Customer-centricity and financial inclusion enrich banking
Modern banking has the potential to exceed the capabilities of its former incarnation through a combination of digital technology, cultural realignment, and a new emphasis on the customer.
In an exclusive Q&A session, FinTech Magazine (FM) spoke with Matt Williamson (MW), Vice President for Global Financial Services at Mobiquity, a leading global specialist in the design and implementation of digital products and services.
FM: In recent times, how has the customer experience changed in banking?
MW: We surveyed a group of consumers over the age of 18 and found that, across the board, the use of digital banking mobile apps has increased since the onset of COVID-19.
In addition, 48% of respondents agreed that switching banks is easier than it used to be, with 40% saying they’d consider switching banks to get better digital tools. Millennials are especially susceptible to account switching in the short-term, with roughly 33% likely to switch in the next 12 months.
Therefore, banks must start paying attention to the customer experience they’re creating. If they aren’t investing in digital, now is the time to commit or risk losing both future and existing customers.
FM: To what extent can digital products build and/or maintain customer loyalty?
MW: The pandemic elevated the need for convenient and safe options in virtually every industry, and banking is no exception. Our research proved that digital banking drives more loyalty. Banks that want to maintain their customers need to invest in a seamless customer experience and the digital products that younger generations expect.
With millennials surpassing baby boomers as the largest generation, we’ve seen the shift in the way many organisations reach, obtain, and retain customers. For many, this means creating digital products, such as digital applications or platforms, or a combination of hardware and software that get to the heart of what customers want and need, when they want and need it
FM: Are there any particular products or use cases you can provide to illustrate your point?
MW: Our work with ila Bank is a great example. With over 100 million millennials and tech-savvy young people in the Middle East, where over 50% of business owners are under the age of 35, Bank ABC saw the need to give this generation of consumers an easier way to manage their finances. The team proudly built the first cloud-based, digital bank in the Middle East.
Another example is our ongoing work with several large credit unions in the United States, where we are helping them digitally transform by modernising, unifying, and streamlining their digital banking platform. To reach more customers, you need to offer them the products and solutions they expect.
FM: If digital is the future of banking, will the physical element of banking become obsolete?
MW: While the future of banking is undoubtedly digital, we can never underestimate the power of the human touch. Although the current consensus is that one must replace the other, that is not the case. Instead, one should augment the other. We call this “putting the human touch in touchless banking.”
The ‘Community Banking Hubs’ appearing around the world are an example of this. These hubs allow customers to show up on specific days at a specific venue other than a brick-and-mortar bank branch and meet with a representative from your banking brand.
FM: Is there anything that isn't being widely discussed on this subject that you'd like to highlight?
MW: By adopting or creating digital products and services, you can reach a wider audience outside of your traditional market or geography. This level of access and financial inclusion is critically important for everyone. Digital enables you to democratise access to financial services, based not on economic status but on having access through a smart device.
When banks make financial inclusion and access their priority, they are taking a customer-centric approach that enables the user to make smarter financial decisions through multiple product service options, regardless of the bank they choose.
CMA warns UK and Irish banks over bank transaction histories
Specifically, the CMA named prominent challenger bank Monzo, the Bank of Ireland, NatWest Group, and Virgin Money as not providing customers with records of their bank transactions within the maximum outlined timescale (40 days after closing the account).
Such information is crucial not only for ensuring a smooth transition from one bank to another, but also to provide a foundation for credit applications in the future.
According to the Retail Banking Market Investigation Order 2017, 95% of bank and building society customers should receive their bank transaction histories in at least 10 days.
Reputation: A bank’s greatest asset?
Of the 150,000 customers affected, Monzo was by far the main contributor - 143,000 (95.3%) - with the other three dividing the remaining 7,000.
The extent to which the magnitude of its mistake is attributable to being a digital-only bank is not clear, although it may give some customers pause for thought. With a superior customer experience being among the bank’s greatest assets, continued reputational damage is something that it cannot afford to sustain.
Although the CMA’s action in this instance has been to issue each bank a warning and order the immediate dispatch of all outstanding information, it has warned that future breaches will carry heavier consequences. Measures could include legally enforceable compliance audits on a yearly basis.
Helping customers get a better deal
Condemning the banks for negligence that could negatively impact customers’ desires to take out loans or mortgages, Adam Land, CMA Senior Director of Remedies Business and Financial Analysis, promised that his organisation would remain vigilant to similar behaviour moving forward.
“Banks must comply with all the rules – that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.
Image source: gov.uk