By Jessica Cheney
The banking industry is in a time of tremendous digital transformation. The question today is what are the big steps banks need to undertake in order to meet the unique challenges of their customers and win business.
Banks are beginning to face the jarring reality that they are no longer being evaluated on the traditional banking measures of reputation or branch proximity; instead, they’re being measured by how effectively, authentically and intelligently they can engage with customers in the digital environments in which those customers expect and prefer to do business. To raise the stakes even higher, they’re being judged by customers who have grown accustomed to the levels of service and innovative technology set by organizations such as Venmo, Amazon, Google, Uber and AirBnb.
Ultimately, the success of banks as they navigate this time of significant change will come down to how effectively they can execute in three key areas:
Winning (and retaining) the primary customer relationship
While it’s often suggested that banks are at a disadvantage in the race against fintechs due to their perception as stodgy, archaic, old institutions, the reality is that reputation is actually an advantage.
Consider this: Because of banks’ longevity, they have earned certain privileges, such as a reputation for stability, security, a large base of product offerings and, perhaps most importantly, a tremendous amount of intelligence about their customers in the form of data. These are an excellent foundation for success. Banks need to become more aggressive in their digital transformation by channeling new technologies to keep the needs of their business customers at the center of their digital transformation journey. Key to winning primary bank relationships will be the ability to provide the right tools, at the right time, with the right information to help their customers grow their own businesses.
Providing customer-centric digital transformation
Digital experience is now the main product that banks provide. The quality of that experience will dictate a bank’s ability to acquire, deepen and grow banking relationships. Similar to interpersonal relationships that transform and grow over time, banks need to be mindful of the evolving needs that impact their relationships with their business customers. The time for winning the hearts, minds and wallets of customers just by virtue of an abundance of features is long gone. Instead, focus should be centered on reducing complexity of these features and increasing their value by using technology to deliver a simplified, intelligent, engaging experience on all fronts.
It is no longer enough to simply provide transactionally-based payments and cash management services — that’s a commodity in this day and age. Winning the primary banking relationship now requires providing customers with a superior digital experience at every single touchpoint, executed in unique and compelling ways and delivering a level of intelligence that makes both the customer and their business smarter.
Delivering rich, actionable insights
Bank customers have more power than ever before with easily accessible information they can readily use to find alternatives to banks. The barriers to switching banks or utilizing alternative providers are much lower today than ever before. With this in mind, banks need to re-evaluate their thinking around how they provide value.
It all comes down to one simple truth: in this day and age, customers are looking for business insights, and banks hold an amazing amount of information that is waiting to be unleashed. Remember the vast amounts of bank data referenced earlier? That’s the source of a contemporary bank’s strength and where they should invest their focus. Banks need to use all the data they have at their disposal, augmented with technologies such as artificial intelligence and predictive analytics, to deliver rich and actionable insights that enable organizations to grow and secure their businesses.
Banks also need to focus on exploiting their strengths and partnering to overcome their weaknesses in this area, assuming a new role as facilitator, dedicated to orchestrating a new banking ecosystem in which the bank and alternative solution providers can work together harmoniously to provide the biggest impact to the customer’s experience. If banks can achieve that, success will be theirs.
There’s no doubt that the challenges banks have before them are significant — this is a time of unprecedented change. It’s important to remember that with change comes opportunity. By embracing a new reality, banks have the chance to take a leadership role in the transformation, reinventing themselves as a collaborator that puts the power of data into customers’ hands. That is where the promise of the future lies, and it’s the key to winning in the digital age.
Jessica Cheney is vice president product management & strategic solutions, Bottomline Technologies.