The Covid pandemic has only validated the need for robust digital capabilities across all industries. Banks have not been immune from the demand of customers to manage their banking relationships using digital channels; especially when it comes to banking transactions and payments using the mobile phone. This accelerated adoption has identified gaps and weaknesses that banks need to address to meet these demands. With social distancing being the new norm, all industries are working to ensure that they can provide the same level of digital services that can be provided by physical interactions, where regulations allow.
These digital-first consumers are not an emerging trend, but now the norm for how consumers expect to conduct business. They expect a similar experience from their banks as provided by the techfins and e-commerce retailers such as Amazon, Lazada etc. These expectations, coupled with the emergence of Fintechs who focus on a seamless, frictionless customer journey has forced traditional financial institutions to accelerate and strengthen their digital and analytical capabilities, which includes not only expansion of features, functions and channels but understanding the context of what the customer wants to do to better enable and guide the experience.
Trends shaping Retail Banking in 2021 and beyond
Frictionless Customer Journeys
Banks are increasingly being rated by their customers on the breadth, depth, and quality of the digital services they oﬀer. “Frictionless” not only represents ensuring how the customer interacts is intuitive but also meaningful. Nowhere is this more evident than in the digital journeys provided in the retail sector by companies such as Amazon. Frictionless must deﬁne the end-to-end experience from initiation to delivery of banking services. Complexity in banking can no longer be used as a reason for not providing a service digitally. Re-shaping business processes and strategies are vital and strike a balance between cost and engagement will deﬁne the real winners in the customer experience race.
Analytics and AI Capabilities
The widespread adoption of the AI/ML in various industries and the popularity of big data and cognitive computing provide many success stories. Banks are enhancing relationships by streamlining services that involve customer interactions using AI and analytics capabilities. AI can also help driving another level of personalization through a better understanding of user preferences and traits. In order to use these technologies meaningfully to enhance a customer’s journey or provide predictive modelling to initiate customer journeys, these analytical capabilities must view the customer data holistically to maximize the credibility of the data used to improve customer.
The importance of an integrated and seamless multi-channel experience increases from time to time. Banks start to think about the implementation of a device-agnostic ultimate experience strategy that leads to consistent user experience across channels, including mobile and foreseeable new channels in the future. Customers continue to provide feedback to their ﬁnancial services providers that inconsistency across digital channels is not acceptable, which are driving banks to an omnichannel approach to all digital initiatives.
Real-time payments are a foundational capability required in today’s digital world. Consumers and banks are driving demand for products that interact with them in real-time, and this will push real-time payments to progress from being the new norm to become the expected norm. The expectation will shift from how to get set up for a real-time future, to what banks can do to become more competitive by leveraging real-time digital payments and more.
Adding new customers to expand deposits and broaden the lending portfolio is key to a bank’s growth strategy. The process of adding new customers, for many banks, starts with digital. From the ﬁrst interaction to the opening of an account must be intuitive, seamless, and eﬃcient; all the while adhering to bank policies and regulatory mandates. The pandemic has only heightened the importance of digital onboarding. Customers want onboarding experiences to be convenient and cover more products, even in more complex scenarios – from selecting an account or loan, applying, getting approved, funding, and receiving follow-up communications, such as a welcome package or additional product recommendations; a digital experience must be available to consumers.
Alexa, Siri, and Google’s assistant are rapidly being adopted by consumers as part of their daily routines in countries/regions where this is supported. It gets smarter and more useful. The quality of voice interactions and semantic understanding will continue to improve with the advancements of AI technology. Customers expect to use voice as another means for human interactions. They can use the voice commands to make payments, enquiries, and other self-services.
Open banking aims to widen consumer choice and ﬁnancial services by encouraging banks to open key banking functionalities via APIs. This will then allow ﬁntech and other businesses to provide more products to consumers. Multiple stakeholders should beneﬁt from this transformation. Banks should beneﬁt from new business models adapted to the digital era in which they can attract new customers and keep their existing customer base by partnering with new services and products that extend their value chain.