Mobile has become a way of life. Smartphone and tablet devices are everywhere, connecting people more than ever before. The new technology era has changed customer behavior, increasing their expectations of banks. According to research conducted by FIS, in the UK, digital-first banks are already outperforming traditional banks when it comes to customer satisfaction. Challenger banks indicate 76% of their customers say they are ‘very satisfied’ with their banking relationships, compared to 69% of those who bank with one of the top 50 global banks.
Thus, digital transformation in the financial sector is no longer an option – it’s a pressing necessity. It’s not enough for banks to just have “some” digital app. To get customers loyalty, the banking products should be exceptional – and reflect the lifestyle of customers – no matter what digital channels customers are using.
Banking as a lifestyle. The philosophy and principles
Mobile-first users require financial solutions that go beyond simple balance checking, transferring funds and mobile payments. They want easy and effortless, on-demand control over their finances, which can also be combined with their other activities. They want banking to become a part of their lifestyle.
Therefore, in order to succeed, banks have to search for the best possible ways of tailoring the products and services to the 21st-century customers. It is all about understanding consumers’ motivations and preferences, as well as adding value by solving their problems.
"Lifestyle banking means being present in people’s lives anywhere, at any time and creating constant bonding with them. It means transformation to something more than just an institution – to a reliable partner, guide, and assistant. " - comments Jonathon Bartlett , Senior Business Development Manager, Financial Services at intive.
Simply put, banks should introduce new features and services that will make consumers’ lives better and easier than ever. Do the consumers want to receive notifications when their salaries come? Learn about their spending habits? Or do they need something only partly related to finances, like finding a car or new apartment? The possibilities are endless – banks should explore them and make use of them by leveraging the newest technologies.
How can banks adapt to the new needs of the customers? Practical tools
I. Create a perfect user experience
Listen to the customers. In 2018 banks can’t be satisfied with just usable interfaces or adopting some of the UX processes – every bank needs a UX strategy. To create this strategy, banks should talk to their users, research their financial behaviors and collect all possible feedback.
"When it comes to UX, observing and talking to people is the key. It’s the only way to create well-designed, human-centric products.", – says Marcin Łasica, Associate Director Experience Design at intive.
Stepping into the users’ shoes and finding their real pain points translates into building a solution that they really want. One which is meaningful and provides a certain value.
Moreover, it’s important to remember about personalization and anticipating needs. Do you know that 63% of banking customers are asking for more tailored advice? That is a niche that can be – or even must be – taken.
Keep it simple. It’s well-known that the most attractive part of using mobile banking services is its ease and availability. Therefore, banks should simplify the user experience in all possible ways: making better page layout, clear navigation, etc. It is important to ensure that the most frequently utilized tasks are visible and intuitive for their users.
Simplicity should also be preserved across every channel. Consumers want to manage their financial tasks in a frictionless way on all their devices: they might start some activity (e.g. opening the account) on a smartphone but finish it on the website. And they expect banks to facilitate such a process for them.
Introduce new features. When it comes to functions, banks should do their best to let consumers assess and carry out capabilities they value the most. Very often it means bringing out new functionalities in response to customer requests.
According to the BI Intelligence's Mobile Banking Competitive Edge Report, currently, the most in-demand mobile feature is instant transfers. Among other popular services, mentioned in the report, are bill pay, international transfers, and peer-to-peer (P2P) payments. So, when it comes to becoming a lifestyle kind of bank, it’s crucial to create new desirable features as well as improve the old ones.
Going beyond those demands are challengers that do more and introduce state of the art features that will most likely impact daily banking in the future, like biometrics (from voice, through digital signature till face/eye/ finger-veins scans), augmented reality and many more.
Don’t forget about emotions. The financial industry is highly regulated, but that doesn’t mean users are not interested in having some fun when using the app. The emotionally oriented services can deepen customers’ engagement and raise the frequency of using the bank’s app. It might not be obvious, but it’s true: delighting customers with emotions translates into a huge increase in revenue.
II. Use artificial intelligence
Artificial intelligence is everywhere, and it’s rapidly evolving, having an unprecedented impact on people’s work and life. Hence, the full integration of AI’s power is a very important step for every bank striving to get ahead of the market.
AI-driven analytics. The use of advanced AI-based analytics enables banks to gain valuable data insights about their customers and match their needs on a deeper level. It’s an opportunity that should be used. Especially considering that most customers do not mind revealing information about themselves – according to the Accenture’s financial services report, 67% would share more data with banks in return for new benefits.
When the valuable data is combined with user-friendly mobile services, financial institutions can understand customers behavior, make relevant recommendations and offer the right services at the right time, e.g. offering a loan when a customer is looking for a new house online.
Chatbots. When it comes to lifestyle banking, using chatbots can give a significant advantage. These smart virtual assistants represent a thing of great importance to the modern banks – the ability to create immersive dialogues with the customers.
"Chatbots together with voice assistant are driving a new wave of User Experience like mobile apps did a few years ago.", – says Grzegorz Skorupa, Data Science expert at intive.
Besides just communication, chatbots can be used for gathering information about customers. By using predictive analytics and customer-specific data, chatbots can start hyper-personalized conversations with customers, making them feel understood. For example, chatbots can learn a customers’ spending patterns and then use this knowledge for advising them on how much to save. On top of that, chatbots can be used as an extension of the direct sales channel, just imagine ordering a pizza or taxi while chatting with your mobile assistant through a smartphone.
Voice assistants. Voice-Powered chatbots, like Alexa, Siri, Google Assistant or Cortana, are the next big thing for the contemporary financial sector.
While still far from mass adoption, voice assistants are becoming more and more popular among the millennials and younger digital-native generations. According to the report by eMarketer, today the heaviest users of digital assistants are people between the ages of 25 and 34.
Digital banking apps, enhanced with voice recognition systems, can greatly facilitate the most important financial services, leading to a whole new level of personalized and intuitive user experiences. Thanks to the voice assistant, banking clients will be able to check their account balance, track their spending and even pay bills – just with a single voice command.
III. Get business value from regulatory requirements
The Revised Payment Service Directive (PSD2) is one of the most groundbreaking regulatory challenges that banks have faced in recent years. Compliance with the new legislation means the financial industry is going to change considerably, affecting both businesses and customers.
Despite some difficulties, PSD2 gave rise to the new open banking ecosystem, and it presents a lot of exciting opportunities for banks. An open API economy will accelerate innovation, encouraging banks to create new customer-driven, added-value services, and products – either alone or by leveraging third-party providers.
Adapting to the lifestyle trend. The example of Tandem Bank
In the face of a rapidly changing world, more and more banks try to keep pace with the expectations of modern consumers. Undoubtedly, so-called challenger banks are in the forefront – and the British Tandem Bank is among them.
An “app-only” bank, Tandem focuses on giving its customers faster, more personalized, full lifestyle banking experiences. It provides a selection of banking services, which tend to simplify and personalize finance management. Bank apps great user-friendly design, intuitiveness, and quick performance really appeal to today’s consumers, especially millennials.
Leveraging AI-driven analytics, bank provides its clients with valuable insights into their spending as well as actively seeking better deals to help them save more money. For example, the bank always alerts the clients when their bills increase, or a payment comes in – letting them have more control over their budget.
The Tandem Bank company is also embracing new regulations, such as PSD2 – seeing it as a step towards a better open banking world and the opportunity for broadening the banking offer.
The uniqueness of Tandem Bank’s offering, combined with the effective use of customer’s individual data, results in a lifestyle kind of a solution, which has the potential to change the way we think about financial services.
So, what’s the best way for banks to succeed in today’s world? We believe the key is to realize that banks aren’t just about finance anymore – they are about aggregating various services and giving the best user experience possible. The banking products of the future are the ones that fulfil real people needs and solve real problems, evoking positive emotions at the same time.
To keep pace with customers’ expectations, banks should rethink their strategies as soon as possible, creating flexible and open banking platforms to develop and distribute tailored products to customers, utilizing third parties when needed. The banks with a focus on innovative lifestyle approach to financial services will become leaders and trusted partners for their customers.