Customers Are Loyal to Experiences — Not Banks

Customer demands are changing faster than financial providers can keep up. In 2020, customers accelerated their migration to digital channels and relied on digital-first experiences to make remote banking fast, secure, and painless. Previously loyal customers lost patience for lengthy phone calls and complicated paperwork. In response, innovative competitors rushed in to offer technologies that proved to make their customers’ lives easier, from robo-advisors and automatic portfolio rebalancing to face-scanning authentication and heightened security. As a result, traditional banking, wealth management, and capital market companies failing to modernize — while continuing to use legacy systems and outdated processes — risk more than just their time; they virtually guarantee losing customers, revenue, and reputation.

So, how can financial institutions keep up with these evolving demands? One way to meet demands is by reconfiguring business strategies to focus on customer experiences rather than product features. We believe delivering a delightful customer experience should be a top priority for financial institutions and banks that aim to keep up in the fluctuating landscape — a landscape where customers are loyal to experiences, not banks.

What’s stopping providers from delivering better customer experiences?

In 2021, NTT DATA and Oxford Economics fielded a survey to 100 North American businesses and IT executives from the banking, wealth management, and capital market sectors to discover how organizations are approaching key digital transformation initiatives emerging from the pandemic and beyond.

This study found that two-thirds of financial services executives feel customer wants and needs are changing too rapidlyto deliver positive experiences, which is likely why just 39% indicated above-average customer satisfaction. Financial services respondents identified customer satisfaction as a primary driving force of organizational strategy. They believe product and service quality (50%), digital experiences (45%), and flexible services (42%) are the most important factors to consider when determining how to provide value to customers.

How can providers prioritize customer experiences?

We believe that financial services executives should focus on technology investments, workforce needs, and strategy — because these efforts pay off. Surprisingly, only 6% of our sample have invested in artificial intelligence, developed culture and organizational purpose for their workers, and ensured strategic and operational changes put customer needs first.
Most of these leading executives believe they are better able to keep up with rapid changes in data regulation. In addition, some of these executives report substantial revenue growth and are more likely to provide higher quality products and services to their customers.

What do customers expect from banks?

Customers expect more from financial institutions than ever before. Customers want high-quality customer service, low fees, security and fraud protection, and mobile and online access. They also want banks to be socially responsible, support and advise them through financial hardships, and contribute to the community in meaningful ways. It’s no longer enough to distribute good products and services and expect loyalty.

What makes a positive customer experience?

According to research, “ … nearly 80% of American consumers say that speed, convenience, knowledgeable help, and friendly service are the most important elements of a positive customer experience.” We believe four key pillars can meet these primary needs and deliver a positive digitized banking experience.

1. Accessibility — Organizations delivering digital-first experiences often classify web accessibility as a compliance requirement, but things are changing. Accessibility is an essential component of a positive user experience. Financial service providers that offer customers an omnichannel and mobile-friendly experience will win in the market. Accessibility impacts customer retention, and even a 5% increase in retention rates can increase profits up to 95%. An accessible website or app uses interactive features that everyone can access, including those using a mobile device, on limited internet bandwidth, or those hard of hearing or sight. Not only will an accessible website improve customer service, but it can help you reach a wider audience, build positive public relations, improve market penetration, and help grow your business.
2. Instantaneous Assistance — Many digital-first banks are implementing AI chatbots that answer customer queries in seconds and escalate to an agent when necessary. Customers no longer accept long wait times on the phone — they want answers to their questions now. According to the FinTech Times, customer service is the single most significant factor likely to increase spending on banking. Moreover, 32% of all customers would stop doing business with a brand they loved after one bad experience. Live 24/7 support for website visitors enables quick resolutions and better customer experiences.
3. Personalized Services — The future of banking will be hyper-personalized and anticipatory. Banks previously saw personalized products, services, and experiences as a “nice-to-have” for customers. But personalization and anticipating customer needs is imperative amid digital acceleration and evolving customer expectations. New technologies allow financial service institutions to gather customer insights — beyond a siloed view — to build a 360-degree customer view capable of delivering personalized experiences while maintaining privacy and security. Personalization is a differentiator that contributes to higher engagement, enhanced customer experience, and a more substantial ROI. Organizations can invest in data collection, data mining, AI/ML, data scientists, and technology consulting services to deploy tailored customer journeys for their unique users.
4. Data Security and Privacy — Data concerns are top-of-mind. The pandemic increased risks for organizations across industries. Account takeovers, data breaches, and financial crimes are rising, and customers want to feel secure with their banks before providing loyalty. As a result, a necessary trade-off happens regarding hyper-personalization and security. Financial services providers must protect customer information, abide by privacy regulations, and mitigate risks, while simultaneously leveraging accessible insights to improve customer experiences. The best customer experience is safe, secure, and seamless.

At NTT DATA, we help banking and financial institutions delight their customers by focussing on these four pillars. Organizations that build the foundational components of CX can deliver the speed, convenience, knowledgeable help, and delightful service that customers expect. Our strategy starts with customer-centric goals and employs expert consulting, advanced technology, and partnerships to move from strategy to implementation and operation.

Read NTT DATA’s Innovation Index: Digital Strategies for an Era of Constant Disruption to learn more about the digital strategies industry leaders use to overcome challenges.