorable customer experiences and creating lasting customer loyalty. To achieve these lofty goals today, banking strategists must deploy innovative technologies centered on digital transformation. The latter is the obvious route to combating challenges and capitalizing on opportunities.

However, earning top ratings for customer service and flawless CX is not an easy target, swung back and forth by rapidly shifting buyer behavior and technological advancements. As a result, we have a dynamic banking landscape moving through unexplored territory, fueled mainly by competition escalating beyond anyone’s expectations. Consider the following:

• Financial services/fintech (essentially non-banking) – competitors disrupting traditional markets.
• The expansion of digital-only banks (online/mobile).
• Traditional brick-and-mortar community banks and credit unions competing tooth-and nail against each other.

Bankers no longer have the luxury to “watch and see”

A sense of urgency pushes them for faster decision-making at a strategic level, with the assurance to stakeholders that their strategies are informed and based on mainstream issue visibility.

Bankers who turn their backs on the challenge of harnessing digital tools and reinventing the customer experience will fall dramatically behind the curve – perhaps so far as to never make up ground. Reliable data derived from Forrester research shows the following related to global banking executives:

• Around 35% admit to progressing aggressively with substantial digital initiatives to escalate the customer experience.
• Conversely, 12% are in the planning stages of digital transformation.
• A die-hard 6% are change-resistant.

Conversely, from the banking customers’ viewpoint, there’s little doubt where their inclinations lie. The same Forrester report shows that online banking is the favored channel of Canadians (77%), Americans (71%), and Spaniards (69%) – making it the “new normal” in those countries.

Important takeaways include the following:

• The movement to technological banking for an uplifted CX is sustainable and not a fad or a come-and-go event.
• The relatively slower banking reaction leaves a significant gap between customer priority needs and the pace of satisfying them.
• Understanding what the transformation looks like in the minds and emotions of customers is the first important step before any transition can occur.
• The discovery process is slow, complex, and scientific, requiring survey and segmentation techniques.

Need a refresher on customer data segmentation? We’ve got you!
(Then, learn how to segment in Sogolytics, too!)

An omnichannel connection is a must.

Immediate accessibility is the principal divider between agile mobile banking apps disrupting the financial services industry and stodgy competitors slow to react. A survey by Insider Intelligence discovered that:

• Mobile banking is the preferred choice of 89% of the respondents.
• Millennials jet-propel that metric into the stratosphere, with 97% (almost all) preferring mobiles.

Nonetheless, mobile-oriented customers expect their favorite bank to provide numerous options outside of mobile, such as self-service platforms and one-on-one direct contact with customer service agents.

Interestingly, in a comprehensive survey of 5,000 banking consumers, 82% insisted that omnichannel access is vital to their confidence and trust in the organization (notwithstanding the mobile preference was overwhelmingly rated #1).

The question is this: How demanding is it to achieve omnichannel accommodation? We know it’s time-consuming, expensive, and often bewildering to the team. The trick is to springboard off the existing infrastructure, calling on outside consultation with companies like Sogolytics to speed up the process. In short, you can save thousands of dollars by not reinventing the wheel.

Moreover, innovative SaaS and App options hitting the market can pave the way efficiently and cost-effectively. Guidance on which can best establish an omnichannel experience is the recommended way to go.

AI and automation are firmly in the banking formula.

According to The Economist, AI is a staple ingredient feeding into banking customer interactions, even in the most traditional institutions. Projections across operational developers rate AI impact as follows:

• Personalizing investments – 17%
• Credit scoring – 15%
• Portfolio optimization – 13%

Ordinarily, one would expect AI to have considerable weight in the customer service arena through the development of chatbots. However, the latter demonstrated severe imperfections, resulting in defective client support and thumbs down on the customer experience. Indeed, a survey by The Financial Brand painted a clear picture, showing 66% of respondents were satisfied with online chat technology as long as it connected to a human agent, while only 26% expressed satisfaction with AI-powered chatbots.

A Deloitte investigation confirmed the sentiment from another angle. Its report reflects that 80% of bank customers who had experienced chatbot interactions in the past year wouldn’t want to repeat them, with 46% saying they would deal directly with branches the next time.

So, the banks are learning fast that the more complex the customer’s situation is, the more advantageous it is to insert human guidance and advice into the equation. Alternatively, AI chatbots are expanding their usefulness for basic/routine banking activities where the solution options to customer questions are limited. Forrester confirms this in the report referenced above, showing:

• The repetitive task of checking bank account balances via chatbot has caught on with 30% of customers in the US.
• Smart speaker use is big in the UK, where 30% routinely transfer funds to others.
• In Canada, 22% use smart speakers to transfer funds between their family accounts without human assistance.

Consequently, while customers have started using smart speakers for basic banking activities, Forrester research shows they remain wary of voice assistants. To a certain extent, this is a matter of familiarity. Indeed, the more banks experiment with AI incorporating voice into their digital experiences, the more customers appear to be using them, leading to a conclusion the trend undoubtedly has traction.

Another key trend in banking this year? Tightening customer asset protections.

Digital transformation depends on digital collaboration.

One of the primary movers in financial services markets has been the extraordinary emergence of fintech startups or non-financial digital brands offering faster, cheaper, and higher-quality services to customers already losing trust in their traditional bankers. It has been a significantly disruptive incursion, throwing commercial lenders, community banks, and credit unions into a tizz, thus forcing hasty strategy moves to keep pace. As a result, stakeholders are throwing every digital transformation idea and initiative against the wall to see which ones stick, all in the interest of delivering the same or better customer experience.

Unfortunately, copying complex technologies developed by the new players is more than challenging. These usurper entities have successfully covered multifunctional dimensions across mobile and cloud applications, real-time data, and user interfaces with flexible digital architecture. In a nutshell, they’ve disrupted traditional markets almost overnight with broader platforms and ecosystem businesses, throwing the usual suspects into uncharted territory.

So, as we envision it, banking is at a transformation crossroads, and time isn’t on its side. Here’s what’s happening: A collaboration culture is developing where the traditional institutions seek partnerships and associations with fintech startups and Big Tech companies instead of declaring war and engaging in head to head competition. In other words, they’ve realized they can springboard off their brand presence to expand into new and more dynamic ecosystems together with, not against, specialist digital experts.

According to Deloitte: Although there’s evidence of successful collaborations since 2014, these have more than doubled in the last nine years and won’t dissipate anytime soon. It seems like every banking institution must climb aboard the collaboration bandwagon to maintain a presence in the marketplace with a progressive, customer-oriented, responsive brand. The alternative is being left in the dust as the financial service industry zooms on to the next station.

Looking ahead

Regarding banking, trust is the overriding driver in any customer experience. Currently, it’s at an all-time low, especially in the Millennium and GenZ segments expressing disbelief in the traditional financial providers. According to the J.D. Power 2022 U.S. Retail Banking Advice Satisfaction Study, 37% — more than a third of banking consumers — prefer fintech brands, pushing traditional banking to the bottom of their priority list.

The most decisive consideration in the trust equation is cybersecurity protocols and infrastructures protecting accounts and personal information. With hacks, leaks, and other cyberattacks in the news, banking cybersecurity is set to be an important trend in the financial services industry this year.

From customer experience to cybersecurity, it’s clear that digital transformation will continue to drive the evolution of the banking industry for years to come.