Best-selling author and banking industry futurist Brett King once said, “The easiest customer experience isn’t one where you drive to the branch, find a parking spot, wait in line, ask advice, and sign a piece of paper. It’s one where you activate the service you need in real time when you need it.”
Big tech, fintech and consumer organizations are shaping consumers’ expectations of conventional banking relationships. These organizations have been powerful motivators for traditional institutions, proving the art of the possible and pushing the evolution of digital engagement by using data and consumer intelligence to deliver more relevant offers, contextualized products and services, and personalized insights.
With those experiences at the forefront of consumers’ minds, banks must tap into their vast volumes of customer data to deliver differentiated customer journeys and offer experiences that make banking seamless, frictionless, and virtually invisible in customers’ day-to-day lives.
Digital natives as drivers of transformation
Millennials and Gen Z, digital natives since birth, tend to distrust traditional banks given they’ve witnessed big banking’s highly public missteps – think false account openings, unethical lending practices, and the pain of consumer fraud as data breaches regularly make the news. These digital natives now pose a significant challenge to banks as they control hundreds of billions in spending power.
More than 50% of bank customers now use digital channels as their primary banking interactions, and many are shifting away from conventional banking altogether. As organizations like Apple develop technology and products that shift deposits and credit away from traditional banking institutions, the reach of nontraditional fintech continues to expand.
These changes pose significant threats to banks, chipping away at revenue opportunities bit by bit as deposits decline and consumers find alternative solutions for lending, financial planning, and wealth management.
Gaining a competitive edge
To meet consumer demand, halt revenue loss and gain a competitive edge, traditional banks must reimagine and revamp their digital presence, customer journeys, customer experience, products and marketing activities from front to back. Banks must focus on elevating the digital experience by using data to support hyper-personalization at scale and choosing partnerships that help support innovative solutions.
IDC predicts that by 2028, powered by CX and analytics at the edge, real-time sentiment analytics will drive 33% of consumer engagements, delivering 10% growth in customer loyalty and retention for banking firms. Forrester predicts that CMOs will increase digital marketing budgets to more than $146 billion by the end of 2023, and the US financial services industry will spend more on digital marketing than any other industry.
This is a true inflection point in banking. Banks that fail to use their vast data stores and deploy specialized marketing intelligence and transformation platforms to deliver personalized experiences, journeys and recommendations will risk further disintermediation by big tech and consumer platforms. The face of banking as we know it is changing. Investing in technologies that boost efficiency, productivity, security and profitability is essential to long-term survival.
