As technology has rapidly evolved throughout time, consumers’ preferences and expectations have also changed. The financial industry especially has seen a massive shift in automation driven by convenience in the past seven decades. From the emergence of credit cards as the first portable payment solution in the 1950s, to smartphones now enabling users to mobile bank, the influence of technology in finance is unavoidable and necessary.
In 2020, institutions faced a new chapter in the story of financial technology as the COVID-19 pandemic accelerated the use and reliance on digital technology on a new level. FIs launched completely digital customer service lines so they could maintain relationships with account holders while also following social distancing protocol. This swiftly escalated the speed at which financial institutions were compelled to adopt digital banking practices, generating one of the most dramatic fintech shifts in banking history.
Amid all the disruptions and anxieties of the pandemic, opportunity arose for fintechs and FI’s. For so long, financial institutions had followed a road map for digital transformation, yet many lagged behind in meeting the digital wants and needs of their consumers. Whether it be hesitancy due to compliance or a compromise in customer connection, financial services has been one of the straggling industries to fully effect digital transformation especially in the realm of customer engagement. The sudden push in 2020 for more and better digital unleashing the desires of consumers, especially younger accountholders finally caught up to banking. According to a survey, by McKinsey & Company, 71% of banking consumers prefer multichannel interaction whether that be online, on the phone, or in person, while 25% of individuals prefer a completely digital private banking experience.
Rapidly evolving customer expectations combined with increased competition plus a mandate to streamline operations have had an impact, regardless of the size of financial institution. The quick pace that institutions have been forced to reexamine digital customer engagement is not going to retract. This is not just due to the unpredictability of COVID-19’s impact; consumers have now grown to expect their FIs to provide the same digital services as their counterpart industries. While customers were forced to shelter-in-place, their banking habits changed. Those that encountered positive digital experiences will never go back to the old ways. Now, FIs must learn how to continue their technological transformation without losing their personal touch and attention to detail.
In pre-pandemic 2019, a survey of financial institutions showed that 68% had developed a digital transformation strategy. However, at that time, only 14% were actually in the process of implementing their strategy. The mid-sized and smaller financial institutions have had more unique challenges. Digital customer engagement and marketing has never been adequately emphasized or resourced. Therefore, they must maneuver this journey carefully without the more robust resources of the larger institutions. Yet, this is a journey that they must make if they don’t want to be displaced as not relevant in the industry.
In the past, institutions have relied on the preface that digital banking is always a possible solution, but not optimal. With an unprecedented reality of the past eighteen months, digital banking has now become the primary solution for most consumers. It is here to stay even after social distancing becomes a vague memory.
Regular and effective digital messaging is crucial to keeping in contact with customers in a time where physical interaction is far more limited. This communication must also maintain a high quotient of personal touch, especially considering that consumers are likely to switch to another FI after they have a single negative digital experience. Maintaining a real connection with those who already prefer digital communication is key to customer loyalty. Interacting with customers through smart, omnichannel banking brings about relevancy and not only meets, but exceeds, customer expectations. It sets a standard for an excellent customer experience. When an FI uses accountholder intelligence and is strategic in the way they reach out to their customer, it shows that they truly understand them.
Digital banking has created a new normal in the financial industry. Customers now expect more digital channels of contact, more information, and better, immediate communication from their FI. This inevitably means institutions must learn how to digitally communicate but with a personal, more human, touch.
Financial institutions must find ways to collect and maintain customer data as well as keep communications through multiple channels. This needs to come through multiple aspects of a banking customer’s life and financial journey, but this all requires technology that aids FIs in handling each account holder as a unique individual. This data can create a massive improvement in customer experience leading to more trust and loyalty between the customer and institution.
On this somewhat alarming landscape of soaring customer expectations and equally lofty competition, there is good news to be had. Innovations in customer engagement that turn customer data into relevant communications, utilize AI and social media-inspired engagement approaches have also entered the market during the recent few years. This powers customer engagement by connecting with each accountholder uniquely, at scale.
Building on that bit of good news is even better news. This sophisticated technology is not just reserved for the legion of multi-billion-dollar asset-sized financial institutions anymore. The platforms that are accessible, affordable and resource-light so that even the smallest financial institution can leverage its benefits have evened the playing field.
Building on that bit of better news is the best news. This innovative customer engagement technology is reaping huge returns and ROI for the FIs that have deployed it. Being digital in nature, it can be tracked and measured in every which way. As a result of the proven and promising returns, FIs that don’t make an investment in this area are really losing out.
So, to summarize, digital transformation in Financial Services has seen a massive acceleration in the past 18 months. Similarly, so have customer expectations and fierce competition. The digital transformation of any FI cannot be considered germane or complete without reconstructing customer engagement. Technology that is accessible, affordable and proven exists today and is already game-changing for FIs that deploy it. The future is here and now – for the financial institutions that want to reimagine digital customer engagement and make it a reality.
Preetha Pulusani is the CEO of DeepTarget, a FinTech company developing an open, data-driven and results-focused customer engagement and cross-selling platform for credit unions and banks. For more information, visit www.deeptarget.com.