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By Ryan Hall, Chief Growth Officer, 4 Roads

Challenger banks have more than given legacy banks a run for their money in recent years. The likes of Monzo, Revolut or Starling’s more modern, fun and human-centred branding alongside their USP of ultimate banking convenience has certainly turned consumers’ heads. Having worked to transform the digital customer experience for many a high street bank over the years, the challengers have achieved with great agility, what the big banks have struggled to do in over a decade.

However, there’s one area where challenger banks aren’t so savvy, and it’s an area that traditional retail banks continue to win out on—trust.

Sure, traditional banks seem dry in comparison to Monzo’s flashy pink debit cards, but credibility goes a long way when it comes to big financial decisions such as buying a house, taking out a loan, or investing a huge sum of money. In these moments, most of us still prefer to rely on legacy providers, according to research from payment card company Curve.

But this won’t last forever, particularly as challenger banks up their game (and technology) around community, responsiveness, knowledge sharing and communication. So legacy banks quickly need to capitalise on this strength and focus on creating a community-led service offering that will ensure longevity with future generations. Which has seen many banks within banks spring up, such as Natwest’s Mettle.

Do you really know me?

Most banks invest heavily in KYC, but this stops at verification and doesn’t really transfer to a more customer centric approach. Instead, there’s heavily reliance on personas and focus groups. But as we’re peering down the barrel of 2022, is this just a tired and dated approach? Where traditional banks should be taking lessons from is more modern, customer centric sectors and look to incorporate digital community into the mix to support further building trust.

Knowledge bases (i.e. libraries of informative resources) can help, but this is a one dimensional service. Communities make access to knowledge, insight and opinion much easier than forced research techniques and significantly raises levels of customer service either by being able to self-serve, find the answer among peers or access digital customer service support.

Why? Because consumers are time poor and need quick, convenient solutions that satisfy their immediate need for instant gratification. And frankly, press 2 for this and 5 for that just doesn’t cut it anymore. Weren’t we promised hovercars and moon colonies by now? Even so, touch button call handling seems a bit archaic by anyone’s standard. First direct innovated on that front over 25 years ago!

But there is hope. Digital communities build on the convenience of knowledge bases by encouraging “channel hopping” to a new self-service channel: the digital community forum.

Let’s say a traditional bank’s customer has lost their credit card. A knowledge base might answer how to order a replacement but if they don’t, they’ll have to ring customer service which soon turns the ordeal into a drawn-out procedure. Yawn.

The opportunity to jump onto a digital community, however, where fellow customers would have likely discussed and resolved the same issue already, means customer service information is readily and conveniently available. And after all, greater convenience means greater customer satisfaction, which only improves bank to customer trust.

Value is a two-way street

What fosters customer loyalty more than anything else today is a feeling of being heard. The informal, conversational environments of a digital community allow customers to be entirely honest of their banking experience – it’s real insight and interaction. So much more than a tired old feedback form, meaning observations can be trusted and carry much more value in proactively reacting to them and staying ahead of customer expectations.

Customers feeling heard, handled quickly, in conversation and valued goes hand-in-hand with trust and building advocacy. And through digital communities, banks can offer a potent platform to promote customer voices.

We’re human after all

This just about scrapes the surface of the practical advantages of a digital community. It goes far deeper than the picture I’m painting. But perhaps more importantly, and bringing it back the traditional banks’ cornerstone of trust, is a digital communities’ proven ability to build customer loyalty by cultivating online real conversation and relationships.

It’s human nature to seek validation, and while already having customer trust based on heritage is a great start, the perfect confirmation from a customer’s viewpoint is to discuss, challenge and confirm their feelings with the only people in the same situation; other customers.

Peers trust peers, so the validation of feelings via a digital community can often be the all-important assurance that makes up a customer’s mind in trusting one banking service provider over another with a significant financial decision.

Embracing the possibilities

Ultimately, it’s not complicated for traditional banks to utilise the advantage they have thanks to their heritage, which brings with it a unique level of trust challenger banks can’t yet compete with. But this can only be achieved if traditional banks recognise this, respect the need to evolve and embrace new ways of utilising their customer loyalty by providing digital communities.

It’s a race. The challengers are moving fast at the heels of the challenged heritage banks, and it’s very much a ‘when’ not ‘if’ that’ll they’ll overtake.

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