Transforming Financial Services: A New Era of Digital Customer Engagement in Banking

The finance sector is navigating through a period McKinsey has termed the 'Great Banking Transition.' This era is defined by heightened regulatory scrutiny, emerging digital domains, and robust competition from fintech innovators, presenting banks with unprecedented challenges. What is the pivotal strategy for banks to excel in this dynamic environment? Prioritizing and enhancing customer experience (CX).

While CX has always been a focal point, recent shifts in the financial sector have introduced new dynamics into the customer journey, elevating CX as a critical determinant of loyalty and business growth. Research by McKinsey underscores this, showing a direct correlation between customer satisfaction and superior financial performance. In an era characterized by fleeting customer loyalty, the value of a satisfied customer—who is six times more likely to stick with their bank—cannot be overstated.

The bar for customer expectations has never been higher. In a world dominated by the likes of Amazon and Uber, where immediate satisfaction is a given, banking customers seek a frictionless, personalized service experience that goes beyond mere convenience.

The fragmentation of banking services has diluted banks' traditional role in daily consumer interactions. With the advent of comprehensive apps capable of offering instant loans, swift transactions, and bill payments, the question arises: Why would consumers need a traditional bank when a Superapp suffices? This shift has led banks to lose crucial transactional data for crafting personalized experiences.

Digital Banking Experiences: The Gap Between Myth and Reality

As the battle for customer loyalty intensifies, banks are pressured to upgrade their digital capabilities. The past decade has seen significant strides towards digitalization, transforming how financial institutions operate and engage with customers. Banking has become accessible around the clock, with just a tap on a smartphone. Yet, the question remains: Is this level of digital service sufficient?

Despite these advancements, banks still face significant hurdles in mastering CX. A study by Bain reports that even in the best scenarios for opening accounts, success on the first attempt occurs only about 66% of the time. A notable discrepancy exists between CX's expected and actual delivery, with many customers feeling underserved.

The Critical Challenge: Overcoming Silos to Enhance Customer Journeys

A deeper examination reveals that the crux of the issue lies in the persistent use of outdated, siloed operational models. This approach results in fragmented customer journeys and inconsistent service delivery, starkly contrasting with the seamless and intuitive experiences digital-age customers expect. Moreover, the reliance on legacy systems, which often struggle to integrate with modern, flexible solutions, exacerbates the disconnect between customer expectations and banks' capabilities.

Following a piecemeal and isolated approach, the introduction of new technologies further compounds these challenges, creating a labyrinth of disparate systems that fail to synergize and deliver cohesive value.

Achieving CX Excellence Through a Platform-First Strategy

In the quest for digital transformation, banks have often focused on optimizing specific aspects of the customer journey, employing targeted solutions like automation or AI. However, true digital excellence demands a comprehensive overhaul—a shift towards a platform-first mindset that fosters integration and holistic improvement without upending existing infrastructures. This paradigm shift transcends incremental adjustments, advocating for a cohesive platform that connects and streamlines various banking functions, elevating the entire ecosystem's efficiency and responsiveness.

The transformation of DBS Bank exemplifies the power of a customer-centric, platform-first approach. By concentrating on genuine customer needs, DBS launched "digibank," powered by AI to deliver personalized financial guidance. This strategic pivot has expanded their customer base and significantly enhanced customer satisfaction levels.

Leaders in the digital banking arena distinguish themselves not by incremental improvements but by fundamentally reimagining the customer journey. They automate and integrate AI seamlessly into banking processes, facilitating efficient, intuitive, and interconnected services. This holistic strategy, underpinned by a platform-first model, eradicates operational siloes, amplifying the impact and reach of digital initiatives.

A platform-centric approach enables banks to leverage their digital investments fully. Positioned atop the existing technological infrastructure, an AI-enhanced platform unites various tech solutions, allowing for the unimpeded flow of data and insights across the organization. This interconnectedness simplifies the creation of intelligent, unified, and customer-focused digital journeys.

The Future of Banking

The banking industry is undergoing a digital metamorphosis centered on redefining customer experiences. Excelling in the CX domain requires deliberate, strategic efforts prioritizing comprehensive customer journey enhancement supported by an AI-driven platform. Banks that embrace and adapt to these changes are set to lead the industry, establishing new benchmarks for digital engagement and creating customer experiences that are not just necessary but cherished. 

-Written by N Shashidhar – Vice President & Global Head of Platforms, Edge Platforms, EdgeVerve