Despite the fallout from the 2008 financial crisis, many customers stuck with their chosen bank and continue to remain loyal today. The aftermath of the COVID-19 crisis along with the tech giants’ long-awaited threats has now exposed new challenges for banks. Some of the FinTech challengers are quickly establishing themselves with stable balance sheets and an ever-growing user base.
With banks sitting on poor customer reputation statistics, outdated hardware, and an expensive legacy of branches and staff, it can be easy to compare them negatively to the likes of Apple or Amazon. However, this overlooks their place in society and indeed the possibility for change.
So, what can banks do to fight back and keep customers from flocking to challengers?
FinTech challengers are quickly establishing themselves with stable balance sheets and an ever-growing user base.
Creating better customer experiences
If there is one thing that most big tech brands have in common, it is platforms with well-honed and slick interfaces that enable better customer experiences and deliver high conversion rates. One glimpse at banks and building societies and it’s clear that CX takes second place to systems-oriented design. Platforms come with limitations and procedures, built around the needs of the bank rather than the customer.
Influenced by their experience with other consumer products, when it comes to banking, consumers now want straightforward and quick functionality. Multi-page, ten-minute account opening procedures or loan signups requiring 24-hour approval are obsolete. Thankfully, streamlining signups and other bank account processes is possible – the technology exists. Only legacy and cost stand in the way.
The major tech brands are renowned for great CX. When they directly enter the banking space, they will already be ahead, meaning there’s no time to waste for banks in finding fast paths to a better customer onboarding and management experience.
Joining up services and products
Tech giants have something else in common, which is their journeys towards being an Omni-platform. In banking, however, the so-called super app doesn’t yet exist. Typically, banking apps only display current, savings, and credit card accounts in a single interface. Mortgages, pensions, investments, or bonds remain orphaned. There’s work to be done to catch up.
What’s more, only a few brands have tooled their platforms up with Open Banking (XS2A) functionality to allow for third-party products to be viewed in one place. From dashboards that consolidate all financial wealth into one place to competitive foreign currency and cryptocurrency transfer and management services, the opportunities here are endless. Loyalty programs that help save money on higher-ticket items, timely augmented information on inheritance tax implications, and even easy set-up of trusts for future generations are just some of the features that can be made available to banks to help them better serve customers.
Creating efficiency with automation
In addition, Robotic Process Automation (RPA) promises huge increases in efficiency. As a technology set, RPA is the fastest growth area in banking, capable of handling several repetitive, often mundane tasks and creating functional outputs. While core banking systems, including contemporary platforms, remain large, complex, and somewhat impenetrable, the joins between them and the end-user can be rapidly improved with RPA.
From simply augmenting data on spreadsheets to end-to-end rules-driven personal loan approvals, RPA looks to cut out manual processes and replicate rules-based decision-making. These approaches reduce manual effort, improve accuracy and compliance, reduce overall risk, and speed up processes, further improving the customer experience. Benefits of employing process automation include automated report building, rapid customer onboarding and account opening as well as automated lending and loan processing. And this is just the tip of the iceberg.
Robotic Process Automation (RPA) promises huge increases in efficiency. As a technology set, RPA is the fastest growth area in banking.
Tapping AI for personalisation
Finally, one area that banks are ahead of the game is their intimate knowledge of their customers. They know their spending and saving patterns, and they alone have a sufficiently deep enough relationship to have meaningful insights.
But the tech giants are coming and with years of experience in AI, adoption is critical for banks. Whilst the concept of AI can seem daunting and complicated, it has moved from the laboratory to the real world at a staggering pace. Many FinTech organisations offer their AI services to help augment banking with machine learning capabilities, automation, and personalisation.
And as banks continue to shut branches and consumers move to digital servicing, that need for personalisation becomes starker. Customer service has long stood as the high street bank’s stronghold after all. It is only AI that can hope to virtualise appropriate customer service and meaningful advice, from detecting loan defaults before they occur to guiding customers through reducing their outgoings in case of furlough and offering alternative or additional products at appropriate points.
With big tech zeroing in on the industry, doing nothing is not an option. Banks have to modernise or become a thing of the past. Of course, the transformation required is not only an IT issue but a large cultural and political shift, one that has to be driven from the top of an organisation. Banks survived the 2008 crisis. But the threats they’re facing now will make or break them.