Digital transformation has taken a hold of the financial services industry. Today’s banking landscape has been divided into two main roles: traditional financial institutions and disruptive fintech applications. While the differences between the two are stark, a shared goal remains: improving the customer experience.
The Brick & Mortar Approach
Traditional financial institutions have historically played the role of providing a highly service-oriented approach to their customers’ banking needs. While these types of institutions have relied on face-to-face interactions to build and retain relationships, they are currently pursuing new technology to expand their relationships with customers. Banks are providing more options for customers to communicate outside a branch’s four walls. Today’s new mobile app technology enables customers to check a balance, transfer funds or deposit a check remotely. As a result of these new types of offerings, traditional financial institutions are beginning to adapt solutions that encompass multiple modes of communication for customers who wish to manage their bank accounts virtually.
A New Standard of Customer Experience
As today’s consumers have become more reliant on smartphones and mobile devices to accomplish everyday tasks while on-the-go, expectations have shifted to include being able to accomplish routine banking tasks easily from a mobile device, anywhere and at any time. Financial technology, or “fintech,” is now at the forefront of the financial services industry as a result of the ubiquity of technology and smartphones that are easily accessible to customers. A survey by Blumberg Capital reported that 88% of all banking interactions will be mobile by 2022 — indicative of the impact of fintech.
Although the approaches of traditional financial institutions and disruptive fintech banking applications certainly differ, they do maintain a similarity: a shared goal of building a relationship with the customer through a strong foundation of communication.
While both the old and the new approaches provide solutions to help customers accomplish banking tasks, fintech applications are taking a completely new approach to customer communications. Today’s consumers should expect differences in communication options from the two institution types and choose to work with an institution accordingly based on preferred communication type.
Artificial intelligence’s (AI) power to transform customer communications and the growing preference for self-service in banking should also be top-of-mind for banking executives as they navigate the evolving digital banking landscape.
Elevated Banking Communications & Security through AI
While AI capabilities have long been viewed as futuristic or out of reach for current generations, they’re already making a big splash in the financial services marketplace – with chatbots and predictive analysis as two examples. AI technology in banking is revolutionizing the customer experience by enabling the instantaneous, mobile communication that is needed to accomplish routine daily banking tasks from a mobile device, as well as extending the hours of service that a financial organization can offer to its customers.
Disruptive fintech applications utilize AI technology to transform the customer experience in banking as consumers know it today. According to the recent Global Artificial Intelligence (AI) in BFSI Market Research Report 2019-2026, AI in the banking, financial services and insurance industry will reach $130 million with a 28% compound annual growth rate (CAGR) by the year 2026. Today, financial services organizations across the nation are using AI technology to automate routine banking tasks for customers, such as resetting passwords, checking account balances, transferring funds between accounts or paying monthly bills.
These use cases all aim to enhance the customer experience for today’s digitally driven consumers, who often prefer to use their smartphone to bank rather than calling to speak with a customer service representative or visiting a branch location. A well-known example of this is Bank of America and their virtual assistant, “Erica,” who uses predictive analytics and cognitive messaging to provide financial guidance to customers.
Additionally, organizations are using AI solutions to not only improve the experience of customer interactions, but also to detect fraud. Citibank has invested in Feedzai, a data science enterprise that identifies banking fraud in real time for online and in-person banking. Advancements in AI technology are helping to protect customers’ payment card industry (PCI) data while also improving efficiencies in the back-end operation of banks.
Self-Service for Satisfied Customers
Along with artificial intelligence as a key priority for banking executives should be a significant focus on self-service and payment processing. Blumberg Capital found in a survey that mobile accessibility is one of the most important features for 60% of U.S. banking customers.
As mobile devices have become the standard in communication, consumer desire for self-service options has skyrocketed. For example, 10 years ago customers had to visit a branch location to deposit a check. Today, most banks offer a mobile application that is equipped with remote deposit capabilities. As a result of an explosion of new technology, consumers prefer to accomplish as much of their banking needs through self-service via a mobile app as possible, as opposed to traveling to a branch to visit with a representative.
A study by Source Technologies found that retail banking kiosks can help customers accomplish a task 13.5 times faster than a human bank teller at a branch. To help ensure bank tellers are being used for the more complex tasks that require human interaction, many banks are deploying self-service kiosks within their branches to help serve customers who prefer in-person visits while also freeing up internal resources to work on other tasks.
Customer experience is vitally important to financial service organizations today as consumers have come to expect options for flexible communication and are likely to take their business elsewhere if a bank lacks an experience that meets their digital needs. Whether it’s implementing AI technology to extend hours of service to assist customers or offering self-service options through a mobile application or kiosks at branch locations, advancements in technology are revolutionizing the customer experience in the wake of digital transformation.
Although the traditional and new fintech approaches to banking may have their differences in focus or approach, both must strive to put the customer experience first, whether that’s in terms of customer-bank communications or by means of offering options for self-service.