For most financial institutions, the path ahead in 2020 means wading through the land of the unknown. Beyond what’s immediately in front of us, with the effects of COVID-19 still unfolding day by day, banks are still faced with all of the usual challenges as well. A fiercely competitive landscape with aggressive new fintech players, constantly evolving customer expectations, and surges of innovation.
Though the dust hasn’t yet settled on a number of changes and the status of the evolving post-COVID19 business climate, you can see which way the wind’s blowing — toward customized, digital experiences mirrored after consumer experiences with tech giants like Netflix and Amazon. These companies know how to seamlessly adapt to their users’ unique behaviors and preferences.
While this “Netflix Effect” on banking has long since stirred moves on the retail side of the house, commercial banks have struggled to keep pace. Many commercial banks lack the tools and investment to translate rich data into deeper knowledge and actionable insights. They have generally failed to drive the highly tailored, cross-channel interaction that customers have come to expect in every area of their lives.
Where competition was once centered around account features, interest rates and lending, today’s winners and losers will be determined by the level of data-driven, personalized advisory services they can offer their clients. In a recent Barlow Research survey of small business owners, more than 90% agree that their bank representative should know the specifics of their bank relationship.
However, only 39% feel that their bank is superior at delivering this experience. The expectation gap is clear — a chasm still remains between how well customers want banks to know their business and how well they actually do.
As bankers today fumble through disjointed channels and mismanaged data to blindly offer up cross-sell products to their customers, the Amazons of the world will be making intelligent recommendations for products that their users are inclined to want or need based on past behavior.
The Fight for Primary Ownership of the Banking Customer
The banks that make a commitment to innovate on the commercial side as much as they innovate on the retail side will have a distinct advantage. Failure to make this level of flexibility and seamless personalization happen will ultimately mean failure to achieve true primary ownership of the banking customer. That is, an inability to become the financial services partner who knows the customer best and where they are comfortable consolidating their assets.
Commercial banks that have secured a lending relationship will undoubtedly push to drive additional products and services and make the pitch for the operating account. Beyond the sales pitch, banks need to be able to show that they can solve unique business problems with technology, tools and insights that create an intelligent engagement with their customer.
Commercial banks must be able to support a wide variety of customers and the many ways they each do business. All the while, they need to be able to make sense of the valuable data in their payments and cash management systems. By doing this, business customers will engage in a deeper more meaningful relationship with their bank, ultimately adding on more products and services if the bank can translate that customer’s data into actionable insights.
Putting Intelligent Engagement To Work
Financial institutions have been notoriously slower to innovate compared to other industries. They have failed to combine their channels of engagement — whether it be web, mobile, batch file, API and voice — because many have yet to see seamless interconnectivity and openness as a possibility, and more so as a critical aspect in fulfilling the ultimate goal of enhanced customer experiences. Banks that ignore finding a way to fit all of these pieces together will only see resulting data that is essentially unusable, that sits hopelessly within a number of disparate systems.
Successful banks can identify the immediate opportunities first, rather than getting caught up in a long-range plan that can be so difficult to implement that it causes paralysis. By picking an easy win to start such as interaction between the file-based channel and web channel, or identifying and automating customers’ repetitive activities, is enough to get the ball rolling.
Still, it’s nearly impossible to go it alone. Many have opted to find a strategic partner to not only help make the numerous products and services work seamlessly together, but to also prioritize the types of data and how the data is capitalized. A strategic technology partner will enable banks to play the role of agile intermediary for their business customers. The right fintech partnership will also enable the bank to achieve faster speed to market and to be better aligned with future innovation. This ultimately will drive more real-time, personal exchanges and in turn the ability to deliver a deep understanding of the bank’s customer relationships.
Smart Banks Can Win in 2020 and Beyond
Intelligent interconnected systems enable banks to engage with customers to deliver that Netflix-level personalized interaction that is now expected at every stage of the customer journey. Smart banks will be the winners in the challenging times that lie ahead and intelligent engagement is the only way forward in the battle for primary ownership of the customer relationship.
By Jessica Cheney, vice president of product management and strategic solutions for Bottomline Technologies