It’s 2018 and from the “adulting” millennial to the question of cryptocurrency, it would seem that there is a greater need for finance management than ever before. Unfortunately, banks are struggling to find growth due to a drop in clientele.
In this digital age, banking competitors are creeping up and seriously threatening to take away not only a new generation of banks customers but some of the older, more loyal crowd as well.
In a survey recently performed by Bain & Company of over 130,000 banking customers throughout 22 different countries, when it came to trusting other entities with their money, customers in the US and the UK ranked PayPal and Amazon almost as high as banks.
Many customers, worldwide, are completely open to buying financial products from these established tech firms. Customers in countries such as Mexico and India seem to be the most frustrated with their banking experiences. Using words like "time-consuming" and "inconvenient" to describe their banks.
However, customers in countries like the Netherlands, where banks have digitized most if not all routine transactions, tend to be more satisfied with their banking experience and are less likely to turn to a tech firm to handle their finances.
The desire for banking alternatives will only continue to grow in coming years as the younger generation shows the most willingness to try other banking options. Not to mention, over one-quarter of the US customers surveyed said that they were interested in using voice controlled assistants as a part of their everyday banking. And since Amazon currently has a major leg up on that market as well as sell payment services, credit cards and loans, it isn’t unrealistic to assume that they may start venturing into retail banking services in the near future.
So, how can banks best defend themselves and prepare for the future? It’s all about the customer and their experience with your bank. In Bain & Company’s survey, they discovered that a majority of customers would prefer working with employees to handle disputes or other “high-stakes” problems. However, for “low-stakes” day to day transactions, they prefer whatever is the fastest and most hassle free option, typically digital.
Behavioral Economics is a Psychology discipline that observes and analyzes human behavior in order to predict and determine how people will act in various situations. It is full of useful tactics that have been used in the business world for decades and are now on the rise in the finance industry, being used by fintechs and banks alike.
Detailed analysis of consumer behavior is vital for banks to improve their customer relations in the future. Understanding what customers want, what they need, what is important to them, and how they want to be treated could save your bank.
However, the end goal of understanding your customers isn’t to increase the chances that they’ll act on an offer or open a new savings account. It’s so that you can provide them with, as American Banker says, “actionable recommendations based on real understanding of their economic position.” Or, in other words, so that you can improve their experience as a customer at your bank.
Always remember, humans (aka your customers) have an inherent way of sensing when they are being manipulated. People also tend to be hypersensitive when money is involved, so make sure that your customer interactions are done cautiously and professionally, to avoid negative situations for both your bank and your customer.
On top of focusing on advanced analytics to improve your client engagement, The Financial Brand suggests a few other areas to consider as well:
It’s no secret that in order to banks to keep up in the ever evolving finance industry, something will have to change. The first step? Changing how you interact and work with your customers. Improving the client experience and enhancing their journey could be what saves your bank.