With more and more challenger banks and fintech providers battling for the attention of consumers, it is a pivotal time in traditional banking history.
Traditional banks now face tremendous challenges around how to capture market share, retain existing customers and attract new ones.
To thrive and grow, banks must identify how they can be more customer-centric, offer enhanced transparency, deliver customised digital capabilities and maximise their assets to showcase their value across each step of the customer journey.
For many banks, this will require them to reimagine their core technology, foster strong partner networks and understand the true meaning of digital transformation, all while placing empathy and agility at the heart of their strategy.
Despite the new difficulties banks face, they have a huge natural advantage in that customers inherently trust traditional banks and the services they provide.
Banks should not take this innate trust for granted but rather use it to position themselves as a leader in customer centricity that understands the specific needs of their consumers.
Banks are uniquely positioned to adapt and optimise their existing assets to provide the type of products and services today’s consumers want and need. They already retain detailed intelligence on their customers, have established methods to interact with them and can aggregate and analyse data to offer a superior customer experience.
Banks that emerge stronger from this pandemic will be those that move towards a much more focused and strategic customer-centric model that enables them to deliver on customers’ expectations through technology innovation that also helps them to control costs and differentiate themselves from competitors.
Customization is king
In efforts to retain existing customers and attract new customers – especially millennials who are much more likely to opt for a fintech provider to meet their financial needs – banks must change their approach and how they develop and deliver consumer services.
They must create products and provide services that are hyper personalised, that understand not just what the customer wants and needs now but predict what they may require in the future.
Big tech companies like Facebook, Google, Apple and Amazon have successfully crossed into the financial services market and changed the game for incumbent players. Their business models are built on customization, prioritising user experience and the customer journey to maintain their existing customer base and grab increasing market share from traditional players.
These tech companies understand how to leverage customer data to provide the ultimate personalised experience and use it to suggest – and even predict – the customer journey, setting the standard for consumer expectations.
The sheer power, size and reach of these companies has left many traditional banks unable to compete. With a daily presence in consumers’ lives combined with significant capital, existing customer data and strong brand loyalty, big tech and fintechs have become the drivers of innovation – and have pressured banks to rethink how they can focus on customer-centricity and strive to own the customer value chain.
Challenger banks and fintech providers have enjoyed a high level of trust among customers due to their service-first models that build consumer confidence and encourage loyalty.
As traditional banks struggle to retain existing customers, they are also losing out on valuable insights that could help them attract new customers, especially millennials. As the banking experience evolves from product-based to customer-based, financial institutions will be pressed to find new ways to deliver the services that customers, especially younger people, expect.
Banks must strive to keep empathy and agility at the centre of their strategies to best serve the customer of tomorrow. That means providing a needs-based customer service that anticipates customer requirements and delivers products and services that meet these needs.
Banks must bring needs-based banking to the forefront as customer preferences continue to evolve. For this to happen, banks must have the right blend of first and third-party data – all in one place.
In 2021 and beyond, it’s vital that banks leverage artificial intelligence (AI) and machine learning to help customers improve their financial wellbeing.
Banks should also embrace customer data to ensure their offerings add real value to the customer journey.
By creating and maintaining access to consolidated data, banks can quickly respond to consumers’ evolving needs and seamlessly access this data by building a digital core layer in their functionality, which captures and logs the data from every customer interaction, personal information, purchasing pattern and more.
Smart banks will leverage their customers’ information to offer service-first models built on trust and loyalty, while ensuring transparency for both customers and potential regulatory requirements.
The bank model of the future is rooted in empathy, understands the customer’s needs, drives customer retention and ensures the long-term health of their business.
By humanising banking, banks will soon realise it empowers them to innovate faster, future-proof their business and reduce costs all while enhancing the customer experience.
Data has the power to enable empathetic banking and help humanise the banking experience, which can be a true competitive differentiator.
This article was originally published in Fintech Futures, Read More.
“The views or opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of SunTec’’.