The Relevance Challenge: What Retail Banks Must do to Remain in The Game

EY's Global Consumer Banking Survey of 55,000 consumers in 32 countries reveals that traditional banks are under threat and their relevance with consumers is waning. Therefore, traditional banks need to rethink – and in some cases even revolutionize – their approach to consumer relationships. Key findings include: 40% of customers expressed decreased dependence on their bank as their primary financial services provider and have used non-bank providers for financial services in the last 12 months. 20% of customers who have not yet used non-bank providers plan to in the near future. The survey revealed four critical areas where banks must focus their investments and efforts to restore their central place in the lives of consumers.

• Building customer trust
• Enhancing customer understanding
• Rethinking distribution and customer engagement
• Innovating customer experience like Fintechs

Build customer trust - without it, you’re just another bank Customer trust in banks is diminishing, particularly in banks’ ability to provide unbiased, high-quality advice.

• 93% of customers trust banks to keep their money safe
• 22% have little or no trust that banks will provide unbiased advice

How can banks build customer trust?

• Radically transform the front line’s ability to provide unbiased, high-quality advice
• Enforce operational excellence to eliminate errors and shorten service timelines
• Foster a customer-centric culture by empowering both front-line and back-office employees
• Facilitate complete transparency on product pricing and features
• Develop value-adding services directly aligned to customers’ changing needs

Enhance customer understanding - you don’t know them like you think you do A lack of deep and granular insights into customer preferences and behaviors means many banks are unable to deliver the services and experiences consumers expect.

• Only 16% of customers are both financially savvy (understand products) and digitally savvy (confident using digital channels)

How can banks serve and engage with customers in a way that is relevant to them?

• Adopt new data streams and more advanced analytics to develop better ways to approach customers
• Segment customers more granularly and develop tailored propositions
• Improve personalization and targeting capabilities, with a particular focus on digital advice and the role of branches

Rethink distribution and customer engagement - get serious about omni-channel Because customers want to interact in many different ways, banks must rethink their distribution approach (including the role of branches) and develop omni-channel capabilities to engage customers on every step of the journey.

• 82% of consumers go online first to research a product, but 59% of customers need to speak to someone to get advice or take up a new product
• 65% of consumers think having a digital presence is highly important, but 60% also think physical presence is highly important

How can banks improve engagement?

• Rethink the future role and format of branches and reconsider branch closure plans
• Thoughtfully design future cross-channel customer journeys
• Anchor all channel decisions in deep analysis of available data

Innovate customer experience like FinTechs Banks face a competitive imperative to innovate like FinTechs, especially around the customer experience, because that’s where non-traditional banks are gaining traction. Customer experience elements rank just behind more attractive rates/fees for reasons to consider using an online or mobile, non-bank provider. How can banks elevate customer experience?

• Set up a formal FinTech engagement program and monitor FinTechs continuously
• Seek potential opportunities to emulate, partner or acquire FinTechs
• Radically simplify product portfolios, product features and pricing
• Set up cross-functional teams to redefine end-to-end customer journeys

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