" class="no-js "lang="en-US"> Thinking Beyond Banking: What’s Next for Retail Banks
Thursday, February 09, 2023
Saltedge Report

Thinking Beyond Banking: What’s Next for Retail Banks

Karan Oberoi, Chief Product Officer at Backbase 

The banking landscape is becoming more congested and fragmented every day. New fintech challengers continue to crop up, offering customers value in the form of ease, speed and new capabilities. In fact, it’s estimated that the neo and challenger bank market will reach $578 billion by 2027. With that, the value of speed and efficiency offered by many of these newcomers could easily lure customers in and take hold for the long haul if not matched. Traditional retail banks therefore have an urgent need to become the source of greatest value in the market, and in today’s environment, this starts with becoming the financial app of choice. 

Retail banks must adapt now if they hope to compete with the vast swath of fintech challengers that have benefited from being built on brand new architecture, free of the restricting legacy infrastructure that hampers traditional banks. Adapting will require banks to shift their thinking. Rather than architecting their technology around their own products or processes, they must think outside-in and architect their entire banking system around the customer. 

So, how can this be done? 

The approach of building around the customer is applicable to the full lifecycle of retail banking – from customer onboarding and product origination to delivering innovative daily banking experiences that increase engagement and loyalty throughout customers’ entire financial lives.  

Fast, bundled origination 

First impressions matter so it comes as no surprise that delighting customers starts with getting them through the door smoothly. Seamless onboarding and origination mean making the experience fully digital, removing friction, and getting customers onboard in a way that wows them. However, research shows that only 50% of institutions engage in customer onboarding. Automation and digitization are key here. Offering a superior digital experience means making the best possible first impression, which becomes a self-reinforcing cycle. Customers will keep coming back if their experience is high quality from the get-go. 

Banks, therefore, need to remove the traditional pain points of onboarding and product origination and create instant customer satisfaction. One of the most important factors here is allowing customers to complete a digital identity verification – traditionally one of the most painful parts of onboarding where banks see the most drop-off. By using instant photographs of an ID, then having the customer complete a live check all from within the app, banks can have them onboarded in a matter of minutes. 

Digital onboarding can go further, though, and enable customers to originate multiple products in one go, increasing customer stickiness and loyalty. By putting multiple product offerings in front of the customer in-app, in a clear and helpful way, banks can offer a bundled approach to onboarding. This allows them to potentially upsell more products or services and provides value for both the customer and bank. For example, with the right digital experience at sign-up, a customer could be prompted to open a checking and savings account simultaneously or even add on a credit card, getting engagement up instantly. For this approach to pay off though, the execution has to be almost instant, meaning customers need to be able to see the sign-up through in mere minutes, with minimum inconvenience.  

Powering healthy financial lives 

Once a customer is in the door, the challenge becomes keeping them there – again, this is reflective of the rise in fintech challengers competing for attention and offering additional value elsewhere. Banks therefore need to shape their everyday digital banking capabilities to keep customers interested and expand in-app engagement. This depends on delivering maximum value across a customer’s entire financial life. 

With the right digital technology in place, banks can deliver smart app features that give customers value they can’t get elsewhere, such as an in-depth view of financial wellness to empower their everyday decisions. It starts from delivering a holistic view of all accounts and financial products in one place – including those from other financial institutions and fintechs. Banks can then provide unique, meaningful insights such as cash flow analysis or spending insights to help customers get a better handle on their overall financial wellbeing. 

But true financial wellness depends not just on having an overview of all assets and liabilities, it also requires insights into the impact of new decisions on overall financial health. Digital technology allows banks to add capabilities such as smart savings features, which help customers analyze their transactions, set new, lower budgets for certain expenditures (like their daily latte), and re-allocate the extra money saved into separate savings accounts for the things they care about most – such as a holiday. What’s more, by offering an instant view into a customer’s credit score via their app, banks can digitally suggest actions a customer could take to impact their overall financial picture. This could include suggestions to consolidate credit cards or the creation of a digital budget to help control spending behavior in certain areas. By using analytics and clever automation, banks can deliver in-app experiences like this, enabling them to advise customers on how to make better decisions for their financial well-being. This is the type of market-beating value that will translate into customer loyalty. 

Personalizing experiences to pivotal moments in life 

Key moments in our lives are always tied to financial implications. That’s why, to deliver more value and become the banking app that customers love, banks need to better understand how their customers’ needs change at pivotal moments in life and get ahead of what personalized services can be offered in response. 

Meaningful, digital and well-analyzed data can empower bank employees to craft more impactful customer interactions. For example, by using data effectively, banks can provide tailored advice on cross and upsell opportunities that match key milestones customers are experiencing. And these communication points can be executed across various digital channels, like a push notification on a customer’s mobile phone inviting them to take out a product that is hyper-relevant to their needs. Better and faster access to data means harnessing the power of the cloud, allowing banks to be proactive. By having a clear, aggregated view of all customer data in one place – tracking their financial behaviour (with their consent) and recording every previous touchpoint they’ve had with their bank – while combining that with smart analytics and automation, bank employees can be more productive and efficient with customer relationships. They can send in-app prompts that give customers the ability to originate new products that underpin key moments in their lives, such as car loans or mortgages.  

More than banking 

It’s not enough to just compete in the current banking environment. In order to survive, retail banks need to be the orchestrators of maximum value and unique digital experiences, creating engagement with customers that goes far beyond what they currently get from core banking services. To think beyond banking, institutions need the ability to personalize every facet of the customer experience with the goal of improving daily lives, while also increasing operational efficiency for themselves. And this can only be achieved by taking a platform approach to technology, where all data, products, channels and touchpoints are centralized and fed into one another to create the smartest, most capable digital experiences. Value that stands out, and not only attracts customers but keeps them loyal, can only be created by a completely unified infrastructure.  

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