Spoiled for choice, retail banking customers no longer value the same solutions they did as little as a decade ago. The rapid growth of technology innovation has ushered in a new era of ease and convenience across every industry, and banks are no exception. Never particularly known for prioritizing technology, banks are now discovering that should they fail to innovate, they risk losing customers to a competitor who’s invested in ensuring that their digital products operate at the razor’s edge of technical capability.
Research has shown that a delay in tech adoption impacts the retention of younger customers the most. A 2016 study by bespoke software development house Digital Scientists, found that nearly 60% of individuals who switched banks were between the ages of 18 and 34. It’s a rapidly growing market segment that’s setting the trend for those that follow, and their departure has been enough to frighten many financial institutions into action. Banks are now committing considerable resources to the development and maintenance of the digital products and services their customers demand. Whether or not they’ve acted soon enough to save their market share remains to be seen.
Here’s what today’s retail banking providers are doing to ensure they don’t fall behind.
Sleek Mobile Apps
According to the Consumers and Mobile Financial Services report, 43% of all consumers who own a mobile phone and had a bank account made use of a mobile banking app. This number continues to increase as the new wave of consumers comes of age and enter their prime spending years. As they do, banks are quickly learning that design matters. Financial institutions are investing in clean, user-friendly mobile experiences that are held to the same design-standards as the other apps their customers use daily, and with good reason.
Downloading a bank’s app gives users a risk-free trial of what they can expect day-to-day banking to look and feel like, while simultaneously improving customer satisfaction and increasing loyalty. A study by J.D. Power on U.S. Retail Banking Satisfaction suggested that there is a direct correlation between consumers being able to utilize a mobile banking platform and increased satisfaction. From there, it’s a short distance to ROI, as satisfied consumers are more likely to continue using the platform and recommend it to others.
Rapid Customer Service
Now more than ever, time is money. Gone are the days when the personal touch of a face-to-face meeting or phone call resonated with consumers. Data accumulated by CEB Global suggests that modern customer service interactions are actually four times more likely to result in frustration, ultimately leading to disloyalty and churn. To create an experience that today’s consumers will truly value, today’s bankers need to keep it quick and easy.
Customers want their time to be highly valued when dealing with customer service departments, and human interactions can be painfully slow, especially in high volumes. Regularly updating an app or online wiki page helps consumers answer their own questions. Real-time chat windows with bank representatives have also been very effective and can, in many cases, be more cost-effective given that a single representative can manage several chat windows simultaneously.
Loyalty Through Wallet Apps
Today, banks are struggling to find meaningful ways of encouraging consumers to spend money using their traditional convenience cards. They expect to be rewarded, and even earning small percentages of their money back is no longer cutting it. Incentive programs that let consumers redeem points for products and services they value have been proven to be successful. Letting the consumer manage this themselves is ideal, especially when it’s handled through a single interface. According to a study by Amdoc, 61% of consumers want to be able to manage their own rewards system through a mobile wallet app, yet only 21% of financial institutions offer this functionality.
Automated Savings
Saving money can be a challenge for any consumer. With online spending at their fingertips, many struggle to find a happy medium between frivolous spending and saving for investments or retirement. “When that money is moved before you can touch it, that’s when real wealth is built,” financial author David Bach explains. New companies have emerged to meet this demand by helping modern spenders pay themselves before paying everyone else. Mobile apps like Digit and Rize have grown in popularity as consumers look for budgeting help. As these sorts of automated saving services become more common, banks would be well served to incorporate this technology into their offering.
Cryptocurrency
Shadowy figures would have you believe that cryptocurrency is far too difficult for the average consumer to understand. This simply isn’t the case. Data collected by a research study from the University of Cambridge shows that the total cryptocurrency market capitalization has increased more than threefold since 2016 and reached an excess of $25 billion by March of 2017. Customers are more tech savvy than ever, and the benefits of blockchain technology should remain top-of-mind for banking providers. As cryptocurrency becomes more prevalent in the way we exchange goods and services, major financial institutions will need to keep up or risk being made obsolete.
Unless banks start putting technology first, they’ll always be playing a game of catch-up with the ever-changing needs of the modern market. Technological advancements make it easier to stay in tune with customers while simultaneously presenting new challenges. Taking advantage of mobile platforms and offering a wide variety of services will be crucial. The banks that offer an easy, fast, and user-friendly experience are poised to succeed in the coming years.