In 2020, the world was thrust into uncharted territory – replacing physical connections with virtual ones – as the pandemic forced social distancing requirements among billions of people around the world. Now, with remote work and virtual experiences becoming the widely accepted norm, physical banks appear outdated, redundant, and out of touch with consumers’ needs – and demand – for convenience, efficiency, and safety.
The resulting shock to the banking industry forced financial institutions to either adapt and quickly pivot toward a hybrid model or risk extinction. Industry leaders were forced to confront the unavoidable challenges ahead and quickly embrace services and capabilities catered to a virtual model while remaining highly engaged with demographics ‘on the ground.’
Meeting Customer Expectations in 2021
The first step in creating a digital experience is to consider end users’ expectations. According to Australia Hoover, president and CEO of CDC Federal Credit Union, “the key to meeting member expectations revolves around the consideration of what they communicate as being important to them, as well as the institution’s knowledge and experience in delivering products and services in an efficient and compliant way.” In this particular instance, convenience and efficiency are at the top of banking customers’ demands.
A recent report by Fortunly points out that 3.6 billion customers will prefer to bank online in order to save them a trip to a physical branch by 2024. Employing technology such as automation capabilities within a financial institution increases efficiency in the back office and therefore contributes to the organization’s capabilities to provide more convenient digital solutions for its customers. For example, the deployment of automated digital services such as chatbots are estimated to save the banking industry $7.3 billion in annual customer service costs by 2023. This allows room for additional budget to be spent on developing more innovative solutions that will benefit the customer in terms of efficiency in handling their finances.
However, financial institutions cannot solely rely on technology to completely replace a friendly phone call to a representative when a customer is looking for support. At its core, the banking industry is one that relies on building relationships to maintain customer loyalty. Industry leaders must find symmetry between appealing to the convenience culture of millennials and maintaining a human element desired by older generations. Banks are in the delicate business of delivering customers the financial opportunities to facilitate major life milestones and must also appeal to a third customer demand – safety. “Given how routine making a car loan may be to a credit union, to [that customer], we’ve just facilitated a source of transportation that will become a part of their life,” said Hoover. “These are very intimate, life-shaping moments that should not be minimized. We should not forget that we are people serving people.”
When implementing digital solutions, banks must also prioritize the safekeeping of their customer’s personal, financial data. At all times, banks must adhere to the security standards set by the Federal Deposit Insurance Corporation (FDIC). The government agency provides extensive resources from the Federal Financial Institutions Examination Council (FFIEC) to help the management and directors of financial institutions understand supervisory expectations, increase awareness of cybersecurity risks, and assess and mitigate the risks facing their institution. Such security and safety measures are critical factors in breeding the confidence necessary for banking customers to seamlessly adopt change.
When it comes time to implement digital solutions, banks should have a clear set of goals and ensure that they have the proper resources available to meet those goals. According to Hoover, “Virtual models can be extremely convenient for members, but the institution’s staff and management must fully commit to delivering it in an exemplary way.”
CDC Federal Credit Union learned this lesson when they began implementing their own digital transformation starting in 2008. The credit union was set to launch an online solution designed to make it easier for people to join or add additional accounts to their relationship, and soon after, found that the solution they had selected resolved the member-facing problem but created internal workflow problems. These internal issues soon became counterproductive to the overarching goal of creating a convenient and personal user experience. As a result, CDC was forced to reassess their internal infrastructure and make adjustments before identifying the best digital solution for the second time.
With 89% percent of American bank account holders using mobile banking for account management, financial institutions are seeing accelerated demand for a convenient virtual model that blends the personal nature of financial management with the benefits and ease of on-demand service. With the understanding that adapting to change and implementing a digital experience will require a balancing act worthy of its own circus show, banks should assess the resources available to them, listen to the specific needs of their customers, and chart a distinctive pathway for creating a model that is interchangeable between the physical and virtual worlds.
We will be discussing many of these key themes and challenges across the day at Fintech Talents North America. Register by March 19th to secure your free pass.
Cassie Gonzalez, Senior PR Associate KCD PR