Real differentiator between banking products

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Over the past two decades, banks have made customers key players in the design of all products and services, and customer experience has become essential in banking strategic decisions. To dive deeper into this topic, let’s understand what customer experience is.

Customer experience or in short CX can be defined as the cumulative customer impact across multiple customer touchpoints throughout the journey with the bank. Previously, customer experience was defined as adoption, retention, and promotion, but with changing customer preferences, behavior, and advanced awareness of innovation, selection, and decision-making are also becoming important elements of CX.

Historically, the banking industry has fallen victim to slower adoption of customer experience in innovation, primarily due to the large legacy infrastructure and regulatory policies that traditional banks face. With less customer turnover, banks have also felt less pressure to innovate in the past. In a highly competitive banking world where product parameters are almost similar, customer interactions and impacts on every touchpoint become increasingly important.

Customer preferences are moving away from traditional product parameters

Traditionally, banking product metrics such as fees, changes, interest rate, loan term were deciding factors, but with increased competition from non-banking entities and fintechs, banks are focusing on satisfaction customer needs first. Previously, customers did not have many options for shopping for financial products. However, the weather has changed. New age customers are more comfortable buying financial products like any other commodity.

While most customers use traditional banks to hold primary accounts, they use fintech or digital-only banks or challenger banks (which have service customization and advanced customer experience at their disposal) for most services. banking, whether investing in stocks or mutual funds or making payments or obtaining loans. All of this has convinced banks that the only way to differentiate their products and services from the competition is through a superior customer experience.

In a recent survey by Redpoint Global and The Harris Poll, 82% of customers say they are loyal to a brand that demonstrates a deep understanding of them as unique customers. In the post-COVID-19 world, branch banking is being replaced by digital banking. In the digital world, customers are looking for highly personalized products and services that should be delivered to them through a personalized journey.

Shifting customer experience from human interaction to digital journey

In the post-pandemic world, human interaction in customer service has been replaced by a digital journey. Friendly bank staff with the requisite emotional intelligence have been replaced by AI-based chatbots or virtual assistance. Customers always prefer personalization of services which they always look for in chatbots.

Banks need to use the data stacks they have to understand the right dimensions of customer behavior and preferences. The ideal customer journey should mimic the human element of interactions in the digital world. To achieve this, identifying customer touchpoints is important, as well as visualizing customer behavior on each of these touchpoints.

Customer experience in day-to-day banking

The need and use of money has made banking an integral part of customers’ daily lives. Post-COVID-19, the global economy is moving away from physical cash towards digital/plastic cash, while e-commerce is gaining more and more importance. All of this leads to the need for day-to-day banking. Everyday products like buy now pay later, automated savings tool, fund manager, virtual assistance, etc. mimic customer behaviors and allow customers to experience their product journey.

Customers have a wide range of opinions to choose from and they are more savvy about their preferences. Moreover, when it comes to selecting financial products, “prudence” comes first. For a digitized banking experience, in addition to data security, easy accessibility, real-time assistance and personalized services become key elements of the customer experience.

Customer experience in a highly competitive banking industry

Customer experience is becoming a key differentiator in a highly competitive banking environment as it increases customer loyalty and retention, while dramatically reducing costs. But these require an accelerated focus on brand recall value and a seamless experience across different channels. Banks need to analyze every step of the customer journey in detail to build customer loyalty and build future business.

Banking products are no longer a real differentiator in terms of offers, it is rather the agility and speed of implementation, the simplicity of the user journey and hyper-personalization that are becoming essential criteria to stand out from competition.

In the post-COVID-19 world, bank branches are losing their age-old charm. Customers in all segments are increasingly comfortable with digital channels for all types of banking services. Digital transformation is becoming a priority for the bank. In the digital world, customers need to get the right experience they want to use banking products and services effectively. Finally, banks need to understand customer behavior and psychology to stitch together the whole experience.

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

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Posted: Sunday May 15th 2022, 7:37 PM IST

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