How Technology Is Driving Digital Change In The Banking Industry

We’ve seen significant changes to the way consumers go about their day-to-day lives in recent years, with technology being one of, if not the, key driver behind this. Consumers are now demanding things on their own terms – connecting to what they want, when and where they want it; all of which creates new and challenging expectations when it comes to service consumption.

The banking sector is not exempt from these new expectations, as all sorts of financial institutions are now having to react and change how they view their relationship with both technology and consumers.
Banks have been striving to improve customer relationships for several years, having naturally fell out of favour with customers in the aftermath of the global economic crisis. In 2015, truly connecting with customers and making their transactions more convenient is still an aspect of customer service that financial institutions can struggle with.

According to KPMG’s latest annual bank benchmarking report, issued in April 2015, it is in the best interests of banks to focus on connecting with customers. The report reveals that banking profits have still not recovered to levels seen prior to 2008, and that customer relationships, and elements around trust, are major profit drivers across the industry. This link to profit means an enhancement of the customer relationship is also of the utmost importance to shareholders.

The report is a clear indication that work needs to be done when it comes to boosting customer engagement – work that can be done by adopting new technologies that support the delivery of digital services.

Not only will this create happier customers, but banks will also achieve a healthier bottom line.   However, although providing customers with more value is essential to success, it must not be done at the expense of security, which needs to remain paramount.

Modernising bank services for the 21^st century customer

The retail experience is now much more diverse than it was 10 or even five years ago. As consumers now compare their experience with banks to that of other large retailers, such as that on offer from an Amazon or Starbucks, we must ask how banks will react to this and what the future of banking services will look like.

There is a great opportunity for banks to learn from the retail industry, which is showing how technology can both enhances the customer experience and reduce overheads. As the digital landscape started to progress, so did consumers expectations, needs and habits. Retailers responded to customers evolving needs, and it is clear to banks that this is a lead they should follow. However, once this revolution has started, the end goal should be for banks to eventually be pioneers in both customer experience and innovation.

A customer centric approach is key

It doesn’t matter if a customer is new to the bank or if the relationship has lasted 20 years – adopting a customer centric approach to the design, offering and implementation of new digital services will always be vital.

A fresh and unique touch-point is created every time a new service is offered, producing the opportunity to further develop, enhance or even redefine the existing relationship. So regardless of who the customer is, every element of contact with them starting from the initial acquisition of the account, to then offering new online and offline banking services, must be treated with the same amount of value.

Once the customer actually opens a new account, their attention will generally turn to payment options. They will want to make payments quickly and easily with the flexibility to use their preferred payment method. This might be a simple option, such as a credit or debit card, or go beyond this to the likes of smartphones, wristbands or stickers. Whichever options is preferred, the ability of a bank to issue payment credentials quickly across multiple devices, online and in proximity, is crucial.

These new, all-encompassing payment methods offer an attractive value proposition for banks, but they also have to accept some responsibility. Working with retailers to ensure new payment methods can be delivered conveniently and securely to consumers is an ongoing challenge, but one that can be overcome.

Developing the customer relationship

Retention is just as important to banks as recruiting new customers – ensuring their existing customers are happy with the service and always feels completely safe and secure in their banking activities. Whether relating to direct communication, data exchanges or payments, security will always be a key issue for consumers. One bad experience can be disastrous, resulting in the permanent breakdown in a customer relationship.

Being able to guarantee the confidentiality and integrity of customer data stored, transferred or exchanged in the digital banking ecosystem will always be of the utmost importance. As traditional in-branch banking services lose ground to new online banking services, creating an increasing need to authenticate users online, the need for security is only going to multiply as customer data becomes ever closer to the threats that exist in the online world.

Embrace the change

It’s evident that banks are still recovering from the global banking crisis, both financially and in terms of their relationship with customers. However, by fixing the latter, they can address the former, and new technologies are key to this.

Digital technology has already transformed how businesses interact with customers and is now revolutionising how banks serve and interact with theirs. However, this ‘new way to bank’ not only requires a change in process, but also a change in culture from banks and customers alike. Banks can’t revolutionise customer service overnight, but they can push it in the right direction.

By utilising innovative technology, banks can do more to service shareholders and customers, as the two are intertwined. In the long run all parties will benefit – but only if the customer user experience and security remain front of mind.

Howard Berg is senior vice president at Gemalto

All clued up on mobile payments? Try our quiz!