Today’s customers expect modern & personalized interaction with financial institutions. Banking and Insurance industry is going through an unprecedented opportunity to change their business models, products and overall branding. These opportunities are mainly driven by the increased expectations of customer experience. This post is focused on three strategies that banks can adopt in 2017 to stay relevant to their customers. These have been derived from the industry patterns being noted in the FinTech industry in recent times.
Current situation at Banks
You must have heard one of these recently?
- ” Things that used to work in past to attract more customers (business) aren’t that effective anymore? “
- ” Customers don’t look at just interest rates to decide if they want to Bank with us. “
- ” We need changes to core banking system to introduce some of these products and we are only few months away from getting the updates. “
This is a very typical landscape that banks and smaller credit unions operate in 2016 – 2017.
Three strategies for success
With the changing markets and customer demands here are three strategies banks can invest in 2017 to stay competitive.
Today’s customers (mainly millennials) don’t have any idea about how complex banking business is. All that compliance, security, legal and regulatory requirements mixed with legacy systems are very overwhelming when someone wants to introduce a change.
The fact is – customers don’t give a f**k. Your customers want an easy, mobile friendly and very targeted interaction with banks when they want to apply for credit card, their first home loan or to open a business account for their first business etc.
IT teams at banks need to put customer first in anything they touch. It includes new software, changes to existing business processes, communications, copy (text) and even smallest things like error messages and simplified language over the phone.
I call this Un-Banking. Bankers need to unlearn the banking practices to refine the products, services and internal processes to create more productive business. These new practices need to be tailored to customers’ need while they are on mobile devices, have short attention span and are very used to instant gratification.
Example: N26 (Banking by design)
A great example of this is N26 (Banking by design). A German bank which has mobile first experience, can give you a new account in 8 minutes and leverages FinTech startups/services on an unprecedented level. Here are some more interesting reads:
- Co-founder and CEO – Valentin Stalf’s Business Insider interview.
- Techcrunch Article – Number26 Is A Bank Designed For The 21st Century
“Act of behaving like an entrepreneur while working within a large organization.”
Creating a culture where employees feel empowered to explore new ways to do the same old work is crucial. Creative minds who focus on the outcome first, and then drive the delivery of the new solution will innovate more than others. Compared to a brand new business and entrepreneurship the mindset of Intrapreneur works a little differently. He/She still has to work within the large organisation boundaries but this type of individuals will always find a way to promote and deliver the innovation for the outcome he is after.
One of the way to start this is to bring together very selected individuals with following roles. Give them a problem and task them to create an ideal concept solution without worrying about existing constraints such as system limitations, current business processes or change management issues.
- User Experience Designer (so he can design ideal customer experience)
- Business (Process) Analyst (so he can put together a reasonable end to end execution model)
- Product Manager or SME (so the team can build a real product with real benefits to customer)
- Tech Lead, Architect or someone who knows about existing systems (so technology can be used in a meaningful way)
- Business Manager (so someone can actually sponsor a short spike to prove the value)
3. Adopt cloud technologies
Banking industry is very well known for buying costly hardware and software products. Long release cycles and customization to the Nth degree of software products have been a very costly and risky affair since early days of IT departments at Banks.
FintTech startups & cloud based services are changing the way software is built and delivered. When business finds a new opportunity in market to acquire more customers or service the existing customers better, its usually a missed opportunity if changes to the processes or software requires months.
Systems like Document Management Systems, Web Content Management and Analytics platforms have given some control back to the business by decoupling from IT departments. BUT some of the new services fueled by cloud based offering will get businesses even more flexibility in terms of responding to the opportunities.
Large organisations are already using the private and public infrastructure services such as Amazon Web Services (AWS) and Azure but there are tons of other Software-As-Service (SaaS) offerings to add value to your platforms. These niche enterprise grade services have solved problems already and are very easy and inexpensive to integrate with. Selecting the right vendor according to the local market needs and using them with the existing online channels will expedite the rate of innovation and add to a great customer experience.
Cloud services to look for:
- Online ID verification
- Customer on-boarding and servicing platforms
- Address lookup
- Phone and Email verification service
- Online fraud detection and prevention service
- SMS and Email gateways
- Social & Online conversation services
Ultimately, the millennials (aged between 23 to 35 in 2017) will be looking for their first or second property purchase this year. This generation has grown up with technology led innovation. Mobile phones, App stores, instant gratification and world-class customer experience is what they consider a norm. The opportunities are endless for the financial institutions who starts or matures its service delivery to meet the expectations from millennial generation.