Banking on Customer Behaviour

 Banking has gone through a paradigm shift and is no longer the same as it was even two decades ago. Even before the  pandemic changed the way the world operated, 49% of banking consumers showed keen interest in Internet banking and 47% preferred mobile banking.¹

The outbreak of Covid 19 virus and the subsequent restrictions has only strengthened the consumer’s belief in digital banking, leading to 57 % of them preferring Internet banking and 55% opting to bank on mobile applications. With this, the entire concept of banking is changing as physical branches are now being replaced with applications. This technological change has opened new doors for consumers to gain control of their transactions. Banks need to re-evaluate their business models. The only way to tackle the changing environment is by putting customer behaviour at the heart of everything they do.  

Transformation of Banking 

The banking business model has lacked both, customer involvement and differentiation, for decades. Customers had no choice but to entrust their finances to banks, and banks enjoyed a high level of customer loyalty. However, the recent financial crisis, tighter regulations, digital disruption, and the proliferation of fintechs and IT behemoths have all had a significant impact on the sector. What’s more, other industries have embraced technological advancements such as cloud mobility, IOT, and artificial intelligence to provide hyper customized services round-the-clock.

Retailers, for example, offer omni-channel experiences and highly customized offers and services. Customers, now have expectations of the same level of engagement, access, ease of business and intuitiveness from their banks.  Customers today demand not just access and greater control over their transactions but also enhanced engagement. Add to it, digital native fintechs and technology giants that have opened new avenues that are changing the entire banking experience and putting customers at the center of everything.  

According to the Deloitte Center for Financial Services, traditional banks lag behind digital companies by at least 12% when it comes to creating emotional relationships with clients. Truth is, customers are not hesitant to switch banks or even move their business to new players, due to urbanization of the sector. In fact 41% of banks reported that their digital plans have been largely implemented. The pandemic further pushed digitization to the top of every bank's priority list. Today, banks are focussing not just on guaranteed business continuity considering the difficult times, but also on assuring customer satisfaction.

Putting the Customer at the Heart of Banking 

Customer loyalty and trust are two important factors. Traditional banks must begin by putting the customer at the centre of all their plans while they focus on speeding up their digital transformation.

In essence, banks must focus on two key concepts. First and foremost, what do customers desire? Second, how do they handle their finances? By now, the answer to the first question is quite obvious. Customers today expect a seamless and simple banking experience.

They want to be able to access their accounts whenever and from wherever they are, and they don't want to have to go to a bank branch to do it. Banks can deliver services to clients when and where they want them by investing in cloud, mobility, and contemporary apps. 

However, this is only the first stage in a bank's journey. The abundance of data held by practically every traditional bank provides the answer to the second question. Banks can develop a complete picture of a customer's behaviour by effectively evaluating this data - the types of transactions they conduct, the platforms or modes they prefer, their spending habits, their savings patterns, and so much more. For an enterprise trying to communicate with customers in new and imaginative ways, this data is a gold mine. From hyper-customizing products and services to creating sharper and more relevant marketing and engagement campaigns, customer behaviour is the key to modern banking.

Achieving Behavioral Banking 

The bank of the future must be technologically advanced, customer-centric, and mission-driven. Legacy banking systems lack the flexibility and cutting–edge technology required to develop dynamic customer–centric goods, services, and promotions. Through effective revenue management and real-time customer experience orchestration, aligning with a technology partner can help them maximize the lifetime value of their customer connections. With the right partner in place, banks can gain a deeper understanding of each customer and leverage technology to deliver a great customer experience. They can automate processes to create a high–quality experience and enable the right ecosystem to support the complete customer life cycle and provide optimum value. A technology partner can assist to drive a new era of customer-centric banking and help the bank accomplish its goals, from smart and relationship-based pricing or offer management to hyper customization and loyalty management. 

Customer demand and operating models are changing drastically in banking as they are in other key industries. Banks must focus on a long term transformation that provide the ‘value’ expected by clients. And this shift to a customer-centric behavioral approach is always easier when you have the right partner.

1 Businesswire