How to Safely Navigate Digital Transformation in Banking

Not so long ago, it was normal for customers to round up their cash and cheques, drive to their local bank, and then wait in line to make a deposit via a cash machine or teller. This approach to managing finances was time consuming and made banking feel like a chore.

Fast forward to today, where banking is a breeze and making a deposit is as simple as taking a picture of a cheque with your phone.

More banks are jumping on board the digital transformation bandwagon by launching mobile apps that make banking quick and easy for customers. But there’s still a way to go before this way of banking spreads and becomes the new normal for the majority of customers. After all, only 19% of banks admit to having a clear digital strategy.

With mounting pressure to safeguard electronic customer data, manage evolving customer expectations, and keep pace with the competition, it’s time for you to figure out how to navigate digital transformation in banking. Let’s look at how you can get started.

Understand and manage evolving customer expectations

Customer expectations are evolving at breakneck speed. These days customers can order a meal, buy a car, or plan their next vacation all from the comfort of their homes. Having the world at their fingertips has created an expectation that the brands customers do business with will evolve to accommodate their needs.

A global study by Accenture surveyed approximately 33,000 banking customers in 18 different markets. What they found were three distinct groups of customers:

• Nomads. They value quality service, personalisation, innovation, self-service, and branch experiences.
• Hunters. They value quality service, traditional providers, a human touch, and access to new services.
• Quality Seekers. They value trust, innovation, automation, enhanced experiences, and are prime for retention.

[Source]

You can use this framework to identify these groups within your own customer base. Once you’ve identified your groups, you’ll have a better understanding of their expectations of you.

When it comes to digital transformation in banking, Nomads are open to accessing their banking products in non-conventional ways. For example, the Accenture study found that, “53% [of Nomads] would like instant access to face-to-face banking advice via mobile.” The study points out that financial service providers that deliver a face-to-face experience via mobile will stand out, compared to the competition, for this group of customers.

What you can do

Once you’ve identified the different kinds of groups within your customer base, advertise your services in ways that are relevant to each group. For example:

• Highlight your self-serve mobile app features to Nomads
• Showcase your value-added features—like expense tracking—to cater to Hunters
• Introduce your mobile-only advice service to Quality Seekers who value automated advice

Use the framework above to create several different types of marketing and advertising campaigns for each group. This way you can tailor your product to the specific expectations of each group.

Use a secure messaging system to communicate with clients

These days it seems every week brings news of the latest data breach or cyber attack. From stolen credit card data to hackers scamming banks out of funds, cyber threats are on the rise. This is especially troubling when you use third-party vendors—for example, platforms that let you send emails or mobile messages to customers—to help you manage your customer accounts.

Cyber threats aren’t only costly for you, but they also damage your relationship with your customers. A global survey by Gemalto, a global provider of data protection services, found that 64% of customers say they’re unlikely to stay with a company where financial data was stolen. Plus, 49% of customers say they’re willing to take legal action against companies where their data was stolen. When financial information is stolen, customers lose their faith in you and your business suffers devastating setbacks.

[Source] Customers are most concerned about having their financial data stolen.

If your bank does experience a breach or cyber attack, you need to reassure customers that the issue has been resolved. The Gemalto survey found that 75% of customers don’t feel companies do enough to secure their data. Although it’s reactive after a breach happens, take this time to explain what’s been changed and what measures you’re taking to safeguard customer data.

If you work with third-party vendors, make sure you know what these companies do to protect customer data.

At VoiceSage, we work with businesses, like Vanquis Bank, in the financial sector. These companies use our platform to send a combination of SMS, rich media, and interactive voice messages to their customers. Since becoming a customer, Vanquis Bank has been able to:

• Increase customer contact rate by 200%
• Increase 90 day+ ‘promises to pay’ by 2%
• Increase conversion of promised payments to actual payments for late-stage debts
• Simplify the online application process

A successful partnership like this wouldn’t be possible without our proven track record managing cyber security risks. Vanquis Bank can focus on growing their business while we take care of cyber security. We offer our customers round the clock monitoring and access to security systems that safeguard customer data.

What you can do

A big part of digital transformation in banking is keeping customers up to date on outstanding payments, reminders, and notifications via their mobile devices. While these messages can be sent using your banking app, notifications aren’t effective if customers turn them off. Instead, target customers with mobile messaging.

Make sure the platform you use offers security features like:

• Data encryption
• Ongoing, regular security testing
• Breach detection and monitoring

This gives you and your customers peace of mind knowing data is safe and threats are actively monitored. Book a demo with us to find out more about how these and other features can help you.

Research the competition, then outperform them

Every day, new apps are released on platforms like Google Play and the App Store, which creates a considerable amount of competition. Of the millions of apps available, we’re seeing more finance apps launching on these platforms and creating more opportunities for the financial sector to innovate. For example, there are:

• Fintech apps that help customers do anything from manage their finances to submit loan applications
• Budget planning apps that help customers manage their money more efficiently
• Investment apps to help customers grow their wealth
• Banking apps that let customers manage their accounts, transfer funds, make deposits, and more

This last app group is especially important because, despite the growth in digital tech, not all banks offer mobile options. As a result, this leaves room for you to understand your competition and find ways to outperform them.

Banks like NatWest and Lloyds Bank let customers do things on their banking apps like check balances, review transaction history, withdraw cash from cash machines, and apply for loans. If you don’t have a mobile app yet, use services like these as a starting point to create a product customers find useful early on. If you have an app and would like to improve it to increase downloads, consider what additional services and features will add value to the customer experience.

What you can do

Once you understand who your customers are and what they need from you, research your competition. Think about what digital features and services they offer that match your customers’ expectations.

Create a list and identify the features and services you already have, analyse how often they’re used, and find out what customers have to say about them. This is where you’ll find opportunities to differentiate yourself and innovate.

Don’t just copy your competition, either. Go one step further than what they offer. For example, if a competitor offers the option to add payees via their app, make it easy for customers to find payees—like utility companies—by adding a drop-down menu of companies for customers to pick from, based on the account number.

The future of digital transformation in banking is here

We’re in the midst of the digital age and customer and industry expectations to adapt are only growing more every day. You can’t afford to sit on the sidelines and rely on traditional ways of doing business. While this might work for some customers, the majority expect something different. They’ll leave and go to businesses that offer them the types of services and features that simplify banking and make the experience more user-friendly.

Make defining and launching your digital strategy a priority. Embrace the constant transformation of the financial industry and try to understand how to use this change to build customer trust and keep it.