Customer experience will be the digital imperative in 2020

Digital transformation used to be code for “what are we going to do with all of these branches?” The transformation efforts focused on changing the branches and everything associated with physical distribution. But while branch strategy remains important, much progress has been made. Bankers have changed their branch footprints, reimagined branch design, introduced new technology approaches and evolved staffing models. That’s all good. But, as we enter a new decade, digital transformation has now become much more than replacing physical delivery. It now centers on customer experience.

Today’s financial services executives clearly recognize the importance of seamlessly digitizing the customer experience that had once been primarily delivered face-to-face in the branches. This is a top priority, as confirmed in BAI’s research reported in BAI Banking Outlook: Trends in 2020.

Improving the customer digital experience, which barely registered in last year’s BAI Banking Outlook report, replaces deposit growth as the leading priority for 2020. The same survey finds that financial services organizations will invest heavily to support their digital strategies. When asked their top three investment priorities for 2020, bankers cited technology integration and platforms as the top priority, followed closely by customer digital experience, and segmentation growth strategies finishing as a distant third.

Despite making the customer digital experience a top priority and expressing a willingness to invest in digitization, financial services leaders will have plenty of challenges ahead of them:

Charting a digital strategy in a fast-changing environment. Digitizing delivery channels is complex and expensive — and customers have set the bar high. Consumers have grown accustomed to the one-click convenience of Amazon and other leading online retailers. They know what they like and expect the same from their financial services providers. Financial services companies need different technology and new product offerings, all while evolving the talent mix of the organization.

Investing in technology amid an uncertain economy. Debates on economic projections abound, but the one thing we all agree on is the uncertainty of what’s ahead. Many are taking steps to prepare for a possible downturn, which will impact how decisions are made regarding the level of investments in digital.

Protecting customer data. Data security is a top priority for financial services companies at a time when most banking transactions are conducted online or via mobile devices. Customers expect that banks will protect their data, and they hold banks responsible even when data breaches occur at credit-reporting agencies or retailers. The financial services industry is well ahead of other sectors in managing cyber risk, but concerns that banks aren’t doing enough weigh heavily on a customer’s digital banking expectations. 

Even in the face of these challenges, financial services companies are actively preparing to create more satisfying digital experiences for their customers, including three high-impact approaches:

Create a separate digital entity. This year, JP Morgan Chase shuttered Finn, its millennial-focused digital banking service, but there are other financial services companies that have created distinctly separate structures. For example, Citizens Access, a division of Citizens Bank, operates as a separate financial services organization. Citizens Access particularly appeals to consumers who are willing to forego the traditional services offered in the branch banks and who want more competitive rates and minimal fees on various products. Instead of trying to turn a legacy bank into a topdrawer digital machine, the creation of a separate digital division aims to deliver like any of the leading direct banks.

Develop a killer app or other breakthrough technologies. Examples of technological innovation in this space abound. One that stands out is BBVA’s Bconomy, a mobile app that helps customers monitor and budget expenses by analyzing their financial health. Bank of America continues to evolve Erica, its AI-driven virtual financial assistant with more than 7 million users. Capital One engages customers with its Eno chatbot, which sends text messages about their accounts and helps them make credit card payments from their phones. BMO Harris Bank has taken an even different approach, introducing its smart branches that feature video access to live tellers and specialists who can help with mortgage applications or retirement planning, advanced ATMs that dispense cash without using a debit card, or on-demand videos that showcase financial products.

Streamline the omnichannel experience. According to research in BAI Banking Outlook: Trends in 2020, only slightly more than half (53 percent) of financial institutions allow first accounts to be opened online, impacting the initial customer digital banking experience. Also concerning is that 58 percent of financial institutions say they can’t connect online product shopping to in-branch purchasing, according to the Trends in 2020 research. Financial services companies that figure out how to win with a strong omnichannel experience will win.

Making the customer digital experience the best it can be is an important goal for progressive financial services organizations. There is no shortage of challenges in meeting that goal. But banks that stay ahead of the industry’s digital transformation and deliver a superior online experience will succeed in growing an engaged customer base.

Debbie Bianucci is president and CEO of BAI.

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