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The open age of banking: technology’s role in driving customer trust and loyalty

In the age of choice, where consumers can switch services at the click of a button, the only provider that has remained constant for many is their banking provider. UK consumers generally give a high amount of trust to their banking provider, with 85 per cent of customers saying that they trust their bank with personal information and to manage accounts efficiently.

While many banks interpret this as consumer loyalty, the reality is that many people stay with their chosen provider out of fear of the presumed upheaval switching providers entails, and concern that their data and money will be put at risk.

Our research shows that 48 per cent of banking customers would worry that direct debits and standing orders would not be transferred accurately during the switching process. However, this is all subject to change with Open Banking coming into effect in January 2018.

Open Banking will make it easier for customers to understand what’s available to them and more able to compare and switch providers, which means more will have to be done to retain customer trust and loyalty in the long run.

And, in this open age of banking, trust can easily be broken if something goes wrong. For example, 62 per cent of customers admitted that they would quickly lose trust in their banks, if the bank suffered a data breach. Similarly, 55 per cent mentioned the same if they were to become a victim of fraud.

But it’s not just these high-profile instances that can impact a bank’s reputation. Failure of the technology to “just work” is also a trust turn off, with 37 per cent of respondents stating they would lose faith in their provider if the website or mobile app isn’t functioning properly.

The onus, therefore, is on banks to ensure that their technology is robust and reliable across all channels to prevent such situations from occurring, in order to build trust and a loyal customer base.

Acquire loyalty with a seamless digital experience

Technology is playing an increasingly greater role in our lives and, as such, our research has shown that customer preferences are changing. Customers are embracing digital banking and are choosing to interact with their banks more and more through mobile and online channels. In fact, 90 per cent of UK consumers report that they are signed up to use online banking and 95% feel that it is making their day to day, current account banking quicker.

When asked, 91 per cent of respondents actually expressed a preference of checking their balance digitally and 74 per cent cited this means as their preferred way to change personal details. Now, more than ever, it is vital for banks to ensure their customer experience is digitally focused. Banks need to be delivering a seamless customer experience across all touchpoints – both digital and physical.  With more than 482 bank branches closing down across the country this year alone, and RBS recently announcing a further 259 in the near future, delivering in-branch, personal experiences will become a thing of the past.

It will not be enough to rely on the loyalty of the customer of yesteryear, a more technologically advanced and less loyal younger consumer is now coming into play.  Our research shows that the rising tech-friendly millennials are less loyal than their older counterparts; 38 per cent say that they would be likely to switch their bank with Open Banking compared to 13 per cent of over 65 year olds, and banks need to be mindful of this in order to retain them as customers.

Whether customers need to transfer money, check their account balance or even apply for a mortgage, banks need to be able to provide these services confidently online, just like they would in branch to meet the expectations of today’s customer.

Think different with digital

As well as using technology to provide a better user experience, banks can also use it to differentiate themselves from their competitors. With the emergence of fintech and challenger banks, the retail banking sector has become much more competitive, meaning traditional banks have to be able to offer something different to be able to compete with the upsurge of this potentially more agile and customer responsive set-up.

With customers having so much more choice, banks will need to think creatively to stand out from the crowd and technology will be a key differentiator in the sector. In many ways technology can deliver the in-branch human experience via different formats: chatbots can give loan advice or mortgages can be discussed via video calls. Integrated channels will mean that customers can start filling in applications via their smartphone on their daily commute and then picking them up from the same position on their desktops when they get home.

Moving forward, banks will need to use technology in innovative ways to meet the needs of both existing and potential customers to retain and gain market share.

Quality assurance equals reassured customers 

With Open Banking due to come into play in January next year, it will be easier than ever for customers to vote with their feet if they lose trust in their bank and are frustrated with the technology it offers.

However, with this rise in importance of banking technology and more of it being implemented, there is also more potential for things to go wrong. To avoid this, banks need to ensure quality assurance is consistently at the heart of all their banking systems.

To retain and attract customers in an ever more competitive market banks will need to ensure the stability and reliability of the systems their customers rely on, from the smallest to the biggest transactions. After all, when personal information and finances are at risk, customers will be able to move to a more trustworthy provider a lot quicker with the new Open Banking regulations.

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