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How US Banks Can Strengthen Trust Among Customers

Jim Kearney

Managing Principal, Financial Services Consulting
Blog
  • Financial Services

The impact of emerging technologies and the need for rapid change are driving near-term digital transformation efforts across the banking space. Gone are the days when banks could simply have a conveniently located branch with cordial tellers and private bankers sitting behind mahogany desks offering free calendars to customers opening a checking account.  

For the first time in history, there are five generations of banking consumers in the marketplace and they’re demanding customized, hyper-personalized experiences driven by their individual preferences and needs across a multitude of channels. Customer experience and the ability to create effortless and frictionless experiences—regardless of channel—has never been more important than it is right now. 

The results of EPAM’s 2020 Consumer Banking Report show that physical branches still have a role to play for many US banking customers. However, if the COVID-19 pandemic has shown us anything, it’s that these same consumers are becoming more self-sufficient and willing to use virtual channels due to the constraints that quarantining has created. Digital experiences now augment traditional physical experiences and have convinced banking customers, who historically may have been averse to trying digital technology, to explore different options. The result has been an uptick in digital interactions and a heavier emphasis by banking providers to make sure that client experiences are consistent regardless of the channel (in branch, mobile, online, etc.).

But how do banks continue to instill the trust in clients that was initially gained through physical interactions but now will be delivered through a digital lens?

Deciding what to do with its branch network is something that every US bank is struggling with right now. There’s still an underlying trust and confidence that goes with having access to that building and the professionals therein. Do banks continue to operate with their existing brick-and-mortar footprint with the same tried-and-true business model? What about repurposing the branch with modern interfaces complimenting historical interaction frameworks? Even removing the traditional branch concept altogether by leveraging digital tellers, chatbots and conversational commerce mechanisms is an option some banks are considering. But will providing these channel options incentivize consumers to stay with their existing provider, or more importantly, potentially switch to a new one?

Although the physical branch is still an important component in the banker-client relationship, it’s been deemed less critical than in years past as banks look to either cut expenses tied to their real estate footprint or leverage different channels for client interaction. The key, again, is creating trust in the new channels through a secure, personalized and efficient experience. In other words, banks should look to move from a location-centric model to a tech-enabled customer-centric model.

In addition, non-traditional competitors are entering the space and are looking to challenge traditional norms by forgoing branches all together. As those entrants that are not bogged down by legacy culture and infrastructure get to product and experience parity with traditional banks, generating a trusted, digitized experience becomes even more important for firms looking to retain and attract revenue.   

According to EPAM’s report, banking clients in the U.S. are more hesitant to switch banking providers than banking customers overseas. Focusing on great customer service and a personalized client experience are ways to not only retain existing clients, but also to attract new ones based on the report’s outcomes.

Those incentives to switch banking providers have to be transparent to clients and, more importantly, the experience in moving from one bank to another has to be as painless as possible. With new technologies and startups moving into the banking space, it’s becoming easier and easier to find other options and potentially move from one banking provider to another. The question then becomes how banks can build a trusting relationship with clients and prospects while creating a stickier brand and a better user experience.                

A possible answer to this question may also be found in our report: Take-up of modern digital services is highest amongst a group of consumers who also has the highest use of branches and voice services, such as telephone. The driver appears to be the interaction itself, rather than the channel.

So, to build trust, retain existing customers or incentivize switching, retail banks should all have one focus at the center of their strategy: the human.

A better customer experience works hand in hand with this—starting with the onboarding process. Opening an account with a new provider should be as painless as possible for the consumer while still adhering to the bank’s regulatory and risk-management commitments. Requiring no deposit or initial minimum balance along with making the required documentation collection process more efficient are a couple of ways that forward-thinking banking institutions are gaining market share. The experience can then be further enhanced through the use of AI-based tools to monitor activity after the transition. These tools can be used to recommend additional products and services based on client information and online behavior. This leads to a more personalized experience for the client and more business intelligence and cross-sell opportunities for the banking institution.

Beyond onboarding, banks should step back and understand customer wants and needs within the context of a post-pandemic world. Focusing on the human element of how retail banking consumers will want to engage has become critical to providing a higher standard of client experience in an environment where the rapid adoption of key technologies has become commonplace due to the implications that social distancing and quarantining have created. As such, even the most traditional and risk-averse banking organizations realize that digitizing interactions and processes is necessary to compete. Banking clients now expect their provider to meet them on their terms, not the other way around. That’s a crucial point in building trust between customer and provider. 

Focusing on a differentiated, customized and modern customer experience is critical for banks looking to build trust and seize on the opportunities in an ever-evolving banking ecosystem. Leveraging a sophisticated, innovative and experienced technology partner to accelerate and execute on those endeavors will allow organizations to realize a return on their investment more quickly than going it alone.

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