Digital Banking with a Human Touch: Three Trends
Digital banking is fast and frictionless – but are these capabilities enough for a bank to build trust and attract new customers in strategic business areas?
The rush to digital is forcing banks to rethink when, where and how to bring the human factor into the customer’s journey.
The tech revolution flipped the traditional business model in many industries. In the financial industry, an EY report revealed that the global adoption of fintech services – which brought a lot of convenience to users, like remote account openings and instant payments – moved steadily upward, from 16% in 2015 to 64% in 20191.
Customers have switched to mobile banking and payment apps in great numbers in the past years, and the trend is expected to rise. Experts quoted by Global Banking & Finance believe that 72% of adults in the UK will use mobile apps for payments and transactions by 20232.
The pandemic accelerated the rush to digital. In March 2020, when the coronavirus outbreak was labelled a pandemic, 25% of bank branches worldwide were closed, and 15% remained shuttered by the end of spring. However, even ahead of the pandemic, branch contribution to core banking unit sales had dropped from 75% in 2015 to 55% in 2019, according to McKinsey3.
More than 4,000 bank branches in the UK have closed in the past six years as digital services have been expanding, according to S&P Global Market Intelligence, quoted by Forbes4. Bank branches are also rapidly declining in the U.S., with some research predicting they may become extinct by 20345.
But what happens when a customer needs a more sophisticated product – such as a mortgage – and specific guidance for more complex financial transactions? What communication channels does he or she prefer when distress comes up?
Digital banking is fast and frictionless, that’s true. However, are these capabilities enough for a bank to build trust and attract new customers in strategic business areas? How can the human touch be embedded into digital banking in a way that is convenient for both the bank and the customer?
A recent FintechOS webinar, “Personalized Digital Banking with a Human Touch” addressed that topic, and the major takeaway was that even the most digital-savvy users still want guidance from a human being, as well as trust in their bank. And these two elements are just as important as a customer’s desire to have a friction-free customer journey.
You can find below three major trends in personalized digital banking with a human touch spotted by the two speakers of the webinar, Ionuț Encescu, Head of Products & Digital Innovation Hub at First Bank and Vitor Barros, Head of Platform Evangelism at FintechOS.
#1 The challenge now: to get the balance between digital innovation and human engagement
Digital is getting more and more embedded into our lives. Chatbots and other automated services are great, since they provide banking services 24/7, however there are situations when users need to speak with an employee.
The available data suggests that all customer segments — including born-digital generations —still want face-to-face interactions to be part of their overall banking experience. And banks are willing to offer that kind of experience because “the customer connection builds trust, and trust will transform into loyalty”, notes Vitor Barros, Head of Platform Evangelism, FintechOS.
The challenge now in the banking sector is to get the needed balance between digital innovation and human engagement across all channels.
Besides trust (inspired by human interaction), customers need friction-free experiences (provided by technology). How can these two be combined for a win-win situation? Ionut Encescu, Head of Products & Digital Innovation Hub, First Bank, thinks that friction can be reduced in two ways:
- By including the human touch within the process – and this can be achieved by video interaction
- “Ask the customer as few questions as possible”. If the answers can be found in other trusted sources or certain data bases, banks should integrate technology into this KYC process and keep video banking for other purposes, such as to provide human connection remotely for more complex transactions (e.g. mortgages).
“In our digitalization roadmap we focus on the speed of responsiveness and to provide the right mix of products. That’s why we are currently reshaping the lending process together with FintechOS”, Encescu said.
“We have reduced the response time by 80% to save this time to give advice to our customers”, he continued, bringing up small businesses as an example. “SMEs need a lot of guidance and advice, especially if they deal with EU funding or state-backed guarantees”.
# 2 The human touch will remain critical to build trust
To attract new customers and to retain the existing ones in an increasingly competitive environment, banks need to build new ways to engage with them, as well as to optimize their banking experience in a way that helps forge strong connections and build trust and loyalty.
“When things don’t go exactly as planned, the situation can turn into an opportunity for banks to deliver excellence and customer retention, which creates true loyalty” – Vitor Barros, Head of Platform Evangelism at FintechOS.
He thinks that banks need humans because “it’s the only option we have to deliver humanity”. For instance, when people apply for loans to buy a house, they need empathy. People prefer not to be treated solely as clients.
Banks have embraced different approaches to address these challenges: digital channels, hybrid models, and in-branch communication. The goal is to keep the connection with the customer strong, as well as to reduce time and operational costs.
Banks are aware that emotional connections help to keep customers coming back. Gallup research suggests that these emotional connections with fully engaged customers net an additional 23% of revenue. Emotional connections are driven by customers engaging with staff, not machines.
#3 Distressed customers prefer the branch
“Problems exist – that’s a fact. Everyone will have problems. When customers need support, we want to have the ability to understand them. We need to solve their queries fast and easily”, Vitor Barros, Head of Platform Evangelism at FintechOS pointed out.
That’s why Phygital banking – in which digital technology works side-by-side with physical and human services – is the trend of the moment. Hence, the challenge of the moment for banks is to provide personalized experiences through a mix of digital channels and human touch across everyday touchpoints.
MAIN PHOTO Credit: Unsplash
Register now to watch the full recording of the webinar.
Read on the same topic: Phygital – The New Banking Frontier
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