The financial industry is undergoing significant changes, referred to by McKinsey as the ‘Great Banking Transition.’ Banks are facing increased regulatory oversight, venturing into new digital territories, and competing fiercely with new financial entities. The key to navigating these changes successfully is by enhancing customer experience (CX).
Customer experience has been a primary focus for some time now, but with the constantly shifting financial landscape, new factors affecting CX have appeared. As CX becomes crucial, data shows that a positive customer experience directly impacts loyalty and growth. According to McKinsey, banks excelling in customer satisfaction also perform better financially. In an era where customer loyalty is unpredictable, satisfied clients are six times more likely to stay with their bank, making it imperative for banks to focus on this area.
Today’s customers have high expectations. In a world shaped by the likes of Amazon and Uber, where quick and easy services are the norm, banking has shifted toward providing a seamless, personalized experience that meets individual needs. The unbundling of banking services means they are less integral to daily life. Consumers can now get instant loans, make quick transactions, and pay bills through a single app. With “Superapps” offering so much convenience, banks are losing crucial transactional data needed to personalize services.
In the battle for customer satisfaction, banks need to enhance their digital capabilities. Over the past decade, there’s been a major shift toward digitalization, changing how financial institutions operate and connect with their customers. Banking services are now available 24/7 on various devices, but is that really sufficient?
Despite rapid digitalization, mastering CX remains a challenge for banks. Bain reported that even in the best markets for opening accounts, only about 66% succeed on the first try. There is a clear gap between customer expectations and the experience provided. So, where are banks falling short?
One major issue is the existence of siloes within banks, which disrupts the customer journey. Banks manage numerous customer journeys but often follow an outdated, compartmentalized approach where departments operate in isolation. This fragmentation creates inconsistent experiences, which is contrary to what customers expect in today’s digital age. Additionally, many banks use legacy systems that are not compatible with modern solutions, widening the gap between customer expectations and delivery.
As banks introduce new technologies, the reliance on point solutions and proof-of-concept approaches only exacerbates these siloes. The result is a complex mix of old and new systems that do not integrate well, hindering the value derived from digital investments.
Success in CX lies in adopting a platform-first approach. Many banks have focused on improving specific aspects of the customer journey through solutions like automation or AI. True digital success, however, requires a shift towards a more integrated, holistic platform-based approach rather than overhauling existing systems. This strategy involves connecting different components seamlessly through a unified platform, enhancing the overall efficiency and effectiveness of the banking ecosystem.
DBS Bank serves as a prime example of CX success. They realigned their strategy to prioritize customer needs, launching “digibank” with AI that offers personalized financial advice. This strategic shift led to a significant increase in customer base and satisfaction rates.
Top digital banking leaders reimagine the entire customer journey rather than just streamlining parts of it. They design systems that leverage human potential and support touchless operations. By integrating AI into their services, banks can provide seamless, efficient, and intuitive experiences. A platform-first operating model helps eliminate siloes and scales improvements across the business.
A platform approach maximizes the value of digital investments by enabling an AI-powered platform to unify different technologies, allowing data to flow freely across the organization. When information is interconnected, designing intelligent, cohesive, and customer-centric experiences becomes simpler.
Banking is in the midst of a digital transformation centered around customer experience. Excelling in CX requires strategic actions focused on customer journeys, supported by an AI-first platform. Banks that adapt to this new reality will not only survive but thrive, setting new industry standards and creating digital experiences that customers will love.