By Rebecca Crook, Chief Growth Officer at digital product agency Somo
As COVID restrictions start to come to an end in parts of North America and Europe, many businesses are pausing to reflect on how the past year and a half has impacted the industries they work in. While some sectors have seamlessly adapted to the chaos of the pandemic, others have struggled as government restrictions force companies to rethink and restructure operations overnight.
One sector that has more to think about than most is banking. With restrictions forcing people to stay at home for most of the past year, customers have changed their habits and avoided bank branches in favour of digital tools and processes to limit unnecessary in-person interactions. According to recent research, usage of digital banking apps has skyrocketed during the pandemic, with 75.4% of the US population adopting ebanking tools over the past year. We’ve also seen globally how the pandemic has accelerated the usage of cash transactions with brands now offering digital payment options as an essential service rather than a nice to have. Although in some states and cities in the US, laws have been passed banning cashless stores.
The failure to adapt
Banks have had no choice but to put more time and resources into digitising. While some have been able to successfully create digital tools, the vast majority have failed to deliver digital transformation projects en masse. In fact, a report last year found that only 7% of US financial brands have deployed digital transformation at scale since the pandemic.
The failure to adapt and move services online is worrying. With the number of customers using digital banking apps set to surpass 200 million in the US by 2022, it is clear that people increasingly want to bank online. However, if banks can’t meet customer’s changing expectations, it could really hamper their ability to retain and grow. In research Somo conducted, we found that a significant amount of Americans (20%) switched their current account during the pandemic due to the lack of online services with their former bank.
It’s essential that banks digitalise effectively and quickly otherwise to avoid being at a competitive disadvantage to fintechs and other digital-first banks that can create convenient and easy to use platforms online. Yet we know that it’s easier said than done and must be strategic. Banks can easily fall at a number of hurdles and can end up wasting time and money on digital initiatives that aren’t fit for purpose.
1)Focus on what customer’s want by enhancing their experience
The first step any bank should take in digitally transforming is understanding the areas they need to update. While many financial brands believe that customers want them to ditch branches, adopt new technologies like Chatbots, and implement digital services across the board, this isn’t the case. Instead, in a survey of 2000 US consumers, Somo found that people want a hybrid model that combines physical and online banking.
A good example of this in action is First National Bank (FNB). Last year, the bank installed a number of self-serve kiosks in branches. The kiosks have given FNB account holders the ability to quickly update their account online, while also having the support of clerks and other staff for more complicated issues like setting up a mortgage.
Finding what works for customers also means leveraging modern technologies. The emergence of digital natives like Monzo and Starling Bank has caused users to increasingly expect highly personalised services and messages as a standard. In fact, research over the past several years has consistently put Monzo and other challenger banks ahead of more established banks in customer service studies. Banks, therefore, need to play catchup and implement new tech like AI and machine learning in order to win over potential customers and to overcome new digital competitors.
2)Smart use of data intelligence
As services become increasingly digital, banks need to focus on personalisation to differentiate themselves from competitors. While the term has admittedly become a buzzword in many parts of the industry, the process of using valuable data to tailor services and processes to individuals is key to driving customer experience and developing strong bonds with users. In fact, a study from Salesforce found that 66% of customers expect banks to personalise services to their individual wants and needs. Financial services brands are in the best position to do so, considering how much they know about our spending habits and behaviours – do we buy a coffee daily, pay our bills on time, spurge on luxury items? It’s about using this information to offer a more personalised and better experience.
3)Get buy-in from employees
When transforming, banks must gradually change mindset and infrastructure, working towards a more effective process. This is fundamental to the future success of any cultural approach, as moving too fast can produce cultural backlashes that can hold back the innovation and adoption of new ideas or practices. For example, if employees feel that they don’t understand new online processes and tools, then they won’t use them effectively which can be passed on to the customer – negating the potential impact of any digital transformation program.
Banks can overcome cultural backlashes by clearly communicating the benefits of projects and adapting to feedback. For instance, if the majority of your employees are sceptical about new tools and services, then you could pilot a scheme with a minority of workers before rolling out the practice throughout the whole organisation. Getting the input of a select few before launching fully will save banks’ time, while also making employees feel that they’re part of the new project.
Digital transformation is now a business imperative for banks of all shapes and sizes. The priorities may vary between institutions but adopting a strong culture for change, as well as putting the customer at the heart of everything with personalised experiences is crucial for all. While projects might take time and money to complete, the results should put companies in a stronger and safer position, close to the needs and demands from customers and equipped to continue evolving as these continue to change.