Banking is no longer a simple linear process. The industry has reached a pivotal point, with the explosion of internet access via mobile devices changing the way consumers expect to be able to use everyday services. How they manage their money is no different, particularly when it comes to wanting to have the right information available to view and act upon anywhere, anytime.
This is no more evident than with the millennials; they belong to a generation that is independent, educated, digitally savvy and more connected than ever before, also referred to as Generation Y. These customers will actively search for information that they need, ask for advice and opinions online and through social networks, and fluently use a wide range of different channels interchangeably to get the job done. This ‘always on’ generation seeks availability, convenience and instant satisfaction.
The ‘always on’ mentality applies to all areas of the millennials’ lives – including banking. These digitally native consumers want to be able to dictate how, when and where they do business with banks. As their wealth and influence grow it will become more important than ever to meet their needs. Banks have an opportunity to attract these new customers and to grow their loyalty. Yet, for many institutions, this will involve a fundamental rethink of their strategy, as well as the infrastructure which supports it.
Innovation through technology
A rethink of services is especially significant when considering the different channels that are now available for banks, in fact SAP research found that 73% of financial institutions currently unable to provide a consistent experience across products and channels. Mobile banking has risen dramatically over the last year, with the majority of the biggest banks now offering service via a smartphone app. With smartphones looking to be ubiquitous across Gen-Y consumers, predictions about the end of traditional ‘bricks and mortar’ banking no longer look so dubious.
In fact, recent research by Accenture found that 39% of customers aged 18 to 34 would contemplate moving to a branchless bank. Whilst this highlights a very different approach to banking services, I think it’s important to bear in mind that whilst a lot of customers are comfortable and happy to self-serve, many do still value personal interaction and face-to-face advice – especially when it comes to important life-changing decisions such as mortgages. The challenge for banks will be around achieving the right balance between cutting cost-to-serve through investing in digital channels, whilst still maintaining the right level of availability on the high street.
Other platforms and channels can help to support this model alongside the now-established online and mobile banking options. For example, combining in-branch technology with a personal service through measures such as having video-conferencing available to allow customers to speak to banking specialists, and employing ‘meet and greet’ staff which make use of tablets to bring up customer data and implement quick transactions in real-time – providing a seamless customer experience.
Even simple measures, such as providing free Wi-Fi in branch can help marry up the online and physical customer experience, and go some way in meeting the needs of Gen-Y consumers. However, technology by itself will not deliver a competitive advantage; it’s what banks do with it to develop a unique customer experience will separate the winners from the losers.
Creating a personalised experience
Gen-Y consumers expect a more personal level of service than the generations before, whether in branch, online, through mobile, or on social channels. This sentiment goes hand-in-hand with how other industries – such as retail – are able to deliver highly personalised products and services to customers, quickly and easily. This expectation has filtered through into the banking industry, with consumers no longer feeling obliged to stay with one bank. Today’s consumer may hold several accounts across a number of banks.
It’s therefore incredibly important that banks provide a consistent high level of service and personalisation across channels, and ensure that customer context continues across the transaction journey. Analytics and database technologies are critical to providing a single view of the customer across all channels, and enable banks to provide relevant, customer-centric offers and services based on real-time customer data. Institutions can then more accurately anticipate financial needs and provide improved service; for example – proactively offering a savings account bundled with a mortgage offer when a couple gets married. In fact, 2013 research by SAP found that 73% of financial services organisations believe that predictive analytics would help them to make better product recommendations and offers to their customers.
One great example of this is The Commonwealth Bank of Australia (CBA), which recognises that the competitive advantage is shifting to organisations that can provide real-time value and drive sustained relationship value. The company’s investment in technology supports its development towards being customer-centric, omni channel, real-time and targeted in making offers and bundling products. Through leveraging HANA, CBA has fundamentally changed the way it interacts with customers to provide better service across all channels, and as such has seen a 36% increase in product cross-sell rate, as well as a 10% increase in sales and converted referrals per FTE.
The key to success then is around simplicity, customisation and greater control for the bank in meeting its customers’ needs, through richer customer information and innovation in real-time. It’s not enough to be seen to implement newer technologies and platforms if they’re not joined up. Banks need to be truly omni channel, which means providing a seamless front end to the customer which is supported by a resilient, consolidated infrastructure interfacing with the back end systems of record.
The changes being driven by Gen-Y consumers today have undoubtedly resulted in the banking industry having to respond with the use of new technologies and become more agile. Millennials are no longer concerned with the heritage of a bank – rather its ability to provide an efficient service is their number one priority. Furthermore, as mobile technology continues to develop and innovate, it’s not just Gen-Y that is growing up with these expectations – they are becoming entrenched in every generation, from teens to silver surfers. This makes it even more imperative for banks to take action now, in order to retain the wealth that currently resides with older generations, whilst at the same time capturing new customers from Gen-Y – tomorrow’s accumulators of wealth.
However, moving to a true omni channel model is a journey, and won’t be achieved overnight. For many organisations the challenge will be around consolidating legacy infrastructure, using platform technology, and moving away from siloed channels to bring everything into one simplified, stronger system. It’s clear that those who are already considering alternative ways in which to manage investment into infrastructure will have the competitive advantage when it comes to delivering a customer-centric service.