Unless you still hide your cash under the mattress, you’re probably aware of how technology has revolutionized the way we engage with money.
Despite being able to transfer money, pay with our phones, and report our card stolen via an app, retail banking is falling far behind the curve when it comes to customer experience. This shortcoming opened up a void for companies that can meet consumer needs for an excellent customer experience.
Banking isn’t quite as fast-paced as other industries, so it may surprise you that banking was one of the first to adopt an online approach to improve customer experience. Back in 1981, four New York City banks (Chemical Bank, Chase Manhattan, Citibank, and Manufacturers Hanover) started offering an online home banking service. Soon many more early adopters followed suit as they introduced online and mobile banking services that have now become the norm.
Online banking is now an integral and expected part of customer’s personal banking experience, but the banking industry has not moved much further.
The failure to adopt new technologies to improve customer experience has cleared the way for a new wave of hungry, non-traditional competitors offering a better customer experience, such as fintech startups, next-gen banks, and non-banking institutions. This could get even worse for the banking industry with the next wave of challenges: the tech giants.
Technology juggernauts on the horizon
Tech giants including Google, Amazon, and Facebook have become a huge part of our everyday lives, and have become popular by making the interactions we have with brands and friends ever easier. With traditional banks falling behind in their ability to use technology to improve the customer experience, these tech giants are closing in.
Amazon has already successfully invaded industries such as retail, books, music, television, and grocery services. Now Amazon have set their sights on banking and this seems to be something that customers would consider.
60% of banking and insurance customers globally have said they would consider switching their accounts to Google, Amazon, or Facebook if the tech giants offered financial services, according to a recent survey from Bain. This percentage was even higher for younger customers aged between 18 to 34, with 73% willing to try a tech firm’s credit card, deposit account, investment, or mortgage.
“They’re saying if you come up with an experience as simple and easy as my shopping experience is with Amazon, I’m ready to do that now,” Gerard du Toit, a Bain & Co partner and co-author of the report, said in a recent interview. “We’ve seen this happen already in China, where it’s common for people to do many of their banking activities through WeChat and Alipay and players like that.”
The biggest weapon in the traditional banks’ arsenal is the branch.
“Consumers continue to see the value of branches for the ‘human factor’,” says Adrian Kirschfink, Managing Director at Accenture Financial Services.
Although 24% of consumers say they would consider a branchless bank, nearly 90% of customers believe they will continue to use their branches, and an increasing number of consumers believe that the branch is the single most important channel.
Kirschfink goes on to say: "The key to success will be to create a new mission for branches -- moving away from simply serving customers -- to adding tangible value for customers by educating them though digital tools, assisting them through problem-solving and enabling them to make their own financial decisions with thoughtful and well-timed advice."
Just as the rise of innovative technology has intimidated the branch in the past few years, it also carries the key to their continued future. If banks can implement the right solutions, then they can ensure that branches are cost-effective and play their part in giving excellent customer experience. Offering in-branch events like first time home buyer informative sessions or investing 101 can increase customer loyalty and utilize branches.
Before the inevitable invasion of the tech giants, banks must start investing heavily in customer experience by implementing technology.