In 1995, when Jeff Bezos founded Amazon, his mission was to be “the most customer-centric company on earth.” As CEO, Bezos left one empty chair at the table during the meetings – a symbolic gesture to say that customer is always the most important person in the room. He went on to say that innovative companies must “listen to the customer and invent the customer”.
This is even more important today. Fast and simple digital experiences have become the norm for consumers throughout their lives. And it has also become a key issue in banking.
About the author
Alexa Guenoun is Chief Operating Officer Temenos.
It is a difficult environment for banks to face disruptions due to increasing regulatory pressure, new entrants and profitability challenges. The pandemic has hit the digital fast forward button. And as big technology becomes more involved in the sector – banks are under more pressure to increase their digital offerings. Banks recognize this trend. A recent Temenos report in collaboration with the Economist Intelligence Unit (EIU) found that 31% of bank executives expect large technology to become key competitors over the next five years, and 66% thought new technologies will change their industry over the same period.
The good news for banks is that banks still have a significant competitive advantage. They have strong customer relationships and trust. More rich information in addition to the well-established capital and compliance of banks, these relationships make it clear that banks are still in a good position to succeed. However, for the digital age to succeed, banks must use sophisticated banking technology. By doing so, they can fit seamlessly and intuitively customer experiences offers big technology while maximizing the areas where they have a natural advantage. Companies like Amazon are constantly evolving to meet customer expectations and requirements. How else would a company move from selling books to providing Amazon online services?
A new digital era for banking ecosystems
To improve their customer experience, banks need to change their business model. Banks can no longer go it alone. They need to create agile digital ecosystems and leverage their scale and existing commercial relationships to gain a whole new customer experience.
For example, Partners Federal Credit Union – which serves the Walt Disney Company – used an ecosystem approach to reflect the “magical experiences” created every day for Disney members. The partners developed a new mobile phone application, which redefined the digital relationship with its members. application offers banking services and “Partner Perks” services such as coupons for local and national merchants, a built-in feedback feature and new features such as mobile bill money transfer. It is noteworthy that partners ’remote deposits have increased by 20 percent and 64 percent since launching the app mobile phone payments.
The customer first mentality means that financial institutions need to think ruthlessly about the customer and facilitate their position. Since smartphones are vital, so convenience means mobile devices first – and solutions should be designed for mobile devices and scaled to the desktop.
Banks are unable to create seamless and intuitive customer experiences from legacy technology. It requires advanced digital banking solutions. Take, for example, application programming interfaces (APIs) that allow banks to separate their customer experience from the manufacture of products and services. APIs allow banks to connect financial and other service ecosystems by putting themselves in the middle. For years, banks have been using service providers’ APIs to detect, for example, KYC, payments and fraud. But when a bank uses APIs, it can be a game changer – allowing the bank’s products and services to be embedded in other experiences.
Cloud computing is another advanced technology that can provide a great customer experience in banking. It offers more speed, agility and innovation. Crucially, cloud technology creates a highly efficient cost model where savings can be passed on to the customer. Banks like Flowe in Italy use this efficiency to help customers create a sustainable economic lifestyle and combat climate change. Passing on cost benefits to end users has been a driver of customer loyalty and satisfaction for companies like Amazon for many years.
Finally, artificial intelligence allows banks to analyze large amounts of data. This provides learning that will allow them to continually improve and develop customer service. When HSBC North America launched a credit card offering, analysis tools showed that a particular input box resulted in a significant number of rejected applications. With this learning, the bank was able to quickly improve the customer experience and increase the completion rate.
Maintaining the interest of trust
Trust is more valuable in today’s world than ever before. It is the most valuable asset of banks and they must maintain and expand it whenever possible. In a world of customer experience, banks can do this by combining technology with human contact, which has been key to building these trusting relationships.
Banks can also help increase confidence in their technology-driven customer experiences by ensuring that artificial intelligence is explainable. Big tech uses machine algorithms all the time – as recommended by the next movies to watch on Netflix. But decisions about loans and mortgages can change lives – and customers want to understand why they have been rejected. Explained artificial intelligence (XAI) can clearly show why a negative decision was made, offering customers remedial action. Clarity also allows programmers to combine the inherent effectiveness of artificial intelligence with a human perspective – providing a better customer experience.
Like so many industries before, digital technology has given banks the option to “fight or escape”. Whether they are fighting for their customer relationships or withdrawing as service providers. The transformative power of banking technology and its inherent competitive advantages gives the bank opportunities to fight. But time is of the essence. Stay put and they will be left behind.