With the advent of smartphones and mobile devices occurring over the last few years, the world around us continues to transform from “brick and mortar” to “online”. The web in 2018 will account for 11 percent of total retail sales, up from 8 percent in 2013, according to a new Forrester Research e-retail forecast. People are not just buying clothes, electronics and plane tickets online, they are now buying everyday necessities such as groceries and other every day goods. This cultural shift spans across the demographic spectrum from millennials and Gen-Xrs to Baby Boomers.
With such a cultural change sweeping their buying habits, people also expect to complete all banking needs online too. In fact, more than half of banks worldwide (60 percent) will process the majority of their transactions in the cloud as early as this year, according to Gartner. With rapid changes in technology landscape, cultural change in people’s buying behavior, new regulatory requirements, and rising customer expectations across all channels, banks will need to adapt and innovate at a very rapid pace to stay competitive and provide a premium banking experience that the customers demand.
Meeting Customer Expectations
Bank of America’s Mobility Trend Survey for 2016 shows that sixty-two percent of respondents use mobile or online as their preferred method of banking. 54 percent of consumers also say they are active users of a mobile banking app, up from 48 percent last year. And those that want to bank online or through mobile apps span all ages – with millennials and baby boomers leading the charge for this trend. In fact, what once was the hallmark of the banking industry – the community bank with a home-grown bank president who participated in local charities and worked closely with customers – is giving way to a new concept of banking in which automation and customer expectations call the shots.
"Banks should open their arms to the online world, where new interactive features will become an integral part of their business"
Automation is good news for customers, as it means increased convenience and mobility as well as lower prices and fees – and overall a better customer experience. However, a great customer experience through automation must be planned, designed and actively managed. As banks move to more mobile experiences, customers will demand to have a consistent experience that adapts across all channels and is personalized to their interests. These expectations will require understanding of the individual customers and their behavior patterns to create a 360 degree profile of the customer.
Of course, banks may see this new environment as a complete overhaul of their growth structure, but that does not have to be the case. Just as traditional organic growth occurred when a father opened his son’s checking account, organic growth through small-town community can now come to fruition through an online community.
These days, the online generation cares just as much about word-of-mouth recommendations as the community did years ago, except now the community is online. On top of that, this new community is global and available 24/7.
This shift in community is a huge opportunity for banks, as millennials represent the next generation of growing families who will need mortgage loans, car loans, and long term savings and investments. These millennials now look to their phones and websites between meetings to guide their decision on where to develop a good relationship with a bank. Banks can use this to their advantage by having quick and capable apps on mobile devices that advance in step change fashion with new technology. The advent of automation technology such as robotic advisors and digital assistants are the other 2 trends that will help banks provide a highly personalized, consistent and ubiquitous experience to their customers.
Providing Convenience for Customers
Today, the relationship between a bank and a customer is based on different priorities than before: convenience, mobile accessibility and customer experience are the deciding factors in winning their business. To reach this new generation, banks should focus on what they have been doing for years: growing customer loyalty but with a digital twist. Guides to help assist customers apply for loans, check their account or execute money transfers through self-service portals, without the need for a bank visit, will attract customers like a magnet, keeping speed and value top of mind. The ability to transfer money and deposit checks digitally by the click of a button has become minimum expectations from banking websites and apps.
Going forward banks will further need to customize the experience by using predictive analytics to understand customer behaviors and then preemptively offer tailored services mirroring customer preferences. This leads to fast, satisfying transactions for customers, while simultaneously encouraging organic growth for the bank itself.
In addition, banks can seal the deal with millennials by engaging with them over social media. The new medium to word-of-mouth reputation building is through the two-way communication of social media. Better than over a meal, these conversations can take place in public on a company-owned social media page. The bank can now proactively insert itself into ongoing public conversations to educate the general public on financial literacy, savings plans or mortgages. The public nature of social media can allow a bank to curb angry patrons, take on great recommendations or even stay in touch with their customers.
What Can Banks Do?
Banks should open their arms to the online world, where new interactive features will become an integral part of their business. Interactive features, quick follow-ups to customer concerns, and overall customer care will help customers feel appreciated even when they are not face-to-face.
New customers bank from their desk, couch and car. They conveniently manage all their finances and look to online reviews to make the majority of their decisions. If a bank can conform to customer needs, such as around-the-clock customer service, they will overshoot their competitors. It’s no secret that a working person now needs more hours in the day to contact their bank. Customers are looking for banks to be more than just a place to deposit money. Rather, banks must be strategic consultants for their customers.
The chore of taking time off, driving to a bank, and waiting in line is the last thing millennials need. Customers would much rather get their small-town bank experience with advanced capabilities in the comfort of their living rooms.