Surviving and Thriving in the Financial Services Industry
The way we bank is changing. Many branch networks are being closed or shrunk and spending on digital technology is on the up. Why? Banking at physical branches is in decline, whereas 66% of the UK is predicted to be using internet banking by 2020.
If traditional banks want to survive, they’re going to have to get with the times. And fast.
A change in the tide
Ever since the financial crisis, people have been sceptical of banks. Indeed, 1 in 8 people think bankers are paid too much. Yet only 16% of people think that banks provide quality products and services which are sold responsibly. That’s pretty damning by all accounts.
Following the crisis, The Bank of England has encouraged competition in the banking industry. And in 2015, Martin Stewart, Director of prudential regulation and supervision of UK banks at the Bank of England, said that they had seen a significant shift in the mix of applicants wanting banking licenses:
“We expect this trend to continue over the next few years, particularly where there is a gap in the market – whether it be the service they provide, the customers they target, the products they sell or the technology they use.”
The financial services industry is facing a digital disruption that is reshaping the entire sector.
New kids on the block
There is some seriously fierce competition out there. From apple pay to challenger banks, there are countless new and disruptive innovations popping up all over the banking industry, luring customers away from traditional banks.
Considering the average person uses their bank’s mobile app over 25 times a month, yet accesses their bank branch only less than once a month, it is no surprise that many of these up and coming businesses in the financial sector are built with the digital and connected client in mind.
If traditional banks are going to continue amidst this new competition, they’ll need to transition and adapt. Many have started the process by shrinking their branch networks and spending significantly on digital technologies, but more needs to be done to reflect the rapid change of customer behaviour.
Take Atom Bank — it’s the UK’s first bank built exclusively for mobile. On their homepage they promise that they’re ‘always to hand’ because they are building an entire bank into their App. Atom’s an app based bank doesn’t have any high street branches because “they’re unnecessary, no one wants to visit them and no one likes queuing.”
Instead, clients can do all of their banking on their phones, 24/7. Atom also offer plenty of other perks from simple login using your face and voice recognition to fun features like being able to name the bank whatever you want to.
Blame Millennials and their growing expectations
Millennials are the largest generation in the US and they have high expectations when it comes to customer service.
To put it into perspective, 68% of them have stopped doing business with a brand due to a single poor customer service experience. Suffice to say, if they aren’t impressed by their banks offerings or services, they will have no problem moving on. Get it right though and they can be very loyal customers.
Basically – while millennials might have high demands, these expectations are likely to become ubiquitous and a requested standard across other demographics.
Christopher Hunsberger, EVP Global Products and Innovation, Four Seasons Hotels and Resorts, puts it in a nutshell:
“Millennial customers are an important group of guests in their own right. But their significance is more than that: They’re a unique group in terms of their impact on the rest of our customer base. The behaviours and expectations of the millennial group of guests tend to shape the thinking of the rest of us.”
Digital transformation and changing consumer habits change the way they think about good customer service in the banking sector.
So where to start?
a) Know thy customer
Customers expect banks to understand their needs and tailor their products and services to suit. Whether the consumer has just become a parent, started a business or is about to retire – all will have an impact on which product is right for them. Banks need to be proactive in ascertaining this information:
- Ask: When qualifying a potential customer, use digital advice solutions in your mobile app or website to ask them valuable questions which will help you to help them.
- Analytics: Behavioural, demographic and historical analytics allow banks to customise the customer’s experience accordingly.
In fact, according to the recent Segmint Consumer Bank Marketing Report, “73 percent of Americans who have a bank, trust that their bank knows what financial products and services to recommend to best meet their personal needs. But, 34 percent say they wish their bank better anticipated their financial needs and offered them more timely advice.”
GSB has one smart approach with their Product Selector Tool. It asks questions such as “What type of product are you interested in?”, “What is the average balance you expect to keep in your checking account?”, “What is the aggregate balance you expect to have in consumer deposits and loans with GSB, excluding mortgages?” or “Do you expect to have a direct deposit of $250 or more each month?” to figure out the best product for the user.
There is no hour-long reading of lengthy and complicated texts to identify the best product. Their digital advisor offers a fast and simple process and in the end, the user receives recommendations for the most suitable products. Easy!
In addition to that, sales associates are able to personalize and tailor the follow-up communication with the prospective client based on the shared information and individual needs.
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b) Don’t just sell – educate
Banking is confusing. It’s a complex industry and many consumers aren’t able to understand offerings and differences between them. Banks need to take the time to provide customised knowledge to help meet the individual’s needs and goals. This is becoming an increasingly common practice across many industries. Customers want to learn more from the experts and customers in the financial sector are no different.
- Content: Share expert advice through highly relevant content targeted at specific demographics. For example an article on how to start investing in your 20s or a newsletter for the newly retired.
- Calculators: Allow customers to control calculations based on their information. For example, a mortgage repayment calculator.
c) Embrace digital
Consumers have positively embraced digital technology in banking. In fact, 20% of consumers have gone completely digital and prefer doing everything online. Online access is still important to consumers who aren’t completely digital – 80% say online and mobile and functionality is the most important feature a bank can offer.
Customers today expect an omnichannel experience. They want to be able to move seamlessly between online, telephone and in-person meetings. As the customer moves between channels, their data should move with them, meaning they only receive relevant, consistent advice and recommendations.
A good customer service is the cornerstone of any successful business. But thanks to the digital revolution the way it’s executed is changing. As such, digital strategy needs to be at the forefront of all bank’s customer service strategies and decisions.
Not only is it demanded by customers, it’s also a financially wise move, considering in-branch transactions cost far more than mobile ones. By offering a superior customer experience across all channels, banks will begin to rebuild their reputation and move forward into the 21st century.