There is no doubt that UK banking is experiencing massive change. Traditional high street banks are facing tough competition from a rising number of digitally-focused Challenger banks. Customers now want to be able to do their banking from anywhere, at any time, primarily using their smartphone. As a result, UK banks are striving to become more customer-centric and offer more digital services.
The main cause of disruption has been technology; initially used by banks to identify and drive greater efficiencies and save costs, it is – finally – beginning to be used to enhance customers’ banking experience. So how is this technology actually being applied to create the future friendly face of banking, and most importantly, improve customer service?
The future friendly face of banking
Traditional banks have primarily been at the bottom of customer satisfaction tables, with the first Challenger bank, First Direct, consistently at the top. Customers’ communication with their bank has often been one-way, i.e. the customer contacts the bank to carry out a transaction, meaning that brand engagement is relatively low. Yet brand loyalty has remained high with few bank customers switching, even when it became quicker and easier to do in 2013 with the Current Account Switch Service. This historical inertia must not be mistaken for contemporary satisfaction. It appears the influx of Challenger banks, such as Tandem, Mondo, Atom, and Starling to name but a few, is now causing record numbers of bank customers to switch their account to rival providers.
Trust in financial services – and banking in particular – is lower than any other industry, according to Edelman’s Trust Barometer. Many banks have been trying to regain the general public’s trust since the global financial crisis in 2008. The Bank of England made it easier to set up new banks in 2013 in order to introduce more competition into an industry that lacked transparency and innovation since the crash and resulting recession. Last October the Competition and Markets Authority (CMA) also forced banks to disclose any 'hidden' costs related to their current accounts and show customers exactly how much was taken in bank charges.
So how are the traditional banks trying to compete and regain the trust of their customers? Are they using technology effectively to become more open and honest about their services to customers? What are the Challenger banks doing with technology that’s so different?
Firstly, one must realise Challenger banks have the advantage of coming into a market where innovation in FinTech has never been more prevalent, accessible and affordable. They can leap-frog traditional players as they can build their IT systems from scratch, not constrained by sprawling legacy systems or an expensive network of high street branches. New cloud computing solutions allow the Challenger banks to purchase new systems as a service – such as contact centre technology – on a user per month basis, avoiding high upfront infrastructure costs and gaining fast and flexible scalability.
This new breed of bank is starting to get granted banking licences and understands the latest banking habits. It is leap-frogging its competitors to appeal to modern customers who want an entirely mobile, digital banking experience and greater transparency when it comes to their money and an understanding of a bank’s ethics.
The established banks do however benefit from stronger security systems, a pre-existing customer base (consisting of many people who are still somewhat reluctant to switch), proven delivery channels and financial experience. These brands also survived the recession and are on top of the latest financial regulations. Furthermore, the advancements in technology that Challengers are taking advantage of, are equally available to traditional banks looking to improve efficiency and customer satisfaction.
No more 'computer says no'
The question then is not if but how established banks should use technology to compete. With the answer, first and foremost, being that a change of culture is needed to become ‘digital first’ within the next decade (at the very most). Without doing so, banks will not be able to keep up with customers and will risk going out of business. Gone are the days of visiting your local, friendly bank manager to find out about the latest banking product only to be told 'computer says no' – that the product isn’t available – or rather, not available to them. Now all banking services must live on a phone, from simple money transfers to biometric security and detailed spending data.
Customer service must be consistent and connected across all new channels, which is what we advise banking clients using our customer engagement technology. Some banking customers want to use more than one channel within a given interaction, which is what we call multimodal customer service. For example, an interaction may start as a web chat then transition to a co-browsing session to more quickly and easily solve a problem. This means giving contact centre agents omnichannel technology that was built that way from the start, as well as the training and data needed to help them identify problems and take rapid action.
Smart banking with AI
One of the biggest technology trends today with regard to delivering the next generation of customer service is the use of Artificial Intelligence (AI). This will be where banks can really differentiate themselves and compete against future Challenger banks.
Most bank contact centres are already using some form of AI, with real-time speech analytics perhaps being the most common. But AI is evolving fast. For instance, AI engines can make use of big data to identify things like what web pages a customer last visited, thus arming agents with personal information about a customer before an interaction even begins. AI can also be used to spot and predict customer usage patterns and automatically generate relevant alerts.
The idea of the 'robo-advisor' or 'virtual agent' is also fast becoming a reality. Most agree, however, that while these will replace many of the routine interactions agents handle today, people will still be needed for more complex customer service issues. Rather than taking away the 'friendly' human element of banking, the future will be a mix of automation and people.
The future friendly face of banking isn’t a robotic bank manager. Rather it is banks regaining consumers’ trust by understanding and meeting their needs with a combination of intelligent automation and the essential human touch.
Leon Stafford, Regional Territory Manager, Interactive Intelligence