In the era of digital banking, customers want to communicate and obtain information across all banking channels, in real-time, in the moment of now. Today’s digital customers expect more. They are, in fact, the primary force driving the banking sector into next-generation. Their expectations are diverse and demanding.
Unlike other industries, where technology impacts have been monumental, retail banking has somewhat been a bit sloth in adapting itself to the evolving customer expectations. Standing on the verge of a major transition, the biggest challenge of the retail banking industry is to meet the demands of heightened consumer expectations. Many banks are already rising up to match the emerging trend by integrating technology into their system to deliver agile and enhanced user experiences.
No doubt, it’s a “now or never” moment for banking. Besides the investments in customer-centric banking services to compete successfully in the future, the retail banking sector is also faced with the prospect of increased opportunity of incredible growth potential to bring a large number of “unbanked consumers” in virtually every important market. This is possible by smart use of affordable technology available now.
Other drivers in shaping retail banking strategy, are:
1.Rising Competition: Retail banking, today, is in the middle of cut-throat competition, with community banks, FinTechs, nationalised banks, and credit unions, all playing for the same customers.
The competition is ever increasing due to online dynamics, and no longer is the banking business defined by geographical parameters, it is instead ruled by technology advancements, propped up advertising budgets, and improved banking regulations.
2.The Need for Prompt Action:Historically, the banking industry has transformed slowly. However, the last decade has seen a speedy escalation in the velocity of transformation, setting pressure on organizations to change their processes in order to adapt more quickly.
Sad, but also true, banks that fail to accommodate these emerging changes will be left behind. To be competitive in the future generation, retail banks will have to put efficient systems in place to speed up cross-functional decision-making.
3. Developing a Single Window View of the Customer: Another principal challenge is understanding the customer in a totality. Deeper customer knowledge not only drives loyalty, it also helps identify smart openings that stimulate banking opportunity as well as spur economic growth. Both are very important.
To compete with the new market entrants, retail banks must use customer insights to manage strategic planning across the entire organizational structure.
4.Cost Reduction: With increasing regulatory pressures, banks are obligated to shell out a large chunk of their budget on improved security systems in order to meet compliance requirements. This is especially taking a toll on the smaller institutions, with a major part of their cash reserves getting drained in regulatory measures.
Taking into consideration all the given factors, it is understandable that banks are eyeing every opportunity to curb costs. As retail banks try to gain grounds, technology features as a top agenda, in boosting the profit margins.
5.Enhancing the Customer Experience: In a recently published study, 30% of global bank leaders cited declining customer loyalty as their principal concern. It’s now clear beyond doubts that seamless delivery of personalized and innovative services is the only pertinent tool in winning and sustaining the market share.
To improve customer experience, banks require to
- Develop a better understanding of their client demography,
- Consumer behavioral statistics,
- The flow of choices that a customer makes.
To be in the competitive landscape, banks will have to push for cutting-edge advancements through data and analytics, so that valuable customer data can be converted into actionable insights
By using the right tools, financial organisations can determine and analyse crucial areas like customer waiting and transaction time, throughput per hour, and cost per transaction, which will enable the management to focus on domains that promise high growth potential.
Struggling to mitigate the challenges in digital transformation of your bank? Connect with eKutumb for banking technology solutions and services today!
Author: Kishore Kapoor
Kishore Kapoor an industry veteran of 31 years in global banking technology. A Founder & CEO of eKutumb.com – World’s first marketplace for enterprise software delivery and consulting business by creating value for all of industry stakeholders involved (customers, partners, individuals and investors) through a disruptive and trans-formative approach of doing business.