Over the last few years, established banks have faced enormous change, not least the emergence of numerous new banks and neo-banking brands.
Online and mobile-only banks, such as Atom Bank and Tandem Bank in the UK as well as Lunar Way in Denmark, are attracting digital-savvy consumers, who don’t see the need for bricks and mortar to be able to manage their finances.
Equally, non-bank services, such as PayPal, Google Wallet and Apple Pay, are carving chunks out of the market of the traditional banks. These services already have hundreds of millions of users and forthcoming financial regulation, such as the European Payment Services Directive II, will help further secure their place in the industry. This poses a real threat to established banks.
Banks are no longer simply competing against each other and able to rely on poor service everywhere as a means of maintaining customers. Companies from Apple to Uber have given the customer a new understanding of service, and it is against these fast and agile players that banks must compete.
This means traditional banks need to play to their strengths and where they can really set themselves apart is in the realm of customer service.
Customer relationships should be bread and butter for banks. By contrast, the newer, digital companies do not have the depth of customer experience that established institutions hold. Apple Pay, for instance, has outsourced its service provision for this very reason.
The challenge now is for the banking sector to find the right balance between digital innovation and tried-and-tested customer service methods – the human touch
With their variety of offerings, from current accounts to mortgages and Isas, banks can also provide an holistic service that non-bank financial service providers cannot hope to match. These two factors are key to ensuring customers stick with one bank for life.
The other side of the disruption banks are seeing involves an omnichannel, digital approach to customer communication. This is part and parcel of the new banking environment, and key to modern customer service. Today’s customers are demanding; they want a highly personalised, rapid service and they want to be able to engage with banks through a variety of channels.
Banks are adapting to this changing customer behaviour and becoming customer-centric organisations, where the business model is determined by and developed to address customer needs and concerns. The challenge now is for the banking sector to find the right balance between digital innovation and tried-and-tested customer service methods – the human touch.
One of the areas where banks have struggled to meet the challenges of the brave new world is in joining up all the different channels; a customer might log in online at home to research what mortgages are available, but then go into a branch and have to reiterate all the information when talking to a mortgage adviser.
Nor are banks the sole repository of financial information; a quick Google search can return more information than a customer in the 1950s would have learnt from hours of face-to-face advice.
Customers are more self-directed in the initial stages of making a financial decision, and with a wealth of online content, it is easy to compare and contrast as well as learn and research. So when a customer does want to speak to a real person, it is critical the experience is as seamless and simple as possible.
In the UK, some of the most well-known retail banks are giving their services a new lease of life by adopting this more customer-centric approach. For example, to avoid the problem of customers missing mortgage appointments because they are unable to access the right staff member at a convenient time, one high street bank is installing video conferencing software on terminals and tablets in private rooms in-branch.
This means customers can have a video meeting with a mortgage adviser whenever they drop into their local branch, even if that branch is small or in a remote location.
Furthermore, using the software they can scan, send and receive documents, enabling mortgages to be approved there and then. The video element is very important as it provides personal, human engagement that complies with legal requirements, while creating a faster and more efficient service.
Elsewhere, to help customers bank on the go, Emirates NBD Bank introduced a biometrics log-in capability, where customers can use a touch ID on the Emirates NBD mobile banking app to log in to their account securely. The bank also provides a mobile cheque deposit facility and a “mobile queuing ticket” service that enables customers to obtain a place in the queue for their branch transactions via the mobile app, even before reaching the branch, reducing waiting time upon arrival.
Going even further, as an alternative to bricks-and-mortar branches, some institutions are experimenting with digital branches. A digital branch, in its simplest form, includes a video contact centre channel that is integrated with a smart multipurpose kiosk and back-end systems and applications through commonly used open connectivity standards.
Using a digital branch, customers can access a centralised pool of remotely located banking experts through simultaneous video chat and co-browsing sessions around the clock in a way that’s both private and secure. Since all the resources are centralised, these branches are 80 per cent less expensive compared with the total cost of a physical branch.
But banks are also reinventing the branch. Where once the customer was faced with shutters, staff locked away behind counter-to-ceiling screens and long queues, banks are now renaming the branch a “store” and modelling it on the coffee shop and airport lounge. Space, comfortable chairs, and even tea and coffee are making a bank branch a place to hang out rather than just somewhere to transact business.
All these examples illustrate how the financial services industry is adapting to the needs of the digital customer and fighting off the newcomers. It’s a brave new world for the banking industry, but the opportunity is there to play to the existing strengths of the established banks and make customers even more loyal through using the latest communications technologies.
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