Banks and financial institutions aren’t usually at the forefront of innovative customer service and business agility, but many are starting to catch up.
Over the decades, new technological and cultural developments have changed peoples’ expectations around their finances. Convenience and automation are just the first steps — today’s banking customers demand comprehensive customer support and multi-channel delivery.
The development of these needs within the financial services sector can be traced to the growth of digital transformation throughout the entire economy. As governments, insurance companies, and other highly regulated, large-scale organizations implement digital transformation, so too must banks and lenders.
6 Digital Banking Trends
Banking infrastructure is becoming more important to everyday customers than ever before. Customers are choosing smart, technologically agile banking institutions that focus on the user experience (UX) over older, more established alternatives.
Retail banks hoping to capture a wider share of this market are implementing six key changes to their infrastructure to appeal to new customers’ expectations:
1. Increasing Utilization of Data and Analytics
Banks have always relied on analytics to qualify and underwrite loans. Technologically agile banks are starting to invest in the power of artificial intelligence (AI) to automate their most resource-intensive analyses.
The key to using AI-based algorithms is obtaining large sets of data and setting the algorithm to detect correlations in the data. AI programs are far superior to human beings at finding correlations in arbitrarily large sets of data — like finance records — but executives and IT professionals must always remember the difference between correlation and causation.
2. Improving Customer Journey by Reducing Friction
Half a century ago, banking customers did not mind waiting several days for a wire transfer to complete. Today, a two- or three-day wait for almost anything is out of the question.
Banking customers want to perform all of their transactions online, with instant results. Anything less should be considered customer friction that will send people into competitors’ open arms. Banks need to adjust their infrastructure to allow for instant account creation, wire transfers, and customer support at every touchpoint between their brand and the public at large.
3. Developing Excellent Multi-Channel Experience
Banking customers expect their banks to know their preferences and cater to their needs along whatever channel the customer chooses. This means a banking customer with an account at your institution should enjoy the same degree of convenience and accuracy while using the bank’s official mobile app, an exposed web app, or the bank’s Facebook page.
This is no small feat to achieve, especially for large banking institutions who handle reams of customer data. True multi-channel delivery requires borrowing processes from industries traditionally known for valuing excellent customer service, like the retail or hospitality sectors.
4. Embrace Innovation
Today’s banks and financial institutions are working hard to implement big data, AI, and API-powered open banking initiatives. But these trends only reflect today’s needs — not tomorrow’s.
Banking executives need to keep a steady eye on the state of the banking sector and the opportunities for innovation, generated by consumer demand. These opportunities will change over time, and only banks that value innovation will be able to capitalize on them to spur growth well into the future.
5. Greater Competition
The banking sector was not as competitive in the 20th century as it is now. Today’s banks have to deal with new regulations developed following the 2008 financial crisis, new customer expectations stemming from the cultural development of the “me generation”, and bold moves made by that generation’s budding entrepreneurs in the FinTech space.
Banks are facing competition not just from other banks, but from cashless payment mobile apps, unregulated cryptocurrency exchanges, and quasi-legal Silicon Valley financial service providers of all kinds. On top of that, brand new banks are emerging to meet the technological and cultural demands that today’s institutions are leaving unsatisfied.
6. Exploration of Advanced Technologies
AI is only one of many potentially game-changing technologies on the horizon. Developments in blockchain programming, quantum computing, and the Internet of Things (IoT) are likely to radically change our society’s culture, much like the Internet and mobile phones did only a quarter-century ago.
Even today’s most visionary entrepreneurs cannot tell with certainty how people and money will interact in the future. Banking institutions that plan on sticking through the challenges to come will need to constantly explore the value-generating potential of new technologies.
Partner with a Digital Innovator
Banking executives can’t predict the future any better than the rest of the world. The effects of digital transformation are still rippling through the banking sector and will lead to new customer expectations and cultural necessities for banks to meet.
The only way to stay on top of these changes is to partner with a digital innovator such as Ripcord to automate the process of providing comprehensive technological solutions to customers.