Customer experience: True differentiator between banking products

Banks should use piles of data available with them to understand right dimensions of customer behaviour and preferences

Supratik NagUpdated: Sunday, May 15, 2022, 07:37 PM IST
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The fintech platform of the company, BankSe, has an arrangement with 21 banks and financial firms to offer loan products, at present. / Representative image |

In last two decades banks are bringing customers as key stakeholders in designing all products and services and customer experience is becoming key in banking strategic decisions. To get deep into this topic, lets understand what customer experience is all about.

Customer experience or in short CX can be defined as, the cumulative customer impact across multiple customer touchpoint throughout the journey with bank. Earlier, Customer Experience was defined as adoption, retention, and advocacy but with change in customer preferences, behaviour and advanced innovation awareness, selection and decisioning are also becoming significant elements of CX.

Historically, banking sector are victim of slower adoption of customer experience in innovation, this was mainly because of the large legacy infrastructure and regulatory policies faced by traditional banks. With less customer churning, banks felt less pressure to innovate in the past too. In highly competitive banking world where products parameters are almost similar, customer interactions and impacts on each touchpoint are becoming more important.

Customer preferences moving away from traditional product parameters

Traditionally, banking product parameters like fees, changes, rate of interest, loan tenor were key deciding factor, but with more competition from non-banking entities and fintechs, banks are shifting focus to satisfy customer needs first. Earlier, customers don’t have much options to shop around for financial products. However, time has changed. New-age customers are more comfortable in shopping around for financial products like any other commodities.

While most of the customers use traditional banks to hold primary accounts, they use fintechs or digital-only banks or challenger banks (who have personalization of services and advanced customer experience at their disposal) for most of the banking services be it investing in stocks or mutual funds or making payments or getting loans. All these have made banks convinced, the only way to differentiate their product and service from competition is through superior customer experience.

In a recent survey from Redpoint Global and The Harris Poll, 82 percent of customers say they are loyal to a brand who demonstrate a thorough understanding of them as unique customers. In post-COVID-19 world, branch banking is getting replaced by digital banking. In digital world, customers are looking for highly personalized product and services which should be delivered to them via personalized journey.

Shift of customer experience from human interaction to digital journey

In post pandemic world, human interaction in customer service has been replaced by digital journey. Friendly bank staffs with requisite emotional intelligence have been replaced by machine intelligence based chatbots or virtual assistance. Customers still prefer the personalization of services which they always search in chatbots.

Banks should use piles of data available with them to understand right dimensions of customer behaviour and preferences. Ideal customer journey must mimic the human element of interactions in digital world. To arrive that, identification of customer touch points are important along with visualizing customer behaviour on each of those touch points.

Customer experience in everyday banking

Need and usage of money have made banking a part of customers daily life. Post COVID-19, overall economy is moving away from physical cash to digital/plastic money along with that ecommerce is getting increasingly high prominence. All these leads to necessity of everyday banking. Everyday products like buy now pay later, automated savings tool, money manager, virtual assistance etc. are mimicking customer behaviors and making customers living through those product journey.

Customers have vast range of opinions to choose from also they are more opiniated on their preferences. On top of these, when it comes to financial product selection ‘cautiousness’ takes the pole position. For digitalized banking experience, apart from data security, easy accessibility, real-time assistance, and personalized services are becoming key building blocks of customer experience.

Customer experience in highly competitive banking industry

Customer experience is becoming a key differentiator in highly competitive banking environment as it increases customer loyalty and retention along with these its significantly reduces cost. But these require accelerated focus on brand recall value and seamless experience across various channels. Banks need to analyze each stage of customer journey in details to achieve customer loyalty and build future businesses.

Banking products are no longer real differentiator in terms of offerings, rather agility and speed of implementation, simplicity of user journey and hyper-personalization are becoming key criteria to stand out in competition.

In post COVID-19 world, branch banking is fading off from its age-old charm. Customers across all segments are getting more comfortable with digital channels for all types of banking services. Digital transformation is becoming key focus areas for bank. In digital world, customers must get right and desired experience to use banking products and services effectively. Finally, banks need to understand customer behavior and psychology to stitch entire experience together.

(Supratik Nag, VP-Product Management, Maveric Systems.Views are personal)

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