With an increasing number of customers being tech-savvy, internet banking and mobile banking are emerging as a must have. IFM spoke to Mike Davies, Vice-President (EMEA North), GMC Software Technology,about what banks need to do to retain customers.
The latest research by British Bankers Association (BBA) highlights that 65% of bank customers are not fully satisfied with the services offered to them. Why this dissatisfaction?
This dissatisfaction with banking services stems from multiple sources.It’s worth remembering that a general dissatisfaction with banks as a result of the banking crises in 2008 still persists and is likely to be one factor which influences opinion. Although one large factor that banks can control is their failure to adapt to the pace of technological change in the same way that other high street retail brands have. A big part of this failure to adapt are the legacy systems that the banks have to operate with, which has slowed down and increased the cost of modernisation for the banking industry immensely.
Banks haven’t taken the step to start to use technology not just as a conduit to push messages, but as a channel through which they can begin to learn customer preferences, and begin to cultivate loyalty through personalisation. In short, banks haven’t listened to their customers for a very long time, and appear to be missing the opportunity for listening that modern technology brings.
Couple this failure to adapt with tech-savvy retail brands beginning to offer their own financial services, and we find customers have genuine choice in how they manage their services for the first time in many years.
In such a scenario, what key measures or technologies would improve satisfaction levels?
Banks must become much more “available” than they are presently. The adaptation of banking services to digital channels (regardless of form factor of device) will be critical in achieving this.And, it has to be said that banks are cognizant of this issue and are investing in the technology needed to make this happen. What may go overlooked is the wider point on how more modern technology is utilised.
Banks must fully realise the role personalised communications and offers play in developing loyalty with customers, or risk a steady flow of customers defecting to retail brands who have made significant investments in customer communications management tools and, consequentially, have become very adept at communicating with customers how they want, when they want. This will become especially important as newer generations are far less likely to simply default to the standard banks — preferring more digitally savvy and communicative options.
From a bank’s perspective, what could be the key challenges associated with internet/mobile banking?
The large variety of form factors and platforms (think iOS, Android, Windows Phone etc.) presents a huge technological challenge, especially when coupled with aging banking IT architecture. There are some easy and quick fixes here though.Banking statements, for example, can be generated in a dynamic, interactive way without significant investment in (or changes to) a bank’s back end infrastructure. A pie chart that breaks down your spending each month would be useful to examine in detail — a list of transactions is far less engaging. Other services, however, will present a much more complex problem for the banks, especially as banks must (and are duly expected to) have the highest level of security possible.
Who is driving mobile banking in the UK— banks or customers?
I firmly believe that the customer is who ultimately drives change. Businesses that ignore customer desires will always eventually fail. Banks are no exception to this rule. Banks are the last bastion of an outdated attitude towards customers, and are now struggling to catch up.
UK is one of the most digitally advanced markets in the banking segment. Any insights on the other sectors that you have worked in?
The insurance industry is usually seen as slow to embrace change. However, this industry in particular is now reviewing its interactions with its customers. Comparison and aggregation websites plus new regulations on claim referrals have driven the industry to evaluate how insurers can differentiate themselves and increase customer loyalty. Ultimately, across the financial sector, customer communication and the management thereof is a hot topic.
What lessons can newcomers in this segment learn from the mistakes of UK banks?
Banks have been slow to build relationships with customers and to build out a true omni-channel offering (we’ll define omni-channel here as the ability to operate and communicate on any device/media at any time). This kind of service is becoming expected, especially as internet native generations begin to take more prominence in the workforce. A targeted approach onto these younger generations with a truly digital offering will present a credible challenge to the current banking institutions.
High street banks have struggled to differentiate themselves.Add in the fact that private banks are now seriously looking at entering the retail banking arena and you can be sure the next few years will be one of significant change in the banking industry.
What is the future technology that could revolutionise this segment?
Any technology that makes it easier and faster for customers to perform banking transactions will find itself quickly in demand. Contactless technology, in particular, seems the front runner for this.
Do you see banks adopting a paper-less strategy in future or would you recommend a multi-channel approach?
I would say this definitely depends on how far in the future we are gazing. For the foreseeable future,print remains a vital and important part of many peoples’ lives — think monthly statements in the post. Far into the future, say in the next 10 or 20 years, we may start to see that begin to change, but print still has its role and certain advantages over the touchscreen today, and so won’t be going away anytime soon.