Banking’s future is dependent upon meeting new expectations.
By Michael Scheibach
“Traditional banks see fintech startups and digital banks as threats to their business, and rightly so because these new entries into financial services tout an appealing, user-friendly customer experience, which can help successfully target groups like millennials.”
The comments of Will Weidman, senior vice president, Applied Predictive Technologies (www.predictivetechnologies.com), reflect those being made throughout the industry — an industry repeatedly being warned about its impending disruption. Yet Weidman also emphasizes that traditional banks have a competitive edge in their ability to provide customers with personalized service, which is essential in building long-lasting relationships. The key is to learn from the disruptors and implement more efficient, streamlined, integrated online and mobile offerings.
According to APT’s recent State of Business Experimentation report, traditional financial institutions are, in fact, doing just that. Eighty-eight percent of those surveyed are improving mobile capabilities, and 50 percent are adding Smart ATMs and self-serve technology to further entice customers eager for cutting-edge convenience.
“Traditional banks are actively investing in mobile and online offerings to meet growing demand for digital banking options,” said Weidman. “If they once were behind, they now seem to be catching up.”
Weidman cites the fact that banks are beginning to offer promotions encouraging customers to migrate to lower-cost mobile or online channels, while others are testing strategies to engage and onboard customers that open accounts outside the branch. According to the SOBE report, all financial institutions surveyed are striving to improve their digital onboarding processes to accelerate channel migration, with 78 percent of respondents marketing new mobile and online app features. Seventy percent of respondents said enhancing their online banking platform is a strategic priority, and 60 percent said that channel migration is as well. In addition to tackling the mobile and online spheres, banks are adapting their physical branch networks to cut costs by carefully closing less-valuable locations while trying to retain valuable customer relationships.
Weidman points out that banks are increasingly training branch and call center staff to assume more universal roles than just fulfilling traditional teller responsibilities. This is essential as customers using these channels not only want to conduct transactions; they also want financial expertise. As branch closures increase, contact centers are becoming increasingly integral customer service resources. Banks are experimenting with the traditional call center model by focusing more on proactive outreach and cross-sell activities, rather than just fielding incoming requests.
Undoubtedly, traditional financial institutions need to move toward omnichannel or digital banking. But this is not the complete answer. They also need to personalize the customer experience. Weidman notes that some banks are now using beacons, Bluetooth-enabled devices that communicate with smartphones, to send nearby customers localized event information and promotional offers. Others are embracing innovative branch formats in hopes of connecting with customers on a more personal level.
“Not all new programs will necessarily be well-received by customers,” said Weidman. “For example, video-conferencing technology may save costs and appeal to younger tech-savvy customers but alienate those that prefer in-person interaction over talking to a screen. By testing new customer interaction strategies on a smaller scale, sophisticated banks can identify which programs they should target to different branches and customer profiles before making sweeping changes.”
The bottom line, according to Weidman, is to focus on customer preferences and conduct personalized outreach. Disruptive players are forcing traditional financial institutions to innovate quickly and implement the most effective changes possible. These institutions must prioritize mobile banking and channel migration, and incentivize conversion to these new digital services with online-only promotions and user-friendly, personalized interfaces.
Michael Scheibach is executive editor of BankNews.