Traditional banks will be reduced to storage vaults by 2030
Traditional banks must move away from their current one-size-fits-nobody digital approach, or risk losing control of their customer relationships and being reduced to money storage vaults by 2030, warns customer experience expert Quadient. If they want to continue to be a vital element in their customers’ lives, traditional banks must refocus efforts, embrace a human-centric approach and offer a wider range of services that meet customer needs.
In 2020, 44% of retail banking customers used mobile apps more often due to Covid-19. While the pandemic was a one-off event outside their control, banks have also been neglecting human-centric communication channels in the long-term. The past year has seen countless bank branches close, and a surge in banks adopting digital-only approaches despite consumers’ low appetite for digital-only services – only 5.5% want to use online/mobile banking more post-Covid-19.
“Banks will claim they’re taking a customer-centric approach, but this is not reflected in their actions. They need to re-focus and give customers what they want, instead of a one-size-fits-nobody approach that the bank hopes they want as it will cost the bank less. This means striking a balance between hyper-personalised digital-first services, online chat functions with human advisors, and the option to bank in-branch,” says Andrew Stevens, Principal, Banking and Financial Services, Quadient. “Without this, banks will continue to neglect their customers’ needs and eventually lose those relationships to challengers.”
Challenger banks are already embracing omnichannel services, ensuring no-one is left behind and that every type of customer is catered to. For example, Starling Bank, which started as an app-only service, has partnered with the Post Office so customers can bank ‘in branch’ and also recently launched their new online banking service.
There is still time for traditional banks to catch up. The pandemic slowed challenger banks’ innovation, as they shifted priorities to deal with the immediate challenges. Challenger banks have also taken a particularly hard financial hit when it comes to investment, with Monzo’s funding round drawing a 40% lower investment than a year earlier. While these issues will impact challenger banks’ abilities to innovate new products or deliver alternative banking options to customers, they will very quickly spring back into action. As they offer increasingly comprehensive ranges of products and services, traditional banks will find themselves at greater risk.
“Traditional banks must properly personalise their offering, provide customers with more than one experience and ultimately treat them as valued individuals instead of revenue sources. In an ideal world, by 2025, banks will offer personalised digital banking landing pages based on customers’ financial priorities,” comments Stevens. “Similarly, levels of support, advice and product recommendations should vary depending on each customer’s digital maturity and individual needs. For instance, customers who always have money left over after their monthly outgoings could be proactively signposted to saving or investment options, or newlyweds could automatically be offered joint accounts. At the end of the day, banks are the financial experts here, not customers, and they shouldn’t wait for these additional services to be asked for. Instead, they need to show they know how to manage our money best. As consumer support for sharing more data with their bank for a personalised service decreases, this proactivity will go a long way to rebuilding trust. They need to create a two-way connection with customers that shows the value banks bring to the relationship. If they don’t do this, banks risk losing customers to someone who will.”