N Shashidhar
Everywhere we look, industries are setting the expectation of instant service—be it middle of the night or mid-flight, customers expect quick and easy solutions. But try opening a bank account, and the smooth sailing stops, at least 33% of the time. Aggressive competition from adjacent businesses and fintech companies added to the survival threat for banks.
Super apps stepped up, too, doing everything under the Sun in a single app faster and better. Their promise of a global takeover might have been overblown, but they point out an important lesson to banks: a frictionless integrated platform can be the next big differentiator.
Customers keep expecting more, and every day, the bar gets higher. So, why should banks chase this moving goalpost of customer experience (CX), at all? Because it hits where it counts—the bottom line. For a big bank with multiple channels, just a single-point jump in their CX score could mean an extra $123 million. For online-only banks, that improvement could add $92 million more. And the better the CX is to start with, the more banks stand to capture exponential growth in revenues.
Focusing efforts where it counts
42% of consumers can’t differentiate between financial service providers. That’s almost half the market unable to distinguish one bank from another! While speed, efficiency, trust, and security are fundamental, they’re just table stakes. Then, what are the high stakes in banking?
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Not all journeys are made equal
A typical regional bank deals with over 1,500 customer journeys spanning different products and touchpoints. Does every single one need a makeover? McKinsey says no. Some journeys disproportionately affect the overall customer experience and shape how customers feel about their bank. These are where banks should channel their efforts—for example, enhancing the ease and interaction of shopping for new accounts, simplifying application forms, reducing wait times, and improving the speed and effectiveness of resolving customer issues.
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Emotions take center stage
The real currency in banking is trust and emotional connection. 87% of customers who feel valued by their direct bank stick around. Banks need to be tuned into their customers’ emotional signals and responsive to their feedback in real-time. For instance, by analyzing sentiment data, banks can pinpoint exactly when and why customers get frustrated, allowing them to quickly address and resolve these concerns.
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Hybrid, integrated experiences outperform digital
The most compelling banking experiences today are hybrid. They combine the efficiency of digital processes with the personal touch of human interaction. Consumers demand that their banks maintain consistency across all channels, from app to in-person, without missing a beat. They want to switch from an email to a phone call and not have to reintroduce themselves or rehash their issue. Banks need to knit these experiences together so smoothly that the customer barely notices the seams.
But banks are bogged down by endless compliance updates, security concerns, talent shortages, and the ongoing battle to keep up with tech advancements. Not to mention the myriad of point solutions that have been accumulated over the years that refuse to synergize with the rest of them or the core IT. How can banks truly innovate?
Disjointed systems trigger a ripple effect of tech debt
Consider this scenario: What if every customer logging into their digital banking platform receives real-time, personalized financial advice based on their recent transactions and current financial health? For instance, if the system notices that a customer has high monthly entertainment expenses, it could offer tips or products for better budget management or savings plans. For a freelancer customer with fluctuating monthly income, the app could suggest adjusting budget allocations on a particular lower-income month.
An integrated banking solution like this caters to vastly different customer needs, improving the overall CX by making it deeply personal and responsive. However, there’s a significant hurdle to achieving this. Traditionally, banks operate with different systems for different functions—one for tracking transactions, another for customer interactions, and yet another for financial advice. These systems often work in isolation, creating data siloes. The lack of real-time communication between these systems means the app can’t access immediate transaction data to offer timely advice.
Resolving tech debt with a platform approach
Banks are stuck in a dilemma: they can’t simply overhaul millions of lines of mainframe code or discard the massive investments in legacy systems that perform exceptionally well within their specific domains. The core issue isn’t the functionality of these individual systems but rather their isolation and the barriers this creates against the free flow of data and insights.
A major North American bank found that juggling more than 1,000 systems and applications was costing it over $2 billion in tech debt. Meanwhile, another bank nearly spent $100 million to ditch an outdated system, only to realize that it was so entwined with everything else that removing it wouldn’t actually solve any problems. These examples highlight just how complex and entrenched IT challenges in banking can be, making innovation seem like a Herculean task.
This is where adopting a platform approach can make a difference. It’s not about scraping existing infrastructure and discarding what works; rather, it’s about integrating these isolated systems into a unified network. A platform bridges the gaps between old and new, allowing data to move freely without abandoning proven technologies. The value propositions of such platforms are manifold.
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Unlock Efficiencies at Scale:
Platforms are inherently more scalable than isolated systems. As a bank grows or as market conditions change, the platform can adapt, integrating new technologies or scaling existing functionalities without the need for extensive redevelopment. This flexibility ensures that banks can respond quickly to market opportunities or threats.
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Amplify Human Potential:
Platforms also boost productivity while keeping interactions human-centered. It provides the tools and insights needed to enhance every conversation and decision.
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Harness the Power of a Connected Ecosystem:
Platforms help create a seamless ecosystem, bringing together strategic collaborations and integrated journeys to deliver maximum value directly to the end customer.
Banks will also have access to deeper insights that were previously inaccessible due to siloed data. This can lead to better customer segmentation, more tailored products, and predictive analytics that anticipate customer needs before they even arise.
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Creating a loyalty loop through connected banking
In a world dominated by the likes of Amazon and Uber, where immediate satisfaction is a given, customers seek a frictionless, personalized service experience in banking, too. Offering faster loans, quick transactions, and easy bill payments isn’t just about convenience—it’s about keeping customers around long enough to learn from their behaviors. The longer they stay, the more data we collect, and the better we tailor our services to their needs. This cycle of loyalty and data collection – better services lead to happier customers, whose data, in turn, fuels even more personalized experiences – forms a powerful loop. Is your organization in this loop or out of it?
Disclaimer Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the respective institutions or funding agencies
- https://www.bain.com/insights/customer-behavior-and-loyalty-in-banking-global-edition-2023/
- https://www.forbes.com/sites/zennonkapron/2024/04/28/the-end-of-the-super-app-dream/?sh=77982f4973c5
- https://www.forrester.com/report/how-customer-experience-drives-business-growth-2022/RES177564
- https://www.accenture.com/content/dam/accenture/final/industry/banking/document/Accenture-Banking-Top-10-Trends-2024.pdf
- https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/five-ways-to-drive-experience-led-growth-in-banking
- https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/demystifying-digital-dark-matter-a-new-standard-to-tame-technical-debt
