This article was originally published in FinTech Magazine and can be accessed here.
Digital battle: bank customers demand more
Traditional banks must up their game to meet customer needs and fight off competition from digital challengers
Manoj Mistry, Managing Director, IBOS Association
The inevitable demise of traditional bank branches, combined with an ever more sophisticated range of digital banking services, is continuing to shape customer attitudes and expectations of what a bank can and should provide. Notably, fintech firms have been quicker to adapt to meet their demands with challenger banks most definitely delivering the right change at the right time.
The best of these challengers have shown themselves to be remarkably astute at keeping an ear to the ground and listening to those who will really decide the future of their business – consumers, also known as customers. For traditional banks, now operating in a very different world from the one in which they originally opened for business, keeping up with the pace of change in customer demand is imperative. In order to do so, they would do well to follow the same strategy as the challengers: putting sufficient time and resources into evaluating exactly what modern-day customers want and expect from their provider.
One key way in which traditional banks can emulate fintech firms is to enhance the overall customer experience. Although challenger banks have a very long way to go before they start to knock their traditional counterparts off their pedestal, traditional banks have many lessons to learn from them: if they want to even the score, they should definitely not ignore them. Above all, they should embrace open banking APIs (Application Programming Interfaces) and partner with great service providers to make their platforms more accessible and feature-rich.
They must also recognise what is self-evident: fintech companies have brought new approaches to customer service that customers really like. With the continued evolution of the best-known brands such as Monzo, Revolut and N26, positioning themselves in the right place, at the right time, the question must be asked: what makes them stand out from the crowd?
The answer lies in understanding their customers. Primarily, although not exclusively, these new customers are millennials who do not like having to wait for anything. Instead, they crave simplicity and ease, which they are used to experiencing via their smartphones. Understanding their preferences, and adapting accordingly by making their services entirely digital, has allowed these new market entrants to raise the bar, challenging retail banks across the world as a result.
The new wave of challenger banks have designed and conceived their offering around meeting current customer expectations and anticipating new ones as technology advances at a rapid pace. By leveraging data insights, and offering a better-personalised experience along with a fully digital experience, they increasingly offer customers what they want and then add some more. To keep their existing customers and win new ones in the years ahead, traditional banks need to up their game.
