Personal banking has always centered around convenience. Pre-Internet, proximity was the main factor by which individuals chose which financial institution to trust with their money. Drive-up tellers, ATMs, phone banking—even early online and mobile apps—were all positioned around the branch. Today, convenience means frictionless experiences from wherever the user pleases. This isn’t unique to banking: Consumers are demanding a digital, user-centered experience in all areas of their life. And as the non-banking world continues to redefine the customer experience, financial institutions must integrate these principles into modern banking practices to stay relevant. Let’s take a look at how to accomplish this feat.
Reduce customer friction.
Customer friction is anything that prevents your customers from doing what they want to do—which should also be what you want them to do. When there’s friction, customers may be driven to seek goods or services elsewhere. And when there isn’t, your customer may see you in a better light.
Common sources of customer friction include:
- Poor website quality
- Underdeveloped mobile applications
- Forced non-digital actions
- Long wait time on services
- Slow (and/or expensive) delivery fees
- Limited business hours
However, providing good customer service isn’t enough to overcome friction. In research conducted by the Harvard Business Review, it was determined that exceeding expectations with customer service when an issue arises is not as good as simply meeting their needs in the first place. The real necessity is preventing the issue and providing a customer-focused, effortless, and convenient experience.
How to Start: Identify Customer Friction
- Put yourself in the mind of your customer and walk through your own conversion funnel user experience.
- List anything that causes friction.
- Dig deep into your customers’ experience by talking with stakeholders, interviewing and/or surveying your customers and analyzing your website metrics.
Now take a look at your competitors and ask the same questions. How does their conversion process compare to yours? Your customers want something from you, or they wouldn’t be there in the first place. By giving them what they want as friction-free as possible, you will outperform your competition who does not solve their friction. The quicker, simpler connection between the customer and what they want wins.
As financial institutions face new competition in fintech, creating a frictionless experience for customers only becomes more essential for longevity, increasing conversions, and building brand loyalty.
Develop personalized digital solutions.
As consumers continue to interact with user-centered brands, they demand more of their financial institutions. In order to rise to occasion, banks must be flexible, allowing for digital or non-digital channels, and innovative: leading the development of scalable personalization.
How to Start: Consider Value Opportunities
Consider value opportunities in your digital experience. Beyond the mobile app, how can your website or other digital platforms provide unique, innovative value? How do you as an FI plan to reach individuals with a low interest in banking, but a high interest in financial health? And are you reaching your customers on a personal level?
Countless B2C brands are creating customer-focused experiences, a practice that keeps users happy and loyal. Spotify creates custom music recommendations, Stitch Fix pairs each user with a personal stylist, and Netflix harnesses user behavior for recommendations.
So how can FIs replicate this scenario? McKinsey Digital points to “financial supermarkets”, a platform by which banks provide personalized, data-driven suggestions to customers. By creating a “curated and vetted mix of internal and third-party offerings,” banks can effectively scale the personal financial planner model—with some added benefits.
Several financial institutions and services have already taken strides in the digital revolution: Charles Schwab leverages data, Huntington National Bank listens to its customers, and Discover combines AI with human interaction.
Evolve your branches—and your personnel model.
Enhance your value proposition through connections that can’t currently happen digitally while providing easier access to everyday services.
Financial institutions must evolve their branches in order to enhance their value propositions through connections that can’t happen digitally (such as account services, new account openings). This will mean a smaller retail footprint with a focus on providing personal financial advice.
How to Start: Get Personal With Your Customers
Not only are face-to-face customer interactions dwindling, but when they do happen, they will be for increasingly complex reasons. This complexity will means that although branch visits are less frequent, these connections will be even more influential in building a human relationship with customers.
Tellers can come out from behind the walk-up counter to interact with customers, point them in the right direction for help (and therefore, prevent the dreaded line waiting), or even solve their needs directly.
Many banks are questioning how else they can be customer-focused in the personal finance realm. Capital One, for example, took the step of creating a coffee shop-like experience to complement the financial services.
As the marketplace continues to digitize, financial institutions must digitize with it. Our advice? Put the customer first at all times. Identify friction, consider value opportunities, and get personal with your customers.
Are you implementing digital strategies already? We'd love to hear about your journey.