Fintech firms are the largest disruptors on the scene right now. They have made digital banking the norm across demographics by enabling instant gratification, availability, and ease of access to digital payment platforms, online loans, and internet fund transfers.
While traditional banks have risen to the challenge of catering to digital demands, they lag behind in last-mile experiences. Their modern counterparts, challenger banks, have lapped up customers by leveraging technology to provide tailor-made experiences. Although large banks have tied up with fintech companies and are relying on digitally-experienced customer service outsourcing partners, competition is fierce.
The incumbent challenger banks have taken to open banking initiatives and advanced features that provide almost instantaneous access to funds. Their apps have features like fingerprint recognition and personalized grievance resolution that traditional banks and their customer service outsourcing partners are unable to match up to.
A report titled ‘The Power of Personalization in Banking 2018’ found that 90% customers want personalized experiences; yet, a whopping 94% of financial institutions could not deliver on personalization promises. So, how does one bridge this gap effectively?
Established banks have bulky platforms that are steeped in information. Despite having detailed documentation and robust technology, when these institutions outsource customer service to a third party, some of it is lost in translation. Their fragmented data collection methods make customized solutions hard even for experienced customer service outsourcing partners.
On the other hand, challenger banks collect client data from the first point of contact. This helps in breaking silos. Cloud-based systems and open-banking arrangements make data sharing simple across the board, even when they outsource customer services or other back office functions.
Traditional banks also need to upgrade their legacy systems to achieve a successful digital transition. However, replicating a challenger bank-like digital platform can take years for conventional banks, apart from being a costly affair.
Playing To Your Strengths
While some experts suggest that traditional banks must set up their own challenger bank offshoots, it may just be they only need to tweak their existing systems.
Banks can turn to application programming interfaces (APIs) that build on existing infrastructure. Using APIs to transform tools and practices, partnering with customer service outsourcing firms that leverage machine learning and artificial intelligence, and segueing into predictive analytics can put banks back in the game.
Conventional banks are experts in financial products and challenger banks are yet to gain ground on that front. Their scale and resources also give them an edge over their smaller rivals. They need to focus their transformation on areas that matter the most, like revamping their in-house and outsourced customer service strategy to fit the digital demands of customers.
Reimagining customer experience in the financial space is key for traditional banks to remain relevant in today’s digitally-aggressive world. There is a huge opportunity in the customer engagement space; if the bigger banks seize the moment, the scales can tip back in their favour.