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The new wave of consumer-friendly banking



By David Ritter, Financial Services Strategist at CI&T


Recent financial news headlines of record bank profits and banker bonuses often paint banks as villains. However, they miss out that many have lost consumers to upstart rivals recently. Much of the recent surge in earnings instead resulted from a flood of institutional trading and investment banking (IPOs, M&A, etc.) – the result of unprecedented global monetary and fiscal stimulus during the pandemic. With banks losing consumers and with the UK’s worst cost-of-living crisis for 30 years, perhaps it’s no surprise that signs are pointing to a consumer-focused resurgence. 


In December 2021, the FCA finally proposed regulations to establish more robust customer protection and prevent banks from mistreating consumers. Meanwhile, CMA research shows that online rivals are outpacing traditional banks regarding customer service quality. As a result, nearly 10% of all accounts are now held with a digital ‘challenger’ bank—growing from just 1% in 2018. 

This year, we’ll see a huge battle to win consumers back as banks strive to balance human and digital services and offer upgraded multi-channel customer experiences. Just like booking or cancelling a restaurant reservation via OpenTable, the future of banking is about instant and seamless communication. It’s also about more personalised approaches to show consumers their complete financial picture and provide new, focused services.


In-person, targeted experiences 

The success of digital challengers makes it tempting to fight fire with fire and invest heavily in online upgrades. But to begin, regional banks should wield their distinct advantage over rivals—the ability to provide personal service.


The pandemic and surging inflation have created new financial challenges for consumers and small businesses, many of which require a human touch to address. And though internet banking and cashless transactions have enjoyed a meteoric rise, 2020 figures show 1.2 million UK customers still rely solely on coins and notes for their daily spending. In 2022, bank branches will regain demand as customers seek trustworthy, in-person financial advice. 


This targeted support extends to specific customer segments, too. Elderly people and ‘digital immigrants are the prominent examples—but specific industries also rely on more personalised services. Fintechs worldwide are narrowing their focus, with Laurel Road, a unit of U.S. bank KeyCorp, launching a bank specifically for doctors, undermining traditional assumptions that only a mass-market approach warrants investment. But what makes these tailored customer experiences truly special is their integration of in-person service with digital support. 


The multichannel approach

A personalised banking service also means offering customers the service they want, whenever and wherever they want it. So, for example, banks must enable consumers to complete transactions and applications digitally, as this is the new industry standard. Customers should also be able to start a transaction on a device and then finish it in a branch, or vice versa.  


If staffing difficulties or branch closures impact face-to-face services, banks must offer phone support, online guidance, video calls, and live chats to help customers settle their requests and book an in-person follow-up. Scheduling must be integrated within each product journey, too—if a consumer visits a bank’s online mortgage service, they should be able to complete their application and upload their required documents there and then. But if they want to speak to a mortgage expert about their options first, they should also be presented with options for how and when they can interact

McKinsey research shows that 71% of European banking clients prefer multichannel interactions to previous approaches. Meanwhile, companies with diverse engagement strategies retain around 89% of their customers, compared to just 33% for single-channel businesses. For banks to be customer-friendly and successful, multi-channel is a must. 


Helping customers to help themselves

Personalised services also require the upskilling of customer-facing employees and services. For example, in the US, Bank of America has recently launched virtual reality (VR) coaching programmes to help staff practice skills like strengthening client relationships, navigating tough conversations, and interacting with empathy. Real-time analytics also help managers to spot skill gaps and provide follow-up training, resulting in 97% of the pilot programme’s participants feeling more comfortable about their roles. 


If UK-based banks have the resources, they may want to follow suit and leverage high-tech in-house tools to transform their customer service, too. But often, this isn’t necessary. Instead, banks can streamline the training process by partnering with personal management fintechs and data aggregators like Plaid to help customers autonomously manage their finances.


As of late 2021, only 39% of Brits say they feel some sense of financial freedom in their day-to-day lives. But by introducing tools such as savings targets and adding educational material to online and mobile apps, banks can support customers to take control of their money and create their own ideal customer experience—with the option of guidance when needed. Ultimately, the banks that can provide this perfect mix of human and digital interactions will be in the best position to retain and win back their customers.  

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