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Accelerating forward: how Covid-19 has changed banking forever

(Image credit: Image Credit: MK photograp55 / Shutterstock)

The last several months have proven difficult for all industries as businesses have been forced to shut down their physical locations and offer remote services. One industry that has had to quickly adjust is the banking industry. Covid-19 forced banks and credit unions to offer a digital experience that was convenient, engaging, relevant and secure. While many of them already offered some of these services, the challenge was how to deliver it across channels.

Banks have made significant strides over the past several years in offering more digital and remote services. However, not all services were also available online and not all consumers took advantage. According to PWC’s 2019 Digital Banking Consumer Survey 61 per cent of consumers still feel it’s important to have a local branch. One of the main reasons that number remains high is trust. Traditionally the relationship between the bank manager and the customer was built on trust and knowledge from face to face meetings where the bank manager would get to know and understand their customers fully. However, many banks are still trying to figure out how to ensure they are building mutually beneficial and trustworthy relationships without an in-person experience. Now with in-branch activity severely restricted and many consumers wanting to avoid it all together, banks must find ways to build trust through positive customer engagement.

Understand your customer

Banks need to know not only who their customers are but they need to understand them – what is their channel preference and how can I seamlessly authenticate their identity, what is the right offer and term they will likely accept, and how can I anticipate their needs for other products or services? They need to make sure customers who were already doing online banking are aware of all services and can access and manage their accounts. They also need to ensure non-digital customers enroll online. Typically use of digital banking falls into one of three demographics including those never going digital, digital natives and digital immigrants. Each of these segments has a different history and level of experience with digital banking ranging from banking with digital-online (no branch) banks to taking advantage of mobile check deposit and checking your bank account online to perhaps being open to considering signing up for an online account.

Banks need to offer a relevant experience and better understand who the customer is and anticipate their needs. However, now everything from the opening of a new account, to the application for a loan, document verification or applying for digital hardship or new small business loans, all services need to be available to customers online.

In addition to focusing on the customer experience, building trust with customers facing a crisis also requires businesses to deliver financial solutions that are bespoke to their needs. Understanding your customers means providing them with the proper tools that they need to get through the current crisis. For example, banks should be sure to suggest the right tools to appropriate customers, such as a small business loan to businesses, not individuals. This helps ensure a greater sense of trust in banks and businesses that they recognise and will be there for all of their customers.

Keep the experience safe

Banks also need to ensure that the person opening a new account is who they say they are, or that the business applying for loans can provide the proper documentation.  They have to protect customers from rising fraud risks and do so in a frictionless manner that doesn’t overburden customers with an overabundance of security protocols.

Consumers and small business owners should expect to see banks turning to more advanced security measures, such as transaction monitoring, behavioural biometrics and physical biometrics such as facial recognition. This will allow banks to do a better job ensuring they are keeping the bad guys out and letting the right ones in without causing a lot of extra work for the customer.  For example, instead of filling out a lengthy application forms and bringing proof of home ownership for a home equity loan, now verification of income, expenditures and assets will move to online sources. And instead of going to a branch and filling out a deposit slip and proving your identity by showing your state-issue ID, you can snap a photo of the deposit from your mobile device and submit it to the bank digitally. Perhaps the bank will verify you are who you say you are by required touch ID and using behavioural biometrics to flag how long it took you to enter your information. 

Use technology & migrate into the cloud

Digital customer engagement is a problem for the industry, but technology can help. In fact, many experts believe that one of the best uses of technology is improving customer experience. Technology advances such as AI and Machine Learning allow us to automate the use of data we already know about to spot trends quicker, reach the customer more effectively and improve the overall customer experience. In fact, there is a tremendous opportunity for businesses to segment and use their data to tailor programs or communications strategies that will help customers access and manage their accounts during this difficult time. Many businesses have a tremendous amount of data on their consumers. What is key is how they use this data to provide secure and personalised customer experiences

In addition, cloud technology has become front and centre as it makes it much easier to keep systems up to date and secure, even alongside feature enhancements and new releases.  The Cloud minimises lengthy and costly delivery projects with solutions that can be deployed in weeks, not months and years. The Cloud offers quicker reactions to consumer changes, easier access for employees and is typically more cost effective.

Digital transformation is the integration of technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.  Banks will have to make sure that they can quickly and safely implement technological advances, such as AI and machine learning, to continue to provide a safe and tailored experience for their customers. In addition, they should consider cloud opportunities to help manage budgets and instead focus their resources on better understanding their customers and providing the best possible customer experience.

Chris Fletcher, SVP Decision Management & Cloud Services, Experian Global Decision Analytics