Changes in customer expectations, accelerated by the rise of the millennial generation and the rapid adoption of new digital technologies, are having a transformative effect on the retail banking industry. This transformation is forcing financial institutions to reconsider their product offerings, delivery methods and the role of the branch to better meet the needs of today’s consumer.
Retail banking customers now expect high-quality, easy-to-understand products at a fair price from a banking provider that knows and understands them. Accustomed to the ease and immediacy of digital channels, they presume their bank experience should be as quick and intuitive as their experiences with companies like Amazon and Netflix.
However, if banks aren’t providing the products customers want in the way they want them, they risk losing a significant amount of business to another bank—or even more likely, to an alternative financial services provider.
Historically, banks implemented a robust technology strategy mainly to improve operational processes. However, the paradigm shift from a product-centric approach to one that is more customer-focused should drive financial institutions to invest in digital tools and capabilities that create a hybrid banking experience—one that meets the demands of digitally savvy and technologically reliant customers, but also provides relevant human input in the moments that matter. When done successfully, this should effectively blend all touchpoints into a single experience.
There are several key barriers preventing banks from addressing the widening gap between customer expectations and a seamless experience, namely a reliance on gentrified systems that are siloed across product lines and are incapable of talking to one another in the way banks need. Stories abound of retail banking customers who inquire about other services, like a mortgage or business loan, only to be referred to a specialist at another location. These missed opportunities translate into lost revenue for the bank.
Some banks have spent millions of dollars revamping their front-end customer interface with the latest technology, online banking and mobile apps, yet have not automated anything in the back office. Not having any automation on the back end is like having a house that looks beautiful from the outside but lacks the necessary internal infrastructure like plumbing or wiring. Banks that fail to update or automate their back office, despite having made improvements to the customer-facing experience, create bottlenecks and inefficiencies, increasing the volume of manual work required and putting more pressure on staff.
Moving forward, banks need to embrace a retail strategy that puts the customer at the center of all that they do and uses technology to unify people and processes.
At the core of this strategy is breaking down silos in favor of a single platform that connects to the back office and provides a 360-degree view of the customer—and not just for retail, but across all lines of business. Here’s why: If a customer has several accounts in one bank—for instance, a checking account, business account, wealth management account or an auto loan—without a single point of contact due to multiple systems, he or she will be treated like a separate customer with each interaction. The 360-degree view supported by a powerful back-end system enables banks to bolster relationships, create additional revenue opportunities and build customer loyalty—across all channels.
Customer interaction across channels and business lines should be consistent and seamless, otherwise digital channels will never make up for the connections that branches are losing, and the branch will not effectively transform into the hub it needs to be for relationship building and problem solving. Bankers at the branch or in the call center should have the capability to help someone who started an application or task online if the need arises, and should be empowered to support a customer who asks about other banking services instead of referring the inquiry elsewhere.
As these strategies mature, success stories of banks using key insights to drive cross-sales or otherwise increase revenue will begin to proliferate. One example comes from a major bank in Australia that began using its customers’ preferences to make more targeted offers. This resulted in 37 percent of customers who interacted with a teller, and 60 percent of customers who engaged with call center staff, signing up for an additional product, accounting for $7.8 million in incremental revenue.
Transforming retail with the right digital tools will allow banks to effectively differentiate themselves from their competitors, maximize revenue opportunities and increase customer loyalty while exceeding their expectations.