How Digital Experiences are Changing Banking
Changing Expectations and why Younger Generations are open to FinTechs
Digital products and experiences have introduced unprecedented levels of convenience to everyday money management in the Consumer Banking space. Innovation in customer service is becoming a huge priority for banks to decrease cost while enabling a positive customer experience. In short, Digital Banking is enabling the banks to deepen customer satisfaction and loyalty, driving long-term relationships and profitability.
A Change to Customer Expectations
Today’s bank customers expect quick and convenient service from their banks with interactive and user-friendly interfaces. They demand a perfect combination of human and digital banking services available when they need it. According to BCG, this idea of blending digital experiences with real human interaction will be critical into the future. They have called this shift a move towards the “Bionic Bank”, wherein retail banks must provide digital functionality for speed and convenience, as well as thoughtful, caring human interaction when the customer needs and demands it. Banks are thus increasingly adopting digital technologies and data analytics for not only meeting the customer’s demands, but also to lower their costs and increase their efficiency. Having a clear roadmap with an ability to design and deliver these mobile products will be crucial to remain relevant in the industry.
Almost 70 percent of those who own a smartphone now prefer conducting their banking transactions with mobile banking applications. New transaction capabilities such as PayM (which enables mobile to mobile payment by phone number) are helping the banks deliver this capability in their own branded digital platforms. This may also include offering payment solutions based on NFC such as Apple Pay, Android Pay, and Samsung Pay or developing proprietary payment services. Illustrated in the below figure are the Key Performance Indicators (KPIs) for measuring customer experience in the industry and their impact on the banks. A number of these traditional metrics are now significantly enhanced by both Consumer-facing and Enterprise digital products.
The Impact of FinTech
In North America, consumers are particularly open and in fact desire interacting digitally for their banking. In fact, The graphic below shows customers responding that they have a more positive digital banking customer experience 57.8% vs 49.5% with Non-Traditional banking companies. This has led to the success of FinTech Companies. Millennials today are more inclined towards FinTech companies offering digitized and mobile-first financial products. According to Vision Critical, 44% of millennials use alternative digital banking products, choosing them over traditional banking because of the ease of use and credibility.
The below illustration shows the preference of customers to interact digitally with both Traditional and Non-Traditional firms in the space. Non-traditional firms (FinTech firms) performed particularly well in North America, despite the fact that more than 40% of the Traditional banks have devoted at least 25% of their IT budget towards digital transformation.
This trend means the traditional banks need to invest in digital experiences AND innovation to catch up, and build trust in the younger generations.
In Summary, the banking industry faces the need to transform and modernize through building Digital products and tools. Customers expect it, and FinTech startups are swiftly moving in to take their share of the market. Softvision works with Globally recognized financial institutions to design and build the next generation of products that will keep them relevant, and compete with the agile, innovative FinTechs entering today’s market.
- https://www.scnsoft.com/blog/how-digital-and-physical-channels-impact-on-customer-satisfaction +