Six Steps to Re-Imagining the Customer Experience in Banking—Post Pandemic

By Sudipta Kumar Ghosh, Director, Capital One

Delivering a superior customer experience (CX) has been given lip service for years, but the number of businesses that successfully created the cultural mindset and corresponding behaviors to deliver on their brand promise has not materialized. To complicate matters, with the onset of COVID-19 in 2020 and the year that followed, the rules were turned upside down. Even the best-prepared businesses were caught off-guard in their ability to be agile and responsive. This is especially true in the banking industry, which was attacked from all sides—with customers, competitors, and shareholders looking for answers. How will it respond?

At lightening-speed, COVID-19 has overwhelmed lives and livelihoods around the globe. The pandemic forced a rethinking of what customer care means for individuals and the customer service teams that serve them. Suddenly, examinations of customer journeys and satisfaction metrics that detail what consumers want and need have given way to an acute urgency to rethink the ways banks attract and retain customers.

How is the customer experience changing?

Today, retail banking channel preferences are shifting toward digital, due in part to COVID-19. While many consumers preferred in-person banking channels prior to the pandemic, temporary branch closures and ongoing fear of high-contact exposures have pushed them further toward online or mobile banking. The acceleration toward digital transactions will create a long-term industry impact. Digital-only banks invest in technologies, and the existing banking ecosystem adjusts to meet evolving consumer needs through its infrastructure. Now, more than ever, traditional banks have a greater incentive to reorganize around digital experiences. According to 2021 Deloitte research, many Americans began to use online banking services for the first time during the pandemic, from conducting simple payment transactions to taking out loans or mortgages.

Early in the pandemic, it became clear that digital banking would be the answer to managing banking transactions safely. However, digital banking adoption varies by age, gender, income and other factors. As such, some consumers were forced into the digital experience, whether they were comfortable there or not. To implement a more personalized approach to meeting customers’ needs, industry leaders have identified three core groups of banking consumers to determine the most responsive and effective marketing strategies. The groups are:

• Tech-savvy customers, who love everything technology-related
• Traditionalists, who value technology but also love the human touch
• Technology skeptics, who don’t trust technology.

Before the pandemic, customer groups were clearer. Tech-savvy folks were willing to do all their banking online. Traditional banking customers tended to go to their brick-and-mortar bank but might mix in the online experience. The skeptics? They had the hardest time. However, as the pandemic eased, banks scrambled to see how many folks would continue to prefer the digital banking experience.

Digitization saves money for the banks, but it also makes it easier for customers to change banks if they perceive that they are but an electronic blip in a vast database. Each financial company fights for market share against other banks and faces the gorilla ‘neo-banks’ and Fintechs such as Chime, Robinhood, and Venmo that have no real estate or bank branch infrastructure to protect. To compete effectively, banks will need to have a personalized approach for every customer group.

Six post-pandemic CX experiences banks need to adopt

The transition from “before” to “after” will involve some trial-and error initiatives and some new ways to approach how business gets done in the very traditional banking industry. To accomplish these goals will require simultaneous launches and, in some cases, a sizable investment in soft skills and hardware.

1. Focus on the customer journey. Too often, the customer experience is simply an afterthought that causes many banks to fail when it comes to establishing strong customer relationships. The CX begins from the very first interaction with a consumer, and it should never end. It is a continuous process. At any stage, if the progression gets interrupted or gets out-of-sync, customers might lose interest in your bank. Hence, banks need to gain insights from their past mistakes, understand their current position from a customer standpoint, and design a roadmap for that customer’s unique life journey. This requires a strong foundation, a skilled management team, and a willingness to listen to customer feedback. Reaching customers effectively is by catering to specific (not general) customer requirements.
2. Incorporate customized CX. The trend that attracts most millennials is personalized products. Specifically, millennials expect banks to be more than a place for checking and savings accounts. They believe their bank should act like a financial reminder, advisor, and friend to help them make the right financial decisions. Many banks are incorporating bank apps embedded with personal financial management (PFM) capabilities. Powered by BOTs and AI technologies, these apps offer dozens of insights to help customers on their financial journey including assistance in things like increasing savings, deciding investment plans, and setting goals. When banks adopt such technical advancements, millennials, and other customers feel ‘humanized,’ which enhances customer relationships. Other generations may need a slightly different interface.
3. Ensure greater flexibility and security for customers. The current pandemic crisis is a tremendous financial blow for countless people. To recover from this predicament, customers will rely on banks’ extended support and flexibility to help them return to a solid financial footing.

According to a May 11, 2021 report by EY.com, 27 percent of consumers agree that banks will be more flexible in the next one to two years. At the same time, while some people may see the pandemic as a once-in-a-lifetime risk, others may remain more mindful of future catastrophic events. A feeling of security is important too. The same resource reported that 26 percent of respondents want to be better prepared for the future than they were this time. Banks will have an opportunity to help customers by offering savings and investments accounts, insurance policies, and income-smoothing products such as Trezeo. Out-of-the-box thinkers believe the crisis may hasten the adoption of innovative, subscription-based financial services models. For instance, the link between health and wealth may emerge stronger than ever as one fourth of high net worth (HNW) individuals say they would pay a premium for products that would promote well-being.

4. Accelerate the digital transformation process. Before COVID-19, consumers’ expectations of their financial institutions were evolving, which convinced banks to boost their investments in digital channels, online wallets, and peer-to-peer payments. The deadly virus, however, has given life to cashless payments. People will still feel uneasy when handling cash. Consumers who previously shunned online payments are now opting for digital channels for even everyday purchases. This shift means banks can encourage permanent usage of online channels even though digital interactions are challenging for older generations or people with disabilities. Here’s an opportunity for banks to reach out and really guide their more vulnerable customers.

Through continuous engagement like live or online learning and development sessions, banks can educate customers and improve their digital involvement. While COVID-19 made remote onboarding a global necessity across diverse customer segments, digital onboarding to millennials was already a segmented marketing strategy in some bank populations pre-COVID. By using virtual Know Your Customer (KYC) programs, Artificial Intelligence (AI)-enabled identity verification tools, and digital signatures (like DocuSign), banks can side-step outdated face-to-face onboarding procedures. Wise banks will join with savvy technology partners to make it happen seamlessly.

Then, as mail-in checks give way to cashless payments, banks will want to speed up and streamline digital transformations and develop a robust infrastructure that can handle heavier transaction traffic through increasingly secure networks. “Old and busted will make way for new hotness,” as Will Smith says in the movie Men in Black. Banks will continuously track digital banking metrics—leveraging cross-channel, customer-centric data and responding to customer demands. The hope: By reducing operating costs through increased data analysis, AI, and automation, banks can simultaneously re-align products, increase sales, and deliver a superior customer experience while still making a profit.

5. Train bank employees. Providing new digital tools to improve customer interactions is a helpful first step. Still, unless customer-facing employees are better-trained and coached, banks may fall short of their goals to differentiate with personalized services. The largest banks are starting to use virtual reality (VR) and augmented reality (AR) technology to improve training and coaching. An added benefit is that training can result in lower branch-employee turnover. Bank of America announced in October 2021 that it would launch virtual reality (VR) training by the end of 2022 for its employees in nearly 4,300 branches nationwide. Simulations enabled by VR headsets will be used to practice a wide range of skills to strengthen and deepen relationships with bank clients. It’s a learned art to be able to listen and respond empathetically and navigate difficult conversations, especially when it comes to money. The technology is embedded with real-time analytics so managers can identify weaknesses and provide meaningful guidance and coaching to improve customer-facing conversations. Following a successful pilot with 400 employees, 97 percent of the trainees felt more confident after the simulations.
6. Build hi-tech customer service centers. The adoption of digital and mobile banking produced a sharp rise in the customer service voice channel. One U.S. decentralized community bank augmented its digital operations with an additional 15 locations because its post-COVID-19 “Work from Home” (WFH) call center volumes surged to 100 percent above average, while robot-assisted live-chats plummeted to almost zero. The take-home: While some are comfortable with digital touchpoints, others prefer human interaction, again, especially with their money. The answer is to merge digital interfaces and human capabilities to deliver personalized service when crises arise. AI-powered conversation analytics help achieve this objective by processing conversational data in real-time to reveal an emotion (e.g., frustration or confusion) during the call. It helps agents achieve better responses, which can reduce call time, improve the efficiency of customer service center agents, and enrich the customer experience—a multi-faceted win.

Create a CX that matters

In post-COVID banking, customer experience will be defined by increasing digital interaction across multiple channels. In some ways, banks may become invisible, but skepticism may increase if financial institutions do not address data security with unwavering care and complete transparency. At the same time, as banks leverage customer service initiatives, they must weigh them against the rising costs to do so and decide how technology assists like Artificial Intelligence, cloud computing, and digital tools will help with both the illusion of higher personal interaction through proven feedback loops while lowering costs to provide it.

People’s near-term and longer-term need to access their money and provide for their current and future lives will continue to drive bank executives’ decisions. The most innovative will be the winners. Successful banks of the future will not lead the charge. They will create the customers’ experiences in cooperation both with consumers and their banking partners. Not a “You tell us.” Nor a “We’ll tell you” mentality.” Instead, “Let’s figure this out together.” Because what works today might be different tomorrow. In the scheme of things, we need to know what, when, and how people want their banking at every point throughout their lives in our changing world. As we advance, all our institutions, including governments, will need to be flexible, attentive, innovative, and collaborative.