The financial industry is currently facing what McKinsey refers to as the ‘Great Banking Transition.’ Banks are grappling with increased regulatory oversight, the emergence of new digital frontiers, and intense competition from disruptive newcomers in the financial sector. To ride this wave of disruption, banks must prioritize customer experience (CX) and ensure they get it right. CX has been a focal point for several years, but with the evolving landscape of the financial industry, new factors impacting CX journeys have emerged.
The Impact of CX on Loyalty and Growth
Hard data supports the significance of CX in driving loyalty and growth. According to McKinsey, banks that excel in customer satisfaction also perform well in financial metrics. Satisfied customers are six times more likely to remain with their bank. Ignoring this fact is not an option for banks in an era of fickle loyalty.
Rising Customer Expectations
In today’s age of instant gratification and personalized experiences offered by companies like Amazon and Uber, banking has become more about providing a seamless and customized experience tailored to individual needs. The unbundling of banking services has made traditional banks less relevant to consumers’ daily lives. With instant loans, quick transactions, and bill payments accessible through a single app, consumers may question their need for traditional banks.
“Today, banking consumers can get instant loans, make blink-of-an-eye transactions, and pay bills all from a single app. … banks are losing vital transactional data that they need to drive personalization.”
In order to compete for customers, banks must level up their digital game. Although significant progress has been made towards digitalization, banks still struggle to master CX. According to Bain, even in the best markets for account opening, only about 66% of attempts are successful the first time. A gap exists between customer expectations and the actual experience delivered.
To identify the cause of this gap, it is essential to examine the underlying issues within banks’ digital offerings. Banks have thousands of customer journeys, but siloed departments and outdated approaches hinder organizational alignment, resulting in inconsistent experiences for customers. Legacy systems may not be compatible with modern solutions, further amplifying the gap between customer expectations and the bank’s capabilities.
“As banks try to bring in new technologies, their point-solution and proof-of-concept-led approach amplifies siloes. This creates a complex web of old and new systems that don’t talk to each other and hinder value delivery from digital efforts.”
Addressing these challenges requires more than just targeted solutions like automation or AI to streamline customer journeys. True digital success requires a shift in mindset towards a platform-first approach. This approach integrates and connects various components of a bank’s ecosystem through a unified platform, enhancing overall efficiency and effectiveness.
DBS Bank’s CX Success Story
An exemplar of CX-led success is DBS Bank. They prioritized understanding and meeting customer needs by launching “digibank,” powered by AI that provides personalized financial advice. This strategic transformation resulted in a significant increase in customer base and satisfaction rates. The real leaders in digital banking are those who reimagine the entire customer journey, introducing AI into banking processes to deliver intuitive and connected services, and breaking down organizational siloes through a platform-first operating model.
By adopting a platform-first approach, banks can maximize the value derived from their digital investments. An AI-powered platform sitting atop existing technologies allows for seamless flow of data and information across the business, enabling the design of intelligent, cohesive, and customer-centric journeys.
In conclusion, the ongoing digital revolution in banking demands a renewed focus on customer experience. Banks that understand this new reality and adapt accordingly will not only survive but thrive. They will set new standards for the industry, creating digital journeys that customers don’t just need but love.
