Published in Financial Services

Did You Know 45% of Banking Customers Interact Through Digital Channels Only?

Have you ever wondered how important digital interactions are to the customer experience in financial services? According to PWC, more than 45 percent of banking customers say they only interact with their bank through digital channels. This means that for almost half of a bank’s customers, digital experience (DX) all but equals customer experience (CX). The large majority of banking customers are multi-channel and the most frequently used channel is online.

Retail banking may be on the bleeding edge of the financial sector in the transition to digital, but insurance, wealth management and SMB banking are moving along a similar path. The frequent presence of an advisor or agent has somewhat mitigated the rush to digital for these businesses, but every facet of the industry faces the same push and pull forces.

  • Companies are being pulled by consumers who increasingly manage and live their lives digitally and are accustomed to always-on services through online, on-the-go and social channels.
  • Equally important, financial services providers are being pushed by the growing challenge from FinTech firms making inroads in the market with their digital-only offers supported by cutting-edge technology.

These market forces mean that over the next few years more customers will be digital-only and an increasing share of interactions will be digital. The maturation of Generation Y and Millennials all but assures that digital-only and digital-dominant users of financial services will become increasingly prevalent. As such, DX will become more important to, even the primary determinant of, CX.

The Speed of Change Which Companies Must Keep Pace

When the Internet became a popular means for conducting transactions and disseminating information, financial firms were quick to encourage customers to move activity online. These early efforts were pushed by the banks for efficiency and cost-savings. The focus was on function and static content.

The rush of innovation and technology adoption has crossed an inflection point in the past five years or so. Function is now tables stakes and has been overwhelmed by design and form, static content has been supplanted by the interactive, and digital delivery for operational efficiency has been trampled by the need to offer digital experiences that meet the rising expectations of customers.

The pace of change has caught the industry flat-footed. Designing a home page that is consistent with the company’s brand image and customer experience is one thing. Delivering on this promise is far more complex in an increasingly mobile and social world, not to mention the emerging domains of Virtual Reality (VR) and Artificial Intelligence (AI), let alone wearables and IoT (Internet of Things). Keeping up with the “best next Customer Experience,” as Gartner puts it, is like being the Red Queen in Alice Through the Looking Glass,who says that you have to run as fast as you can just to stay in the same place; “if you want to get somewhere else, you must run at least twice as fast as that!” This is the speed of change with which firms must keep pace.

Focus on Strengthening Relationships

The starting point is an over-arching strategic perspective: digital tools are not meant merely as stand-alone applications that are easy-to-use and minimize customer effort. Rather, the approach to digital needs to be integrated across channels and built on the premise that the objective is to offer delightful, engaging digital experiences that contribute to the larger goal of promoting superior customer experiences. In other words, the digital experience is a means to strengthening the relationships that are the backbone of the financial services industry.

Easy to say, tough to do. So here are a few specific suggestions.

  • Map it.Customer Journey Maps will detail and illustrate the scope of digital and non-digital channels and touchpoints, the complexity of the challenge, as well as help set priorities.
  • Aim for sticky.This means engaging and interactive.
  • Design for mobile first.Four-fifths of Internet usage is via mobile. Flip the old model: explicitly design for mobile, then move to online.
  • Make it relevant.Personalize and anticipate needs. This means built-in intelligence.
  • Omni-channel vs multi-channel.Go where customers go. This means also being social and offering SMS; video access to reps, agents or advisors; click-to-chat; and the emerging technologies, which will continuously evolve.
  • Onboard for DX.This doesn’t mean using traditional onboarding approaches for digital applications; it means adopting digital tools to facilitate digital onboarding.
  • Measure and remediate.Digital is real-time, making it critical that firms have real-time feedback programs in place, supported by closed-loop procedures to mitigate the risks of disappointing or simply unengaging digital experiences.

It is hard to imagine how even the largest banks can accomplish this on their own, so partnerships will be critical. Internally, the lines separating tech workers and the product/marketing teams need to be erased.

Get Rid of the Extra Overhead

Tomorrow started yesterday in the race to keep up, let alone differentiate on CX and DX. The FinTech firms – most with their singular focus and technology pedigree and without the overhead burden of branch networks or offices – are designed for a continuous sprinting leapfrog of innovation. Traditional players also carry the additional overhead weight of heightened security demands and regulatory standards. That is the playing field on which financial services firms must compete and they need to start running twice as fast now.