Home Banking The Customer Experience: An Inescapable Priority for Global Banking in 2024

The Customer Experience: An Inescapable Priority for Global Banking in 2024

by internationalbanker

By Samantha Barnes, International Banker

 

As the world continues its migration further into the digital realm to fulfil its banking needs, lenders in 2024 are only too willing to expand their digital-banking capacities to meet this increasing—and increasingly sophisticated—global demand. Indeed, customer preferences are evolving rapidly, with lenders striving to keep up with new consumer tastes and trends. A clear strategy banks have been implementing to accomplish this is to position the customer experience at the forefront and at the centre of their goals and objectives.

A recent study conducted by Salesforce Research found that almost 90 percent of customers claimed the experience a company provides is as important as its products or services—the highest rating the software firm has ever recorded. “Great experiences provide an important bond between brands and customers, particularly as loyalty proves elusive,” Salesforce explained in May 2022. “As consumers spend more time online, they gain access to an abundance of options, luring them away from tried and true favourites in favor of trying new alternatives. In the last year alone, 71 percent of consumers switched brands at least once as priorities, lifestyles, or financial situations changed.”

Such trends underline the crucial importance for businesses to build robust customer-experience strategies, with the banking sector no different. According to Yellow.ai, customer experience within the banking context is the space in which financial services meet customer expectations. “Customer experience in banking transcends the traditional boundaries of mere service delivery,” the San Mateo, California-based, autonomous customer-experience platform explained in a blog article. “It encompasses the entire gamut of a customer’s journey and interactions with a bank or financial institution. From the moment they log into their online banking portal to the interactions at a branch, each touchpoint contributes to their overall perception and satisfaction.”

Indeed, the days of retail banking simply being about basic two-party transactions and monitoring account balances are firmly consigned to the distant past. With digitalisation now dominating the global banking system—and a post-2008 environment demanding that banks do all they can to ensure that the customer is king—the concept of what the customer experience ought to involve continues to develop and adapt accordingly, with comprehensive customer journeys that seek to deeply understand and individualise every customer now becoming the norm in many parts of the world.

This is already well understood by fintech (financial technology) firms, most of which tend to focus on, at most, a handful of key financial services that can engage and satisfy their customers. “In their assault on traditional banks, fintech companies usually concentrate on improving and perfecting specific banking services,” according to Deloitte. “Thanks to customer-focused product development, they have managed to captivate a large group of customers within a very short time—not to mention investors.”

Global banks, meanwhile, are haemorrhaging customers due to their failures regarding this very issue, with a study published in June by 10x Banking finding that poor customer experience is causing them to lose a whopping 20 percent of their customers. The software-as-a-service (SaaS) banking platform disclosed that banks in key markets across the globe “are shedding large numbers of their customer base to rivals”, with one in eight banking leaders (12 percent) confirming they have lost 30 to 40 percent of their existing customers for this very reason.

And with PwC (PricewaterhouseCoopers International Limited) finding that 61 percent of the financial-services respondents it recently surveyed expected big-tech companies to “continue pushing into areas formerly exclusively owned by incumbent financial services firms”, such as payments, credit, lending and trading, the need to deliver better, more personalised experiences to customers is becoming an existential one. Some banks are starting to catch on, with lenders having demonstrated in more recent times the need to maximise their data-analytics credentials to not only glean the most instructive insights about their customers’ individual behavioural banking traits but also gain more holistic understandings of each customer’s financial preferences, challenges and future goals.

“With FinTech and Big Tech continually enticing people with ever more innovative services and solutions, banks have little choice but to match or top these to enhance the customer experience in banking. This can only be achieved by treating customers as individuals with unique needs and making them feel understood,” Ernst & Young (EY) noted in July 2023, whilst explaining that “customer obsession” was the key to success for lenders seeking to drive client-centric bank transformations. “Banks should regularly survey and interview their customers and conduct external research to gain insights into customer preferences, attitudes, needs and values to inform customer-centric transformation from inception to delivery.”

EY’s analysis implies that banks today face an uphill battle to optimise the customer experience amid an increasingly competitive environment that now comprises a multitude of bank and non-bank entities, all of which are intent on being as agile as possible to meet the speed and weight of customer demands. McKinsey & Company’s 2020 research touts a “proven formula” for executing customer-experience transformations that comprises three main foundational pillars:

  • A clearly defined, strong aspiration: Develop a customer-centric vision and inspiration; establish a clear link between this vision and value creation for the bank; and develop a suitable roadmap accordingly.
  • An agile, disciplined transformation approach: Transform the bank’s strategy by discovering customers’ needs; design solutions for those needs; and define and harmonise customer journeys, products, services and business models.
  • A thoughtful deployment of new capabilities: Transform the bank’s core mindset and underlying capabilities; deploy the necessary technology to achieve the transformation, particularly data analytics; establish cross-functional governance and an agile operating model; and deploy capable measurement and performance-management systems.

McKinsey & Company found that such an approach yielded stellar results for enterprises, including a 15-to-20-percent increase in sales-conversion rates, a 20-to-50-percent decline in service costs and a 10-to-20-percent improvement in customer satisfaction. This same approach can be applied to the banking industry, moreover. “By using these building blocks to achieve successful customer-centric transformations…banks can take gold in the customer-experience race and attain a competitive advantage that boosts growth, lowers costs, and provides superior customer satisfaction,” the consulting firm asserted in May 2023.

Technology plays a pivotal role in this process, with those banks willing and able to invest in the necessary IT (information technology) infrastructure likely to be the most capable of delivering hyper-personalised solutions to their customers. But not all banks can afford to fund such hefty commitments. According to data from a PwC financial-services survey, the biggest challenges over the next five years for banks are “digital transformation” (22 percent of respondents) and the “impact of new technologies” (21 percent). Such trends underline the constraints banks continue to face in upgrading their legacy tech infrastructures to facilitate the necessary degree of agility that customers demand from their banks today. These limitations are particularly significant if they stunt the bank’s data-analytics capabilities—that is, being sufficiently data-driven to ensure customers can be provided with suitably personalised products and services.

The regulatory landscape may also restrict what many banks want to achieve, with authorities consistently creating new regulations—and updating existing ones—to keep pace with the rapidly changing nature of digital banking. PwC’s “Financial Services in 2025 survey data” responses are highly telling, namely that banks’ top three regulatory concerns over the next five years are “data privacy and cybersecurity” (48 percent of respondents), “digital identity authentication” (31 percent) and “use of new technology” (30 percent).

Indeed, it makes sense that banking consumers will place consistently greater importance on data privacy as their digital-banking experiences become more personalised. That said, PwC’s “Customer Loyalty Survey”, published in June 2023, noted that 82 percent of respondents said they would share personal data in exchange for a better customer experience, again illustrating how important customers regard each interaction with businesses. “To deliver hyper-personalized experiences, banks need to translate client data—such as actions, intent, and needs—into tailored advice and financial plans,” the SaaS firm Zendesk noted in January. “With robust client profiles that unify customer data across systems and software, associates can offer personalised advice and offers at scale. 77 percent of business leaders believe that deeper personalisation leads to increased customer retention.”

Ultimately, banks must continue to advance the concept of the customer experience or risk losing out to those rivals willing to do more to support their customers at every touchpoint and optimise every single interaction they have with customers. Whether it’s a simple phone call with a bank’s call-centre support staff, the ease with which customers can check their balances and transfer money or the overall time taken to complete a loan-application process, every interaction between customer and bank now determines the quality of the overall customer experience.

And with the decision to either remain with a particular bank or move to a competitor becoming increasingly easy—thanks largely to the ease of digital banking and the range of alternative financial providers in the market—the sooner that banks embrace the sheer granularity required to deliver unfailingly outstanding customer experiences, the higher the levels of customer retention they will enjoy in the long run.

 

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