The consumer is leading the charge for change within the financial services industry. Through mobile and social technology, customers are more engaged and educated than ever in the services they interact with. They’re increasingly integrating their social and commercial activities and empowered to engage with banking products and experiences, able to customize offers and products that are relevant to them at any moment in time.
New banking behaviors like social payments and mobile wallets are on the rise as are the use of tech platforms that are tuned for digital customer engagement.
With growing customer demand for personalized digital experiences, more efficient operations, and fast delivery of new product innovations, banks must reimagine their business processes to better serve their customers and prepare for a future where the only certainty is accelerating change. Key to this is the challenge and the opportunity to shift the traditional mindset, in which the customer must fit an offered product, to one that asks “how do we become relevant and real-time to serve our customers’ expectations?” then builds collaborations and technology accordingly. Brands are still important, but consumers no longer do business based purely on brand loyalty, and banks can no longer wait for a customer to come to them.
At the recent Customer Owned Banking Association convention, it was clear that key challenges for small to midsized banking organizations were customer retention and non-member customer acquisition. The question for many organizations is how to achieve this.
Let’s look at an example of social and mobile technology coming together for an enhanced digital customer experience.
mBank, owned by Commerzbank, has more than 5 million clients in Europe. A key focus for mBank is personalization, which it provides by analyzing trends to anticipate customers’ needs. The bank, which calls itself “the world’s first mobile social bank within a bank,” focuses on simplifying complicated data from existing sources, such as transaction histories, to provide data to the customer in a useful and aesthetic way. This personal finance management (PFM) interface combines forecasting and analytics with search engine capability, allowing users to locate transactions by category, size, or other factors.
Customers can apply for loans on the spot, with approval taking 30 seconds. They can also access service bundles via the bank. Through collaboration with Facebook, mBank customers can transfer money to peers on the social media platform. A targeted incentive program allows clients to access discounts at retail partners where the bank has negotiated deals, and customers are alerted to these discounts based on their location. mBank partnered with SAP for predictive analytics, meaning its service is delivered through real-time personalization.
Based on work with leading banks across the globe to help them make the transformation and digitize their end-to-end business, the five strategic priorities for banks seeking to adapt to this customer experience-driven environment have been identified.
- Improve customer experience and engagement on the channels they choose
- Predict customer needs and demands
- Reduce operating costs
- Meet regulatory and compliance standards
- Enable open banking and platform based business models
What does this mean? To provide true customer engagement, businesses must be present in the customer’s life, with personalized, contextual offers using deep insights on preferences, behaviors, and attitudes that can change in real time, reacting to the live business environment. Customers are demanding real-time data and decisions, which digitally wise competitors are already offering, hence access to data in real time for customer insights is crucial for banks.
For a bank approaching digital transformation, going for an approach that requires customers to “rip and replace” existing business models and IT infrastructure may be inappropriate, as it is not only time consuming and costly but also introduces massive disruption for limited initial benefit. It’s key for banks to understand how they can use data they already have to create new opportunities for retention of customers and attainment of new customers. It’s time for banks to look at how they leverage the data they currently have to contextualize the experiences they offer and exceed their customers’ expectations.
Read more on what is possible with digital transformation in the banking sector and download the presentation from the recent FST Media & SAP Webcast on the launch of the Australian & New Zealand Digital Experience Report 2017.