Keeping pace with digital change will require banks to put customers first. It’s their experience that makes the difference.
As banks consider how to reshape their digital future, they need to redefine their roles and reflect on what they want to achieve. Success requires banks to think like a customer – and attracting and retaining customers begins by understanding the customer experience. Many banks are digitizing their core businesses to improve that experience, while others are seeking innovative ways to differentiate themselves from traditional banking services.
At some point, banks need to become digital if they are to deliver value. Many are not ready: it’s costly and time-consuming to build IT teams and align them with legal and regulatory initiatives. They need to stop acting digital and take the next step.
Competition is fierce from other banks, as well as FinTechs and InsurTechs that are heavily invested in the market. Though banks already offer next-generation experiences, such as mobile apps, robo advice and live video chats, keeping pace with change is no easy task. It’s not realistic to rely on a long-term customer journey using a model that may not be adaptable for the future.
Raising the bar on customer expectations
Revenue is generated by satisfied customers and the value of the customer experience is what makes the difference. Take the example of a family that wants pizza for dinner. There are three choices: go and buy a pizza for €3; order a pizza from the local pizzeria to be picked up or delivered for €15, or take the family to the restaurant and pay €100. Although there is a cost consideration, other factors make a difference. It’s the way the pizzeria changes the venue or the toppings to fine-tune the experience that makes the customer come back.
Our “bank as an experience” approach transforms customer relationships by assembling different components to provide a superior customer experience. It is an innovative way to deliver a best-in-class capability that anticipates customer needs and embraces the digital interaction that individuals have come to expect.
Customers can choose how they get financial advice for investments, mortgages or loans. They can also move seamlessly between channels, with high levels of security and greater peace of mind. The journey extends to non-banking elements, such as real-estate agents that simplify the home buying process.
Why this approach matters
In a recent EY survey, four in five customers said the experience a company provides is as important as its products and services. That’s sound advice for banks as they focus on improving the value of their services. They need to make the journey as convenient, simple and fast as possible. For example, a bank built on a mobile chat platform must enable customers to handle transactions as easily as if they were chatting with friends on the phone. Routine banking services need to become so transparent that they are no longer perceived as a banking process.
A bank as an experience may be able to charge a premium for its services – adding to its revenue stream. By providing a superior customer experience, the bank can maximize its return on investment and increase market share. It can target, attract and acquire high volumes of new customers while retaining a loyal customer base.
Since the bank holds fewer physical assets, technology and specialized banking services are provided by third parties – eliminating the need to develop them in-house. These outsourced services can be bundled into a common unique brand.
Delivering a better customer experience
Other industries are engaging with customers in a personalized way that integrates new services and targets new markets. The platform scalability that is boosting their sales and margins could help transform the banking industry. Banks need to excel in serving the customer and orchestrating activities to deliver the ultimate experience.
This requires a paradigm shift that EY continues to support. Forrester’s 2019 Research recognized EY as a leader in global digital transformation. It stands out for its ability to bring a customer-insights-strategy to its clients and to embed innovation in everything it does.
EY has identified five ways that banks can reshape their future: as an experience, marketplace, service provider, facilitator and producer. This article is part of a series that highlight the features and benefits of each. Under this new direction, none of the five ways are vertically integrated. Banks could adopt one approach or a combination that will help them truly differentiate their bank from others.