Benefits of a Customer-Centric Banking Approach

In 2023 also new and upcoming digital technology trends will help improve the overall customer experience of banking. Innovation and reinvention in customer experiences is an important factor that allows prolific business growth. According to McKinsey, providing a strong customer experience through digital transformation can increase the revenue of a company by 20% to 50%. Customer expectations and needs have changed due to the digital customer experience offered by top class companies like Amazon, Uber, and Starbucks which keep customers at the center of their business.

• Digital First Approach for Customer Experience
  Digital technologies such as Machine Learning, Automation, AI, Internet of Things (IoT), and more will play a crucial role in 2023 allowing customers to get what they want, exactly when they need it. These new digital technologies have caused a shift in customer expectations and fostered in them a digital mindset. Such an environment will allow businesses to innovate with new products and services.
   
• Relying on Cloud Technology
  Cloud solutions provide a flexible environment to fulfill customer demands quickly in real time. In 2023 and beyond, you will see more and more companies using cloud-based capabilities to test new projects that are cost-effective and low-risk.
   
• Personalized Experience
  It is all about providing personalized customer experiences after evaluating customer trends and behavior. Going forward, you will see organizations relying on customer relationship management softwares to provide more personalized experiences to their customer since they expect just that. A successful digital transformation involves improving the overall customer journey from beginning to end. Here are some ways by which that businesses can improve customer experience.
   
• Understanding Customer Needs and Expectations  
  Companies need to have a customer-first approach. The goal should be to provide a superior customer experience by understanding the needs and expectations of customers in depth. This is where digital trends and techniques come to play. Customers are the most important part of a business’s digital customer experience. The aim of business should be to provide customers a satisfactory experience to ensure that they promote brand loyalty and recommend the business to others. It becomes the responsibility of the entire organization to work in close collaboration to ensure that digital transformation trends can help to achieve the desired customer results and benefits.
   
• Emotional Engagement with Customers 
  Emotional engagement is important if organizations desire to improve the customer experience they provide. Organizations can attract customers with products and services that have a personal touch, are authentic, and demonstrate social consciousness.
   
• Capturing Feedback from Customers
  Customer feedback is a guiding resource for business growth. Customers care how deeply the organizations try to understand them. By capturing feedback, organizations make customers feel as if they are part of the overall business strategy and help improve customer loyalty in the long run.

Historically, customers had basic expectations such as quality service and fair pricing, but modern customers have much higher expectations such as personalized interactions, proactive services, and connected experiences across different digital channels.

According to the Salesforce report, there are 4 major customer expectations that are changing the way companies work and operate, namely:

• Consistency
  The report revealed that 74% of the customers had to use multiple channels to start and complete a transaction. Thus, 76% of the customers expressed desire to see consistent interactions across departments while 54% of them feel that key departments such as sales, and marketing do not share information.
   
• Personalization
  Almost 52% of the customers expect services and offers to be highly personalized while 66% of the customers expect companies to understand their unique needs and expectations. It is all about personalization at the end of the day.
   
• Go Digital
  Around 88% of the customers expect companies to accelerate their digital initiatives. 
   
• Data Protection
  Around 61% of the customers feel they have lost control over how their personal information is used, revealing a hidden expectation that their data be protected by the banks.

High customer experience and digital transformation are now occurring simultaneously, and companies need to provide exceptional customer experiences if they need to succeed in today’s ever-changing market.

• Customer experience continues to be a main driver when it comes to digital transformation. We live in an environment where customers value the overall experience of buying a product or service more than the product itself. Top companies such as Amazon, and Google have invested heavily in providing top-notch customer experiences that help to minimize the customer’s effort. As part of research by HubSpot, 93% of customers are more likely to buy from a company that offers excellent customer service. 
   
• Digital channels are gaining a lot of popularity when it comes to customer interactions. The prolific use of multiple channels to provide customer service is a new way forward. Gartner predicts that 72% of all customer interactions will be associated with emerging technologies such as mobile applications, smart messaging, and chatbots by 2022.
   
• The use of AI and chatbots will increase in the coming years. Around 88% of the respondents of a study believe that AI and chatbots enhance the overall system capabilities and will not replace customer support agents.

Digital transformation continues to be an important trend in banking. Technology is changing the dynamics of the banking domain in every aspect, for example, the banking operations process. Meanwhile, there has been a change in customer behavior as well. That is why it becomes important for organizations to keep adapting to digital transformation trends to ensure long-term market survival.

Here are some of the reasons why there is a need to keep adapting to digital transformation in the banking sector:

• Traditional banks are at risk of becoming technologically obsolete. With legacy technology systems that are slow and incompatible, there is no other choice left than to innovate and re-invent the technology stack
• Youth who are tech-savvy are those types of bank customers that are attracted to new technology trends and innovations 
• Neo-banks are bringing a new level of technical sophistication, speed, and agility which ensures next-level growth and innovation in years to come. They support open banking solutions using APIs (Application Programming Interfaces).

Over the next 5 to 10 years, technology utilized by the banking industry is expected to be completely different from the existing system. The sooner industry leaders recognize and accept this fact, the faster they can move to execute technology strategies that will help them remain competitive and relevant in this digital world. Investment in a digital transformation, translates to investment in the company’s and employees’ capacity to be competitive and adaptable in today’s financial world.

Digital transformation in banking is not just a small change, it is far beyond just moving from the traditional to a digital world. Digitization in banking starts with understanding customer behavior, preferences, and demands. As a result, there is transformation from a product-centric to a customer-centric approach in banking industry.

Here are the key drivers when it comes to ushering a digital transformation in the banking sector:

• Customer Needs and Expectations
  Why would banks think about migrating to digital platforms? Because this is what their customers demand. The digital approach is all about ensuring that customer needs and expectations are met in the long run. Banks are delivering personalized product experiences, transparency, and security; providing modern solutions, all in a bid to ensure customer satisfaction.
   
• Operational Efficiency
  The banking sector is going through a transformation where different banking operations department models are defined to attain the required operational efficiency. This is done to ensure that a personal touch along with a combination of speed and convenience is delivered as part of the product experience.
   
• Modern Infrastructure
  Achieving digital transformation is not just about the implementation of modern technologies but meeting the infrastructure requirements in the best possible manner. Digital transformation in  banking can be achieved by working on the existing infrastructure that helps facilitate data to the front-end operations; modernizing the legacy infrastructure.
   
• Data-Driven Analysis
  The banking sector is aware of the rich value that customer data offers. This means it becomes important to perform in-depth data analytics practices to closely monitor and analyze different customer trends. This has helped the banking sector produce relevant products and services as per the customer’s needs and expectations. That is why you will see more and more companies relying on data-driven decisions to take more informed business decisions.
   
• Cloud Adoption
  The pandemic forced many banks to take a hard look at their approach to digital transformation and at a cloud-aligned future. Cloud and Software as a Service (SaaS) will continue to change the industry dynamics in the coming years. Cloud offers an opportunity to revolutionize the enterprise by allowing you to seamlessly scale your business operations. This means that you can achieve your digital transformation goals using cloud capabilities.

In the past, many banks used to treat customer experience as more of a compliance that needed to be met rather than an effective tool to drive business growth. This is why banks were unable to serve their customers effectively in real-time and across multiple channels. But today, banks are concerned with a customer’s collective experience across multiple verticals like its online banking systems, emails, call center support, face-to-face interactions, and even social media.

In 2023 what are banking operations without a full-proof customer service plan? You can be a marketplace differentiator only by offering seamless customer experience. Just location, price, or product is no longer a guarantee of success. The banking sector is highly competitive and if the customers feel that the customer experience is below par, they will move to another bank that offers rich a customer experience.

Banks that offer superior customer experience,

• Find it easier to attract new customers
• Find customers more willing to purchase bigger ticket products such as mortgages
• Are very likely to have their customers move all their banking requirements to them

Following are the two major customer-centric approach examples in banking:

• Omnichannel
  Omnichannel approach can help provide a next-level customer experience where it becomes easier to understand customers, their savings, and borrowing habits.
   
• Personalized Banking
  Personalization plays an important role in improving customer engagement, loyalty, trust, and retention. A personalized approach provides relevant, and focused products that meet the customer expectations, which in turn improves the customer experience in the long run.

You can create a personalized customer-centric journey in banking only when you understand what is customer-centric approach and then follow it instead of toeing a product-centric approach. In a customer-centric approach, the focus is on solving business problems and providing value using customized solutions.

You can follow the below steps to create personalized customer-centric journeys that provide delightful end-user experiences:

• Place Your Customer at the Center
  It is challenging to create a competitive edge in a market that is brimming with multiple products and services. This means that you need to listen to customers, respond to them, and ensure their engagement, especially during the early stages. Monetization of any effort too soon in the customer experience journey won’t serve any purpose in the long run. Digital transformation makes it possible to track all the key factors in a personalized customer-centric journey – awareness, leads, referrals, and final purchase.
   
• Map the Customer Journey
  You can use a digital environment to look at the customer journey solely from the customer’s perspective. You need to answer the following set of questions to create a personalized journey experience:
  • Different touchpoints in the customer journey
  • Use of different touchpoints in the entire customer journey
  • Customer expectations and needs
  • Data trends related to customer behaviors and patterns
  • Identification of pain points and how to overcome them
     
• Understanding the Role of the Digital Environment
  Digital transformation is all about transforming the customers and their experiences. We have customer data, but it works in silos across the organization. You can leverage and integrate it for insights and contextual action to create personalized customer-centric journeys.

Banks need to evolve and get better when it comes to learning and implementing new technologies. One way banks can do this is by investing their time and resources to help their employees gain the much-needed knowledge and skill set. This can be done with the help of brilliant online learning platforms such as Careervira which offers learning courses at affordable pricing.

Here are some recommended courses offered at Careervira that help understand the new age banking operations roles and responsibilities, which are changing in real time.

• Digital Banking by One Education
  This self-paced online course allows you to learn the basics related to digital banking. If you are a professional looking to make a promising career in the digital banking space, then this course will help you to get started. The course content is clear and crisp as it is broken down into different modules for better understanding. There are no prerequisites required, as you just need the right learning attitude and willingness to learn.
   
• Manage Cyber Threat for Finance Professionals by edX
  There is a growing need to be aware of the cyber threats and other challenges faced by financial and banking institutions. This course helps you in doing just that. All finance professionals, business leaders, or even accountants can leverage this online course to build solid strategies around access control and risk management, which is integral for business growth.
   
• Professional Certificate in Digital Transformation as a Business And Innovation Strategy by edX
  Digital transformation is changing the way banks work and operate. It is all about addressing unique customer needs and providing them with personalized solutions. This course helps you to understand the real-world challenges when it comes to digital transformation and how you can transform your business to attain much-needed growth. If you are a professional in engineering, computer systems, or business then this course will be a true value add.
   
• Customer Analytics by Coursera
  Ability to analyze customer data and trends is an important skill for professionals in the finance sector. This course provides you with valuable insights, allowing you to make the right business decisions. The concepts related to predictive analytics, descriptive analytics, and prescriptive analytics are covered in this course.
   
• Careers in Commercial Banking by CFI
  It is important to evaluate your career growth, especially when you are working in the commercial banking domain. This course provides you with a better understanding of how commercial banks operate and how you can develop the right skills to excel. You can feel more confident about your commercial banking recruitment process by doing this course.

In recent years, financial institutions have started to realign their priorities toward digitization because it helps them

• Create personalized banking experiences by integrating user experience across the entire customer journey to offer more integrated experiences for all customers
• Use customer data and evaluate different data trends to improve overall customer experience across various banking services
• Digital automation service across enterprise applications and infrastructure landscape

Companies need to realize how customer expectations have evolved in the digital transformation, and why they require a new approach. Customers enjoy personalized journeys, and this can be made possible through digital transformation. Companies now interact with customers using multiple channels for a better digital experience. The new digital channels should be clearly explained to users. If your company now uses an app along with a website, make sure its usage does not interfere with each other.

The expectation from digital transformation is to provide a relevant customer journey. You do not want to overload your customers with unnecessary features, content, information, and apps. You should pay close attention to what channel the customer comes from, what resources they have viewed, and what information they are trying to seek. This way you can construct a journey as per their needs and expectations.

You also want your customers to have a seamless onboarding experience using digital transformation as a powerful tool. You can use on-screen guides that help users to navigate through different tasks within your software with interactive step-by-step instructions.

You can reduce the customer experience gap by following these examples of excellent customer service in banking:

• Offer Solution to Customer Problem Instead of a Feature
  It is all about providing quality solutions rather than providing feature-rich platforms. Customers demand a solution for a specific problem. They do not want to invest their time going through a large set of features that add no value at all. You can reduce the customer experience gap by providing a ready solution that is useful and accessible.
   
• Building Emotional Connect with Customers 
  There is an overload of information in the banking domain which tends to create a gap between the customers and the financial brand. To succeed in this new digital era, it is important to build long-lasting and emotional relationships with customers so that it helps to reduce the customer experience gap in the long run. You can make a difference by connecting with customers through emotions, not with annoying ads and product descriptions. Emotions allow you to bring your product closer to the customers.
   
• Disruption of Technology Space
  Traditional banks which are focused on protecting their legacy and maintaining their old brand value, are finding the transition to new technology slow and painful. But the ones with disruptive culture are embracing digital transformation and focusing on customer experience and are leading the way when it comes to growth and innovation.
   
• Transform Fragmented Experiences into Smooth Ones 
  Digital transformation helps to improve employee productivity and customer satisfaction by replacing complexity and service fragmentation with a holistic solution that meets customer needs across the whole customer journey. It depends primarily on the customers that are driving the business needs forward. Digital transformation is pointless if it does not transform the end-user experience. To stay competitive, companies need to identify and bridge the gaps that are impacting the customer experience.

As per the report by MarketsAndMarkets, the global digital banking platform market size is expected to grow from $8.2 billion in 2021 to $13.9 billion in 2026 at a CAGR of 11.3%. This expansion is due to an increase in demand for quality customer experience and the adoption of cloud-based technologies. Understanding customer-centric approach meaning has brought digital transformation. Examples of these are online banking applications, data encryption software, virtual assistants, etc.

The image below shows the significance of digital transformation to a customer banking journey:   

Digital transformation provides the following benefits:

• Improvement in the overall work efficiency
• Generation of more growth opportunities
• Seamless convenience with different banking tasks
• Top-notch end-user experience
• Improvements in sales and revenue which is great for business growth in the long run

Digital transformation brings about a fundamental change in the way a business operates. It enables businesses to modernize legacy processes, accelerate efficient workflows, strengthen security, and increase profitability.

Here are some of the benefits of digital transformation:

• Increased Agility
  Digital transformation makes organizations and their associated members more agile. Businesses can increase their agility with digital transformation to improve speed-to-market and adopt Continuous Improvement (CI) strategies. Customers can innovate and adapt quickly getting better in the long run.
   
• Improved Productivity
  It is all about having the right set of tools and processes to streamline your existing workflows and processes. By automating your manual tasks and performing smart data integrations, customers can achieve effective outcomes which are great for business growth.
   
• Encourages Digital Culture
  Digital transformation promotes a digital culture that is perfect for customers and external stakeholders. With this modernized approach, you can make businesses remain sustainable and help customers achieve desired results.
   
• Smart Decision Making
  Digital transformation is the key to unlocking valuable insights for your business. You can take smarter and more informed business decisions allowing you to create an efficient business strategy to drive customer growth.

We discussed the top benefits of digital transformation that help the customers with desired results, but it is all about implementing a long-term strategy taking into consideration the past and current company positioning in the market. You can then plan your long-term growth strategies that are best suited for your customers.