What can banks do to remain competitive and grow while navigating this current turbulent landscape?
Banks need to embrace and accelerate their digital transformation initiatives and focus on customer centricity to survive and thrive during these unprecedented times. Many banks recognized this was necessary even before the pandemic, but the pandemic and corresponding market volatility have created a new sense of urgency, and an understanding that we cannot simply revert to our previous “normal.” And while several banks have tried to accommodate customers in the short-term with incentives like deferred interest, waived or overdraft fees or credit card and mortgage assistance, these measures will not be what drives growth, profitability or most importantly, customer loyalty.
Increasing market pressure and changing customer sentiment are forcing banks to reimagine how they can extend their value proposition beyond core offerings. They realize they must deliver more hyper-personalized services, enhanced transparency and holistic capabilities to add measurable value across each step of the customer journey and offer a new level of customer engagement and fresh kinds of digital banking services. That can only happen if banks rethink their core technology, foster strong partner networks and understand the true meaning of digital transformation, all while placing empathy and agility at the heart of their strategy to humanize the banking experience.
To become truly customer-centric, deliver exceptional service and continue to grow, banks must embrace both offline and online models. Physical bank branches will continue to play a pivotal role for many consumers and will remain an important vehicle for banks to not just attract new customers and retain existing ones but to engage more deeply with them. Bank branches will become experience centres like Apple stores, offering a place for customers to explore products and services and solve more complicated banking problems. Customers want to have access to this type of physical experience centre – and then have the ability to perform their banking functions and transactions digitally, whether it be mobile, app or web-based. Delivering this new level of personalized customer offerings will require banks to embrace a new way of thinking that enables them to reevaluate their holistic systems, processes, data and people.
How can banks make sure that their digital transformation strategy will drive customer loyalty and trust?
Customer loyalty is currently fragile, which means customer retention and trust are critical to any digital transformation initiative. This gives banks a unique opportunity to provide value-based engagement and hyper-personalized services to empower their customers, help meet their short and long-term needs, and build and retain their loyalty and trust.
Banks can kick-start their transformation journey by simplifying complex operations and infrastructure, embracing intelligent technology and partners to create the right service bundles for their customers, and understanding how to leverage customer data to offer service-first models. They can start with a fairly low-risk method that allows them to leverage their existing infrastructure rather than overhauling their entire system and adopt a digital core. That will allow them to hollow out customer engagement functions from the core system and managing it as a horizontal cross-enterprise layer. They can then quickly deploy new technologies and add functionality that delivers the customized products and integrated services that customers really need.
As the banking experience evolves from product-based to customer-based, banks must identify new ways to design and deliver the hyper-personalization services that customers expect. This is especially true for younger audiences like millennials, who grew up on today’s technology and expect a seamless digital experience. By making smart use of customer data to uncover the context behind banking transactions, banks can understand their customers’ ultimate goals and add value to every interaction, presenting offers and opportunities in real-time that are catered to different audiences and ultimately deliver a superior customer experience.
What do you think the future holds for traditional banks and fintechs, in terms of what they can offer to customers? Do you anticipate increased collaborations within the ecosystem (i.e. between banks and fintechs)?
Fintechs have successfully encroached on traditional banks because they have prioritized the user experience and customer journey. This has enabled them to rapidly grow their customer base and grab increased market share from banks and other traditional financial services providers. Banks can learn from how fintechs have focused on service-first models that engender customer loyalty and trust, and how fintechs view and use data to deliver a transparent, customized client experience vs. a traditional product.
The rise of fintechs and other challengers is forcing banks to recast their strategies and roadmaps, which is a positive change. Banks now realize they need to better leverage their existing assets to re-focus on customer-centricity, deliver value-add products and services and own the customer value chain. This means delivering a model that includes both physical branch banking and digital banking services. Banks are well-positioned to do this; they already possess a great deal of intelligence on their customers, tested ways to interact with them, and the ability to compile and analyze customer insights. If they can intelligently invest in the right technology, partners and resources to customize their offerings, banks have the power to enable truly empathetic and humanized banking and offer a new level of customer experience.
With the rise of Open Banking and an API driven ecosystem, there are also significant opportunities for banks to increasingly collaborate with fintechs, independent developers and non-financial lifestyle institutions. This will allow them to offer holistic physical and digital services that directly impact the customer lifecycle and ultimately make Banking as a Service (BaaS) a reality sooner rather than later.
What trends do you think we’ll see in a COVID-19 shaped banking world in the next 12-18 months?
The only thing the banking industry can be certain of in this COVID-19 environment is more uncertainty. The time is now for banks to future proof to ensure they can quickly adapt to changing market conditions, new customer requirements and continued disruption. And while the current difficulties facing banks and the broader industry are very real, they can also serve as a catalyst to accelerate long-overdue initiatives.
In the next year we will see more banks look to modernize their legacy technology systems, focus on flexibility and scale, and accelerate their digital transformation initiatives. They’ll begin to embrace customer data to ensure their offerings add real value to the customer journey, deliver hyper-personalized services, and allow them to quickly respond to consumers’ evolving needs. Increased competition from fintechs and the Big Tech companies such as Google, Amazon, Facebook and Apple will force banks to shift from product-based offerings to experience-based and service-first models. This will enable them to focus on customer-centricity and truly own the customer value chain. And the value of connecting with third parties becomes more clear, the move towards Banking as a Service (BaaS) will accelerate and become a priority, allowing banks to rapidly innovate and expand their product and service offerings through a collaborative partner ecosystem.
The banks that emerge stronger post-pandemic will be those that deploy technology innovation to deliver on customers’ expectations, control costs and differentiate themselves from competitors. If they can focus on these critical areas during these challenging times, they can transform themselves to become an agile, customer-first organization that builds, retains – and mostly importantly deserves – customer trust and loyalty.
This article was originally published in The Fintech Times, Read More – https://thefintechtimes.com/qa-with-nanda-kumar-ceo-of-suntec/
“The views or opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of SunTec’’.