The digital banking landscape continues to evolve at a rapid pace, shaped by a confluence of technological advancements and changing consumer expectations. Let’s explore the continuous evolution in customer experience innovation, highlighting how banks are striving to meet and exceed the growing expectations of tech-savvy consumers. As we delve into these trends, it becomes clear that the digital banking sector is not just responding to immediate challenges but is also paving the way for a more integrated, efficient, and socially responsible future.
Continued emphasis on CX innovation
As tech giants continually roll out features to make life more hassle-free, they set an expectation for other services, including banks, to place more emphasis on enhancing customer experience (CX). This trend is something we're likely to see year on year. Think about how convenient it is when your Uber app gives you a heads-up that you are getting out at a bike lane, or when Outlook reminds you that there may be a missing attachment in your email, or when your car tells you not to forget that you are in a paid parking spot – these are the kinds of smart, helpful features consumers are getting used to. Banks are in a position where they need to keep up with these changing expectations and deliver the financial equivalents. It's all about making digital banking as intuitive and user-friendly as possible, integrating it into everyday life much like the tech we use daily by offering smart and more tailored services.
Increased importance of consistent experiences across channels and platforms
There is an increasing focus on ensuring that customers have a consistent experience across all banking platforms. Right now, many banks are struggling with disjointed customer journeys. You might find that using a bank's app feels entirely different from using their website or interacting with an ATM. And even within the mobile app itself there can be differences between product siloes, where the environment for your cards is completely different from your daily banking functionality. Banks are increasingly feeling pressure from their customers to fix this. It's not only about harmonising the design. The real goal is to provide a consistently high-quality experience, no matter how or where a customer interacts with the bank. This consistency is key to keeping customers happy and making sure they can move smoothly from one banking channel or product line to another without any hitches or confusion. Equally important is ensuring that all these experiences are aligned with the bank’s brand identity. This alignment is crucial for delivering a seamless experience that resonates with the specific customer segment the bank is targeting. A strong and consistent brand identity across all channels not only reinforces the bank’s image but also builds trust and loyalty among customers, providing them with a familiar and comfortable banking experience, tailored to their needs and expectations.
From CX to EX: Enhancing employee experience
The usability of back- and mid-office systems in banks has long been an area of concern, often leading to inefficient and cumbersome processes. This inefficiency not only increases the risk of human errors, but also negatively impacts customer experience. Recognising that employees are also consumers with expectations of efficiency, there's a growing need for banks to improve these internal processes. While digital banking has automated many tasks, a significant portion still requires manual intervention, often resulting in relatively high operational costs. Addressing this, there's a shift towards focusing on improving the employee experience (EX). The coming years are likely to witness a concerted effort in the banking sector to streamline these processes. This involves investing in technologies that not only automate, but also simplify workflows, making them more intuitive and less time-consuming for employees. The goal is to create a work environment where manual tasks are less burdensome and more integrated into an efficient workflow, ultimately leading to better overall service for customers, lower operational costs and a more satisfied workforce.
GenAI: Move from prototyping and small-scale experiments to extended production functionality
GenAI, a staple in any discussion about industry trends, is moving from the experimental phase to becoming a core component in banking operations in 2024. Banks have been exploring GenAI through prototypes and beta versions, but the coming year is expected to see these innovations shift into full production. A standout example from the end of 2023 is Bunq's introduction of Finn, an advanced AI assistant designed specifically for modern banking needs. Finn represents more than a basic response system; it leverages account data along with Bunq's array of products to provide personalised financial insights and assistance, thus enhancing the overall banking experience. The move to full-scale GenAI applications will likely begin with relatively low-risk areas such as support in contact centers, aiding relationship managers, enhancing risk management, and facilitating code generation by development teams. There's also a keen anticipation for the integration of GenAI in providing financial advice. However, this aspect might face a slower rollout, not due to technological constraints, but rather due to the readiness of regulatory bodies and internal risk management protocols within banks. The expectation is that consumers might be prepared to embrace GenAI-driven financial advice before the regulatory framework fully catches up. This transition marks a significant step in the evolution of banking technology, reflecting a broader trend towards more intelligent, data-driven financial services.
More focus on cost-effective innovation where it matters
Our own research indicates a significant trend in the mobile banking sector: approximately 80% of the functionalities provided by banks are now standardised across the industry. This suggests that the differentiation of a bank's features lies in the remaining 20%. Recognising this is critical for banks in strategising their development and implementation plans. More banks are coming to understand that while the bulk of their functionalities is common and essential, standing out in the market doesn’t necessarily mean reinventing these standard elements and spending a large part of their budget on it. The strategic approach for banks moving forward involves leveraging ready-made, out-of-the-box components for foundational services. This not only ensures efficiency but also frees up budgetary resources for real innovation and differentiation. To truly distinguish themselves, banks need to focus their innovation budgets on delivering unique features and experiences that set them apart from the competition. This means implementing the fundamental banking necessities through established third-party digital platforms, which are adept at integrating these essential services seamlessly. By doing so, banks can concentrate their efforts and investments on creating distinct, tailor-made user experiences that resonate with their customer base and enhance their competitive edge in the market.
Embracing sustainable digital banking
There's a growing consumer demand for sustainable and inclusive banking practices, indicating a shift in customer priorities towards social and environmental responsibility. Customers increasingly prefer to engage with financial institutions that not only offer financial services, but also demonstrate a strong commitment to social and environmental causes. This trend includes the rise of green fintech collaborations, which effectively merge financial technology with climate tech to promote eco-friendly banking practices. Despite a dip in the prioritisation of Environmental, Social, and Governance (ESG) initiatives in 2023, there's a positive outlook that banks will recognise the growing consumer inclination towards brands with a purpose. Ignoring this shift could lead to banks losing touch with a significant portion of their customer base. Technology plays a crucial role in this transition. Tools such as AI, advanced data analytics, blockchain, and other distributed ledger technologies are becoming instrumental in helping banks reduce their own carbon footprint as well as that of their customers. These technologies can be employed to analyse a bank's sustainability practices, measure the impact of green financial products, and support consumers in making environmentally conscious choices. Also, the shift towards cloud presents an opportunity for banks to further reduce their environmental impact, if implemented well with sustainability as a performance indicator. These technologies not only help with sustainability efforts but also create an interesting business case. By finding ways to monetise these environmentally friendly practices or use them to cut costs, banks can fulfil their corporate responsibility while simultaneously enhancing their operational efficiency.