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Change is inevitable – how banks need to adapt to customers’ new banking habits

Change is inevitable – how banks need to adapt to customers’ new banking habits

By James Adie, VP of Sales, EMEA, Ephesoft

During the past year, the way we use technology has moved on. We’ve learned how to take ourselves off mute in a video call and discovered just how many of life’s needs can be delivered to our doors. We’ve persuaded our older population to use Zoom or Skype, shop on the internet and even use online banking. Since the start of lockdown, mobile phones have become indispensable to an even larger portion of the population. The 4G masts in city centres may have fallen silent but elsewhere our use of mobile devices – particularly for apps such as social media and banking – has skyrocketed.

This acceleration in digital transformation has taken most sectors by surprise. Even retailers, who have been gearing up for years for the transition to online shopping, suffered glitches as their supply chains groaned under the strain. For many banks, however, the progression has been even more painful. Traditional banks may have made hurried improvements to their mobile apps and successfully handled a sharp increase in contactless payments, but so far, they have failed to wow their consumer clientele. In the meantime, nimble fintech startups have taken advantage of their digital origins and stolen a march on their larger, more established rivals. In this year’s regulatory review of the quality of personal banking, conducted by Ipsos Mori, customers awarded the top three places to internet banks: Monzo, First Direct and Starling. The highest-scoring “traditional” high street bank, NatWest, appears down at number eight.

Part of the problem stems from the fact that banking customers are suffering from the perception – real or imagined – of a lower level of service as ever-more bank branches close. Traditional banking was built on trust and personal relationships, but with Covid-19, that is no longer possible. Instead, chatbots give us standard responses, phones are slow to be answered – if a number is available at all – and the nearest branch could be 15 miles away. We may be happy to check our bank balances online, but we’ve lost the feeling of connection that we once had and unless the traditional banks can up their game in terms of customer service, many people will be moving over to new competitive alternatives.

My own view is that the industry needs to focus on the 80/20 (core/noncore) rule of automation to provide a more personalised customer experience. To apply this rule, an organisation must first identify how much of its core functions are data-based. Artificial Intelligence (AI) must then be applied to at least 80% of these, analysing and learning from information in order to find trends and opportunities that can determine and predict customers’ needs. In a bank, these functions might include approving a mortgage, helping with a car loan or even opening a current account — in essence, anything that improves customer experience and journey.

The 20% part of the 80/20 rule refers to those functions that are not core to the business, such as handling electricity bills for thousands of branch offices, upgrading server hardware or even paying for TV ads. This part of the business needs to be automated too, but to do so banks can use no-code or low-code integration platform as a service (iPaaS) components, robotic process automation (RPA), business process management (BPM) and intelligent document processing (IDP). These can easily be combined using citizen developer-based solutions, connectors and APIs. With major advances in these no-code and low-code platforms over the last several years, employees can develop their own applications or automated platforms without the help of IT, giving them the ability to simplify their department’s processes without the need for major investments of time or money. This intelligent automation strategy could free up bank employees to focus instead on customer service and to deliver more personal attention to their customers.

Banks are potentially in a good position. The stock market is doing well, and those people whose jobs have not been affected by Covid-19 have spent less over the past 12 months while maintaining a steady income. Money is starting to move again. But without change, this won’t be enough for long-term success in banking. Implementing the 80/20 rule will help banks automate their core and their secondary functions, ultimately improving productivity and freeing them up to focus on customer satisfaction. Moreover, automation will improve their ability to analyse customer data to deliver hyper-personalised services. In short, re-creating a one-on-one relationship with their customers will be possible with the right technology.

Covid-19 has turned many of us – even those of more advanced years – into digital-first users. The days of face-to-face banking are over, so personalised customer service is going to have to be delivered differently. Offering convenient and easy-to-use digital apps is essential, but it’s not enough. It’s vital that banks automate their systems through AI and cloud solutions to improve customer satisfaction ratings. If they don’t, they are at risk of being disrupted by an entrepreneur who has a better grasp of the digital future.

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