The three pillars of modern banking for 2020February 2020
The banking world moves incredibly fast, and if banks want to succeed, they have to be able to respond quickly to modern trends and technological challenges. As in other fields, digitization has become a major focus in banking. While this opens up new opportunities for banks to optimize processes and offer new and innovative services to their customers, it also poses significant difficulties for them. What challenges and expectations will banks have to face in 2020 in order to attract customers and maintain their relevance in the banking market?
Digitization has permeated all facets of banking and the digital onboarding of new clients has become a significant trend in recent times. This process gives new clients the ability to set up their account on the web or via a mobile app in minutes – without having to physically visit a financial institution or bank advisor and even without physically signing any contracts.
Today, roughly half of all clients do their banking via mobile phones, and this percentage is considerably higher among young people. So it makes sense to allow people to make even the very first contact with the bank through a mobile app. Digital onboarding makes it possible to meet a potential client’s needs and to set up a new financial product (primarily a bank account) easily, quickly and exactly when the client wants it. Keeping the process simple is absolutely crucial. According to studies, the maximum length of the set-up process is 10 minutes for the client to perceive the experience positively.
“The ability to open an account completely on-line significantly increases client convenience and can be the key factor when deciding which bank the client chooses” says Karel Beran, Head of Products and Digital Innovation at BSC, adding: “Of course, digitizing processes also saves time and money for both the client and bank. ”
Leaving savings aside, digital onboarding is an important tool if the bank wants to grow. The fewer barriers that potential clients have to overcome when opening an account, the more likely they are to go through the process of setting up a financial product and becoming an actual client. Most people would prefer the opportunity to open an account from home without having to arrange and attend a bank meeting, especially during working hours. The business world runs on innovation and always strives to offer more ease, more comfort and more options for clients, and it should be no different in the banking world.
High-quality digital communication
Effective, empathic communication has always been the cornerstone of a bank’s reputation and a major factor in its success. Communication used to be handled by a banker whose capability, trustworthiness and understanding of customer needs were the key to customer loyalty to a specific financial institution. But times are changing. The trend in recent years in communication between the bank and the client, has been the gradual decline in the number of branches and the decreasing need and willingness of customers to communicate directly with a banker.
The fundamental parameters of functioning communication remain the same in the digital era. Banks need to be able to respond to customer requirements quickly while remaining empathic to their personal needs. However, as digital technologies evolve, user demands for speed have changed, and it’s important that banks be available to customers 24/7 via their preferred channel.
“To be able to do this, the bank must have the appropriate technical solution, one that is able to aggregate all relevant communication channels and to communicate consistently with clients according to their individual preferences. A fast response and a proper understanding of clients’ needs is now standard. The involvement of AI will enable banks not only to reduce costs through automatic handling of simple requests, but above all to understand not only the needs, but also the emotional state of clients and tailor their response, ”explains Karel Beran on behalf of BSC, a digital banking platform development company.
Understanding your customer has always been the key to success, and likewise, communication has always been the foundation for such understanding, and not just in banking. In the Smart Communications survey, 63% of respondents said they would consider changing banks if the bank didn’t meet their expectations for fast, effective and relevant communication.
No matter what kind of communication channel (phone, email, Facebook Messenger or WhatsApp) the client chooses to contact the bank, the bank must always be able to serve them at the highest level, while simultaneously being able to analyze their needs and be an empathic partner on their customer journey.
An empathic and proactive approach
The digitization of client communication poses even more challenges. In the past, each client was known personally by his banker, while today a banker might never even meet their client in person, in fact, the bank might have no banker at all – and yes, such banks exist. Banks not only have to be able to communicate with their client fully digitally, using the specific channel and time preferred by the client, but also have to use every interaction with the client to get to know him better.
Another change is the transition from reactive to proactive communication. Today, it is not enough for banks to simply respond to client problems and complaints, but to use their knowledge of the client and his situation to be able to proactively contact clients and offer solutions to potential problems.
“Banks must, figuratively, get into the heads of their clients, understand their situation and their needs to make their lives easier. It can help individual bank clients to better save and invest money or to warn them of making an unwise decision. For example, it can help entrepreneurs better manage cash flows or warn them in case of a potentially risky business partner. And beyond understanding their clients’ needs, they can also understand their emotional state of mind, which will help them adapt their communication. This is already possible with existing technologies in the area of artificial intelligence.” explains Karel Beran.
As in all business, a satisfied client is also a loyal client. And of course, it’s much easier to maintain client loyalty than get a new client. Problems and mistakes happen and if handled well, the client’s loyalty is actually strengthened. But for this to happen, the problem needs to be solved proactively and empathically.