Securely Empowering Consumers Through the Omnichannel

By Melanie Maier, Pre-Sales Solution Lead DACH and Central Europe, Entersekt

The future of banking is rapidly evolving alongside a shift in customer expectations. Legacy banks that do not swiftly adapt risk falling behind. But, how do banks find the right balance between great customer experience and security? First things first: They need to understand what customers expect from their banks today.

An evolution in customer expectations

Born between 1995 and 2012, those belonging to Generation Z are coming of age and are now joining the working populace. This young cohort of workers brings with them a new vision for the world—one that is globally, socially and technologically connected. And this includes a remoulded ideal for the future of financial services.

Tech giants Google, Twitter, Amazon and Facebook have elevated machine learning and algorithms to such a degree that they can now tailor experiences and services to the needs and preferences of everyone. Growing up with this as their status quo, Gen Z and its preceding generation, the much-maligned Millennials, have inevitably grown accustomed to frictionless exchanges and personalised experiences. They are, in other words, digital natives who probably have no concept of a world without smartphones.

This expectation of personalised digital experiences, coupled with these generations’ mistrust of traditional banks in the wake of the 2008 financial crisis, was quickly exploited by challenger banks. The staggering numbers involved speaks volumes about the popularity of these banks. According to a report by FT (Financial Technology) Partners^[i], 12 of these challenger banks have raised more than US$100 million in equity financing, with six being valued at $1 billion or more. This trend was further confirmed in a study by Pi Datametrics^[ii], which found that between January 2016 and January 2019, the search volume for legacy banks decreased by 22.4 percent, while searches for disruptor banks increased by 32.6 percent.

Clearly, this transition towards the digital space was to be expected; what was unexpected was how the COVID-19 pandemic expedited the process—possibly by as much as two to three years^[iii]. The numbers of banknotes and coins in circulation have dwindled rapidly as many opt to pay using contactless methods because of hygiene concerns. Indeed, in a BCG (Boston Consulting Group) study^[iv] conducted in April 2020, 63 percent of respondents said that their cash use had decreased since the crisis began. And as with many industries worldwide, banks have had to close their network of branches and send employees home in order to comply with social-distancing regulations. Now, with no branches available, even those who had previously resisted the change to digital have had to conform to the “new norm”.

In the face of changing expectations, challenger banks and crisis-induced necessity, legacy banks must adapt, and they need to do so quickly if they hope to survive in this ever-competitive market. Crucially, they will need to adapt in a way that caters to a diverse demographic range. For the majority of legacy banks, the greatest change will be the shift in thinking, changing their focus from what they offer to how they make their offerings. Consumers are no longer willing to be bogged down filling in countless forms, to pay costly fees or to be pushed from pillar to post whenever they want to get something done. Today’s consumers want transparency, useful interactions and freedom to effortlessly manage their finances in real-time and in any way they choose. Omnichannel banking is central to achieving this customer-centric approach.

Omnichannel: the freedom of choice

Each one of us is unique, and for us to be able to express and celebrate our uniqueness, there need to be choices and the freedom to choose. For banks, providing a delightful customer experience hinges on providing that choice. If customers want to begin a transaction online and finish it on the app or speak to the call center about opening a new account and complete the process in the branch, they should be able to—and without having to repeat information or start the process again. These choices accommodate different generations who often have different preferences—and levels of ability—regarding the devices through which they feel comfortable interacting: smartphones for Gen Z and the call center for less tech-savvy individuals, for example. To their credit, legacy banks have started to adopt a more digital focus with different communication streams, but a frequent stumblingblock seems to be the disconnect between the channels, with certain services being available only on some channels and different authentication methods being requested for different channels. These inconsistencies detract from a customer’s experience and call into question the security of each channel.

Derived from the Latin word omnis, meaning every, the term omnichannel^[v] refers to unifying all channels of interaction into a single customer experience. Simply having multiple options through which a customer can interact with their bank is no longer a competitive advantage. True omnichannel service delivery means more than just more ways to do the same things. It’s about creating a seamless and consistent brand interaction through multiple channels that share data and complement each other. Over time, banks can use the data they receive through these channels to develop an understanding of each customer—not only of their immediate needs but also of their future wants.

So how can financial institutions offer their customers the convenience they demand, through the channels they want and with consistent user experience, all without compromising security?

Finding synergy between security and a delightful customer experience

Trust is far easier to achieve when you can see the person with whom you are interacting, and brick-and-mortar branches provide just this setting. So, how do banks now deal with the challenge of replicating this trust in the digital space?

One way to do this is by establishing a “trusted” device. Digital certificates create a strong device identity that allows a financial institution to uniquely identify each customer. Adding behavioural biometrics and risk-based fraud-detection technology to the mix helps to determine whether a customer can be authenticated in the background or whether there’s an anomaly, and the bank has to ask for an extra authentication step.

Many banks have a misconceived perception that, in line with the transition to frictionless interactions, customers are best left out of matters of security. However, actively involving a customer is sometimes the only way to ensure a user is who he or she claims to be. And this was confirmed by Entersekt’s Customer Authentication Study^[vi], which found that 65.7 percent of consumers would feel more secure if they had more control. They are, after all, the ones who know if they have just initiated a transaction or logged into an account, so it makes sense for banks to reach out and ask them directly.

As we all know, communication is key in any relationship, so how can banks open up trusted dialogues with their customers that allow each party to trust that the other is who they say they are? Apps provide a familiar and secure platform from which financial institutions can engage in two-way communication through digitally signed, end-to-end-encrypted direct messages. Formulated into yes or no questions, customers can confirm the legitimacy of any interaction with a single touch. No passwords. No challenge questions. No hardware tokens. It’s that simple.

This low level of “friendly friction” is something research shows consumers appreciate. They feel empowered because they can see the security in action when it really matters. Providing multiple, familiar-looking channels, where the step-up authentication process is the same and expected, creates a trusted environment in which banks and their customers can develop more meaningful interactions. All parties feel more secure, which is, after all, what everyone wants.

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