Next-Generation Customer Experience in Retail Banking
Much more than technology is required to meet rapidly changing customer expectations.
Most banks are currently engaged in some form of transformation effort, the majority of which are focused on digital enablement. When you look at the root issues driving the need for transformation, most can be tied back to issues relating to the need for more effective customer experience (CX).
Getting CX "right" is critical not only to staying competitive, but also for fundamental financial reasons. Organizations with effective CX have:
- Increased customer loyalty (92%).
- Increased revenues (84%).
- Reduced costs (79%).
Despite significant efforts, many banks are still not delivering on the necessary CX improvements. Our research has revealed that many organizations view leading-edge CX as a technology solution. In many cases, many of the challenges that prevent leading CX experiences are not just technology. To truly deliver next-generation CX requires changes throughout the entire organization including people and processes in addition to technology.
Our Advice
Critical Insight
- Elevated customer experience requires mature data practices. Creating a 360 view of a customer requires a strong foundation built on sound data practices including data discover, governance and management.
- IT must work closely and be deeply aligned with all parts of the business. Substantial changes to people, process and technology are required to power next generation Customer Experience and IT is an enabler of much of the change.
- The banking market is changing quickly, working in an agile manner is essential. IT must closely with the business to quickly respond to changing conditions. Adopting agile practices are critical.
Impact and Result
Next-generation customer experience requires the entire organization to achieve; it isn’t just a technology solution. Improved customer experience will elevate:
- Engagement
- Brand
- Value
- Loyalty
- Retention
- Profitability
The ultimate goal of modernized CX in retail banking is to assure that, regardless of the channel selected, experiences are fast, relevant, personalized, and leave the customer feeling more connected to their bank.
Next-Generation Customer Experience in Retail Banking
Much more than technology is required to meet rapidly changing customer expectations.
Analyst Perspective
Next-Generation Customer Experience
Most banks are currently engaging in some form of transformation effort. Most of those transformations are focused on digital enablement. When you look at the root issues driving the need for transformation, most can be tied back to the need for more effective overall customer experience (CX) while engaging with their bank.
Customer experience is among the highest-ranked sources of competitive differentiation, with 81% of organizations listing it as a key priority. CX is also a key focus for management teams with 76% citing CX as a top strategic performance measure. Despite a significant investment of time and resources, only 13% of organizations rate their CX delivery a 9 out of 10.[1]
Getting customer experience “right” is critical not only to remain competitive, but also for fundamental financial reasons. Organizations with effective CX in place realize increased customer loyalty (92%), increases in revenue (84%), and reduced costs (79%).[1]
Despite significant efforts, many banks are still not delivering on the needed CX improvements. Our research has revealed that many organizations view leading-edge CX as a technology solution. In many cases, the challenges that prevent leading CX experiences are not just technology. To truly deliver next-generation CX requires changes throughout the entire organization – that means people and processes as well as technology.
David Tomljenovic
MBA, LLM, CIM
Research Head, Financial Services
Industry Research
Info-Tech Research Group
[1] Dimension Data, 2017.
Executive Summary
Your ChallengeYour bank is not meeting your clients’ expectations. Consumer needs are becoming more sophisticated, and technology is a key enabler to meet new demands. Technology needs to move faster for your bank to compete. Speed to market is becoming essential as traditional and nontraditional competitors rush to fill client needs and gain a competitive advantage. The banking model needs to evolve. Everything from product development through marketing, execution, and ongoing operations can be enhanced to meet evolving client needs. Technology is the key enabler for all these enhancements. |
Common ObstaclesTechnology needs to be at the table as a valued partner. No longer can IT be an “order taker.” IT needs to be proactive in understanding client needs and bringing enhancements to the business leaders. Systems are not integrated, making the task of enhancing CX a challenge. Funding and experienced human resources are required to integrate systems through microservices and APIs to build seamless experiences for the customer. Datasets do not exist to provide insights to drive CX improvements. The lack of experience accessing and integrating nontraditional customer data for personalization is leaving your bank at a disadvantage. |
Info-Tech’s ApproachElevated customer experience requires mature data practices. Creating a 360° view of a customer requires a strong foundation built on sound data practices including data discovery, governance, and management. IT must work closely and be deeply aligned with all parts of the business. Substantial changes to people, process and technology are required to power next-generation customer experience, and IT is an enabler of much of the change. The banking market is changing quickly, so working in an agile manner is essential. IT must work closely with the business to quickly respond to changing conditions. Adopting agile practices is critical. |
Info-Tech Insight
The banking industry is undergoing a period of intense change driven by competition from new products and services. Among the top sources of competition is customer experience. Non-financial and neo-bank competitors are targeting customers who are dissatisfied with the experiences they are receiving from their existing banks. Deep challenges with siloed systems, data, and organizational alignment need to be addressed.
Banks are not delivering a strong client experience
Bank and customer perceptions differ
Banks often believe they deliver an excellent experience for their customers…
51% of banks believe that they are delivering an excellent customer experience.
…but fewer customers report receiving an excellent experience
26% of customers report having an excellent customer experience at their bank.
— Source: The Financial Brand, 2022.
Banks need to demonstrate they know their clients
Customers do not feel their bank understands them
Only 24% of bank customers report feeling that they are well understood by their bank.
Banks are struggling with personalization
Customers expect a more personalized experience from their bank. Only 21% of customers were happy with the personalization their bank offered.
Source: The Financial Brand, 2022.
Many forces are driving the need for new CX
Customer expectations in retail banking are influenced by a wide array of forces both financial and nonfinancial. Retail banking customers experience digital products, services, and journeys in all parts of their lives. Their experiences establish the bar against which a bank’s CX will be measured.
The top influencers of overall CX expectations are:
- COVID-driven consumer use patterns
COVID-19, which forced customers to use online and mobile products, revealed weaknesses in digital products/services/journeys. - Increasing neo-bank competition
Neo-bank competition provides a stark contrast to traditional bank CX. Their mobile- and digital-first tech stacks power faster and easier CX. - Continued growth in mobile usage
Mobile adoption continues to accelerate and is now the device of choice. Mobile CX must be on point or risk user dissatisfaction. - Non-financial customer experiences
Nonfinancial CX experiences have had a powerful influence on customer expectations. - Expectations of real-time products / services
Real-time applications are rapidly becoming the new minimum standard. Banks must update their CX to meet this new standard. - Desire for 24/7 access
24/7 access is becoming essential. Waiting for traditional hours to respond to a request or transaction will not be tolerated.
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