How digital banking can be better for customers
Digital banking continues to grow in momentum and importance.
Jacquie Hersch, head of industry marketing for financial services at ServiceNow, joins us to discuss digital transformation and how banks can offer even more effective digital products and services.
A few takeaways from our conversation:
- Digital banking is not necessarily better banking. What matters most is meeting the customer’s needs in any given interaction.
- Hersch believes that banks are lagging fintechs when it comes to customer experience, and as a result customer loyalty may be shifting toward nonbanks.
- Her best advice is to first focus on making their banking experiences consistent, regardless of platform or channel used.
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Below is a full transcript of my interview with Jacquie Hersch.
So Jacquie Hersch, head of industry marketing for financial services at ServiceNow. Welcome to the BAI Banking Strategies podcast.
Thank you. I’ve been looking forward to it.
Jacquie, ServiceNow recently collaborated Aite-Novarica on a white paper titled “Transforming the Banking Experience Through Digital Growth.” Could you give us a general overview of that white paper and why you went to all the effort to create it?
Banking is one of the most important industries that we focused on at ServiceNow. We’ve made major investments in financial institution product, and since we’re so heavily focused in that area, we want to remain as close as possible to customers’ emerging and latent needs. So we commissioned this white paper to validate trends for our own use to inform our product roadmap and our selling conversations. And then, by extension, we decided to publish the findings for the benefit of financial institutions generally.
So you used the word “transform” in the title, and transform can carry a range of meanings. So when we look at the full continuum of possible definitions of that word, say, from creating some experience improvements for customers at one end to a total banking makeover at the other end, where do we put your vision for transforming the banking experience?
So within the white paper, I believe there’s a quote, in Aite’s view, it’s about “knocking the bricks off the mortar of the branch”, which basically tells you the level of change that’s being anticipated. Digital will become a facilitator of customer communication and it’s going to merge the branch, the contact center and the digital experience through the use of existing and emerging technologies. So this is what we mean when we say knocking the bricks off the mortar, and it’s going to be important to infuse human help within this digital transformation as we move forward. So financial institutions will have to determine what role each of the entities performs going forward. Who is their banker? What happens in the branch? What happens in the contact center? Do these roles and entities remain discrete or do they become more hybrid? And what is the new definition around customer interaction?
The second part of the title of your white paper is “through digital growth”. So if you could walk us through that part. We’ve all heard plenty about the digital growth acceleration during the pandemic. Where do you see that going from here and what other factors will continue to push digital forward?
So, as we’re all experiencing in our personal lives, the adoption of digital is continual, whether it’s through online banking, or digital payments, or fully digital interactions, say, in the areas of account applications or loan underwriting. All of this is on the rise. What the research has indicated is that consumers are actually interacting more deeply through digital. So while adoption numbers are up, what’s more important is more time is being spent in the digital channel and more activities, a broader range, are being performed and requested. And one of the ways we’re seeing this is through digital assistants being deployed in mobile apps, where 28% of consumers are using that technology through a mobile app of their financial institution. This was in early 2020, so presumably, even higher adoption by now. Forty-six percent used it to check their balance. Over 30% used it to monitor activity, pay bills or get spending summaries. We’re also seeing early adoption of new digital assistants like Facebook Messenger, or Alexa, Siri, and Google Home, and collectively are altogether across these channels, a significant level of adoption for digital conversational support.
We all know the advantages that digital services offer in banking for customers. Along with the ones that you just mentioned, there’s the 24-hour accessibility from anywhere, 24/7, remote instant deposit, faster payments. For banks and credit unions, it’s cheaper delivery of products and services. It’s all kinds of internal efficiencies in the middle, front and back offices that save money as well, and things that make them more competitive. So, given this win-win scenario across the board, what’s stopping banks from going all-in on digital banking?
It seems like it should be easier, doesn’t it? There are so many obstacles for a financial institution. And let’s assume that the culture of the bank and the executive level of support and the appropriate funding are all a green light. Let’s assume that the stage has been set for this transformation. Let’s just break down some of the things that are required minimally. Data standardization being a large undertaking for many institutions, and this is getting all the data to a common standard so that it can be read and stored. But then also basic infrastructure upgrades to connect systems so that you’re able to move information across the enterprise so that it’s accessible to an individual at the time when work needs to be performed.
There needs to be an availability of talent to reimagine the business. Often this becomes a challenge where you have a team of people to run the business, but you need a different group of people, or different skill sets, to actually change the business and to imagine that change through a customer-centric lens.
Jacquie, I’d like to talk a little bit about the customer relationship. For decades, banks and credit unions benefited from their status as the primary financial relationship for their customers. But now that status, it’s being eroded by fintechs, by neobanks and, in the case of smaller banks, by those giant banks out there. So broadly speaking, what do banks feeling this pressure need to know about building and deepening and, in some cases, redefining their consumer relationships in today’s digital-first environment?
Banks are losing on experience, and this is leaving them with more unproductive or less productive accounts on their books, threatening margin and profitability. And it’s not only poor experience, I’d say it’s experience inconsistency. So that could be customer to customer, or across channels, or branches, and as transaction activity leaks away to neobanks or nonbanks, loyalty is being created with those entities, creating an even greater ongoing threat for the banks. At ServiceNow, we’re talking about themes that we think matter to banks who are facing these challenges. We think that having the right knowledge of the customer, and the right knowledge of the tasks to be performed, so that you can inject advice where it matters, being able to anticipate the customer’s next question or their next need or to tailor that interaction whether you’re speaking to someone who is early in career, who has a lower credit score, who’s preparing for retirement, or who’s buying their first home. Having that situational expertise is highly valued by consumers now, and they’re expressing strong bias for it. Then lastly, it’s going to be important to continue to keep the foot on the pedal around acceleration of digital business models. This could be anything from what happens in the branch – so digitizing an interaction that hasn’t been thought through end-to-end or optimized end-to-end to be modernized, or it could be in the context of a branchless relationship or reducing the customers’ need to visit a bank branch.
So when you and other folks in ServiceNow, when you’re out talking to your customers about digital banking, what are some of the common key questions that you hear from them? What do those questions tell you about where they are, what they’re prioritizing, and also perhaps what they may be struggling with?
Some customers are conflicted still about moving certain use cases to the cloud, and this brings about discussions about data needs, security, availability, redundancy. And customers want to know how to make their compliance and assurance activities more embedded within their daily operations. So reducing the level of effort around those items is an ongoing point of struggle. Then lastly, they want to achieve a high percentage of automation end-to-end, but it takes some new thinking, and those results won’t be attained at scale, at speed, without some new thinking. One additional data point. When we recently held a webinar with BAI, we surveyed participants about where they were focusing in their digital transformation maturity. We were surprised to learn that, for that audience, 40-45% were focused on prioritizing either the front or middle office, and only 35% of respondents shared that they’re now focused on the end-to-end transformation, connecting front to middle to back. And that would be our recommendation – that you peel off a process or two to start with and actually digitize them all the way, front to back, with some sort of zero-back-office objective attached.
Where does artificial intelligence fit into the customer experience transformation? Like so much of digital banking, a lot is said, and a lot is written, about AI and how powerful it is and how it can be used to great advantage by financial institutions. What do we know about banks implementing AI as part of their digital transformation?
AI is customer-facing or internal-facing to the organization, or both. One of the first things to think about is breaking AI down into what it actually does. What is AI good at? It’s powerful at performing routine tasks. It’s powerful at sifting through massive amounts of information. It’s powerful at decision support, just to name a few capabilities. So when we think about AI functionally and the things that it can really do, it can alleviate a lot of time-consuming manual work to free up staff for more of this intentional customer support and experience care that we talked about earlier. One of the enablers, of course, is having the data in order. We need the data available at the time and place to power the AI. So if a consumer is typing something into a search window, we need to have all of the knowledge and the task information available to that bot so that they can help that individual, whether it’s serving up a resource, whether it’s pre-filling a form, whether it’s opening a case, whether it’s routing them to a different queue. All of these things are things that AI can do. We can think about it in a more intentional way than just AI in general and “automation”. We should look for those areas to automate that have large amounts of data that can be accessed and managed more quickly by a bot than by a human rooting around and, also, areas where a rule set can actually drive better decision support than a human, and parse it out in that way.
We’ve been focusing on the customer so far when talking about digital’s power to transform the banking experience. But delivering a quality experience doesn’t just rely on digital. There’s also the people part. So how do those two parts, the digital part and the human part, how do they fit together in your transformation vision?
It starts with the experience that you want to deliver, and the experience needs to be crafted with the situation and the customer in mind. So it could vary by segment or channel or something like customer tenure. But in any event, you have a customer and you have a need, and that customer is on a journey and that journey needs to be conceptualized so that the most important aspects of the journey, the most complex aspects of it, the places where we’re likely to get off track with the customer, can be supported by a human. And that human, in order to deliver a consistent quality experience, also needs to be supported with the right knowledge articles, with the right workspace, with the right toolset, and with the right second- or third-level support, hopefully not necessary. So that’s the marriage that we’re shooting for. We’re shooting for not just automating the engagement layer, but really turbocharging the employee who is either actively interacting with that customer or even passively monitoring a queue or a dashboard so that when the signal comes, that additional support could be of value, that that support is made available. So it’s the right information at the right time given the interaction.
Jacquie, let’s tie everything together in a way that may offer some guidance on where banks and credit unions might start leveraging their use of data capabilities to transform the customer experience. I’d imagine that answer depends to some degree on where any given institution is now with their digital, but what’s the best general guidance you have for them – strategy-wise and otherwise – to be successful in transforming their customer experience.
Drive towards consistency of experience, first and foremost. Eliminate the variability in experience and really focus on getting the first interaction with the customer to be the best interaction with the customer.
This can be achieved through a lot of enabling capabilities, whether it’s structured workflows, or playbooks, knowledge tools, omnichannel support, process visibility. All of these things play a role, and there are certainly so many ways to augment processes, but these are the things we will want to look at to drive that consistency of experience. So digital in and of itself is not a good thing. Digital is good when it’s better, and making it better means that it’s frictionless, that it’s supportive, that it’s correct, and that it behaves the way it’s expected. If I go to a digital channel, I try to do something and I can’t access my account information because of a continuity issue or a failure… If I can’t understand something and there’s no way for me to ask a question, or if I want to add something to my account and there’s no way for me to raise my hand. These are situations in which digital is not superior. It’s just different and possibly inferior to a phone call or a branch interaction. So always being mindful that being touchless doesn’t mean it’s better. It’s the customer metric that tells us whether it’s better, and that’s what we’re striving for.
It’s good to get that reminder every now and then: That the customer-facing technologies being developed is only as good as their ability to respond to a customer’s immediate needs. Jacquie Hersch, head of financial services marketing at ServiceNow, we appreciate you joining us on the BAI Banking Strategies podcast.
It was great to be with you.