Lessons for Banks to Learn from BigTechs About Brand Loyalty

 In the last few decades, we have seen a plethora of technology giants offering solutions and services that have changed our lives in myriad ways. Technology has enabled us to get everything as per our convenience, right from cabs to movies and food to salon service, with the simple touch of a button.

BigTechs (such as Facebook, Google, Apple, Alibaba, and Amazon) have joined the banking scene after overcoming regulatory difficulties, and banks now face increased pressure to meet customer expectations and deliver services as seamlessly as possible. 

What’s more, the digital surge brought on by the pandemic has spurred the transformation in the financial services industry. BigTechs are delivering a better value proposition in many areas and garnering a high level of trust with consumers, thanks to their digital expertise, access to customer data and presence in the customer’s life events. The result? Earning customer loyalty has become more difficult than ever for banks.

In fact, a Bain & Company survey of 131,930 consumers in 22 countries found that consumers’ willingness to buy a financial product from new technology companies remained high in Asia and Latin America. It has therefore become important for banks to live move ahead with the times and improve and digitalize the customer experience while reinvesting in enhanced product experience to ensure customer loyalty.

Here are a few key lessons for banks to learn from BigTechs:

Offer a Frictionless Experience

Customers have flocked to BigTechs as they have successfully created ecosystems that efficiently match buyers and sellers, akin to a one-stop shop for products and services. That is exactly what banks must do. Banks must lay emphasis on providing users with an experience that is suited to their own needs, as well as providing access to an ecosystem of services at any time and from any location.

Improve Service Quality

According to the Bain survey, 54 % of respondents trusted at least one technology business more than banks in general, and 29 percent trusted at least one tech company more than their primary bank. Banks may protect their turf by incorporating APIs into their offers to boost customer convenience and service quality. They can, for example, study client behaviour and anticipate simple transactions like online bill payment as well as more complicated interactions like buying a new home. Customers will be won over by identifying such instances and making them simpler and more digital.

Collaborate and Co-create

Thanks to their ability to harness data, BigTechs have been able to outperform traditional banks in terms of understanding client needs. However, it turns out that while banks have access to some fantastic data, including customer interactions, they aren't fully able to extract the same value from it. To undo the damage, banks must build an ecosystem of partners and employ data analytics effectively.

Go Beyond Traditional Products

One of the reasons BigTechs command loyalty is that their one-stop-shops are more accessible and user friendly. That’s not all, they also offer integrated, non-traditional products (for instance, money market funds and insurance) leveraging their established payment services.

Banks have to go beyond their core product offerings and lay equal emphasis on customer-centric banking solutions to meet the new-age customer’s aspirations for financial advice, financial education, and tech solutions to ensure greater brand stickiness. One such avenue could be digital unsecured lending that would not only open new revenue streams for banks with limited risk exposure but also cater to millennials looking for instant financing.

Offer a Connected Experience

Customers are today living in a world where they are expecting banking experiences that live up to their digital requirements and lifestyle. Personalization in banking is a definite way of working towards customer loyalty. Banks need to enhance their offerings and be open to design thinking, a continuous process that involves understanding the user and challenging assumptions, to offer customers an experience that merges well with their digital lifestyle applications.

Having initiated their digitalization journey years ago, banks have faced similar challenges due to the rules and stringent licencing requirements that they need to follow. Another roadblock is the existence of data localization laws that require information to be stored locally.

Customers' expectations of banks have risen as a result of the arrival of BigTechs, particularly for rapid, intuitive, and digitally enabled financial solutions. To avoid losing business to technology businesses, banks must stay up with today's tech-savvy, new-gen users, think customer-centricity, and push boundaries in order to increase brand loyalty and win their confidence, and eventually, trust and loyalty.