Digital Transformation is a hot topic for Retail Banks faced with a rapidly changing competitive environment. Digital disruption and innovation is coming from multiple directions, including fintech ventures that can bypass legacy constraints to build customer centric banking solutions, to existential threats (because they can’t be acquired) from giant non-direct competitors, most notably Amazon.
By 2021, there will be 3 billion global users with access to retail banking services through smartphones, tablets, PCs and smartwatches. Against this backdrop, major incumbent retail banks like Banco Santander, Bank of America, Barclays, BBVA, BNP Paribas, Citi, HSBC, JP Morgan Chase, RBS, Société Générale, UniCredit and Wells Fargo are embracing innovation but remain uncertain about the key priorities to pursue, and face significant challenges to rebalance their traditional banking DNA with a digital first approach.
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“Today’s consumers do not buy just products or services— more and more, their purchase decisions revolve around buying into an idea and an experience.” – McKinsey
The growth engine: Superior customer experience
Retail Banks are under siege as new innovative technologies, discriminating customer expectations, non-traditional competitors, disruption from FinTechs, and legacy technologies make it increasingly difficult for retail banks to attract and retain today’s digitally empowered customers. According to Capgemini research, 79% of Retail Banking consumers are willing to pay for a better experience. However 17% of consumers who stopped purchasing from the retail banks altogether upon having a negative experience. So customer experience has become a key differentiator for customer satisfaction and growth in this modern era.
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Digital transformation in retail banking is driven by a high level of customer experiences in all aspect of services & product offerings. Technology and data that supports and improves the customer journey is part of this change. According to Accenture Banking 2020 report, 61% of banking customers expect to have access to more online interactions across their entire customer lifecycle. Retail Banks that are capable of implementing a truly customer-centric approach will be in a superior place in the market to foresee customer needs and demands, and to be prepared to deliver offers based on individual preferences — an experience that people have grow extremely familiarized with Today’s consumer is asking for a better experience, but tomorrow’s consumer will demand it and won’t settle for anything less. Banks and credit unions that can’t deliver will be left behind.
Driving customer loyalty
According to Capgemini’s analysis, retail banks that tightly link their business operations with the customer experience reap greater rewards in terms of Net Promoter Score® (a key metric of loyalty) and positive customer perceptions. By opening up API network, data barriers for retail banks are resolved and that pave the way to make the whole customer experience more seamless and transparent, a new era for UK banks begins. Leading retail banks are already using these trends and getting success. In February 2017, Santander announced it is set to become the first high street retail bank to permit customers to employ their voices to check their bank accounts and authorise payments via its app. This not only improves customer engagement with banking services but also helps in term of customer experiences & loyalty.
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To stay profitable in the new digital economy, retail banks need to implement a customer-centric business model, diversify online delivery of products and services channels, and begin making meaning from valuable trails of digital information. JPMorgan Chase, The New York-based bank utilize the mobile preference trend & created a highly engaged mobile app. And the result is it reported 28.4 million active users at the end of the second quarter of 2017. Enabling customers to seamlessly, holistically engage with products and online banking services – regardless of their preferred device or channel, at the right time, in the right context — is the path to maximising the current opportunity to grow business.
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