The disruption of the banking business, a product of the insertion of fintech companies and large technological players, added to the Covid-19 pandemic and its effects, are generating profound transformations in the financial sector.
A pre-pandemic study already indicated that digital channels accounted for more than 50% of total banking transactions in Latin American Markets such as Brazil. And evidently the Coronavirus pandemic, by requiring that people stay as long as possible at home, further boosted the use of digital banking.
This scenario of digital transformation in banking is unfolding in a context in which the industry is becoming more complex, with the increase in mobile and open banking, a greater demand for real-time interaction and personalized services. In fact, the massive digital disruption in the financial sector is already translating into a rise in online deposits, mobile transfers and electronic bill payments, which are becoming the rule rather than the exception.
Today customers demand personalized and frictionless experiences through all channels and in each contact with the bank or financial institution, which makes it essential to deploy advanced analytics schemes powered by machine learning techniques. The objective is to transform customer data - demographic, behavioral and transactional - into information that makes it possible for us to provide customized communications and commercial proposals.
Advanced analytics makes it possible to "develop ideas about customer segments and behaviors, and guide and adapt products and value propositions with greater precision, as well as to optimize lead generation".
With improved data sources and information processing technology, there is an unparalleled opportunity to proactively identify consumer needs and the product or service that can be offered in consequence.
Messaging can also be customized based on data from these analyzes.
Customization is no longer an option for banks: it is a "must be" to implement their marketing strategies. And it has its prize: it ensures higher response and conversion rates, and greater loyalty from current customers.
Highly customized and well-developed communications can also increase the potential market.
These strategies - added to the total customization of what the customer sees in their banking app or in their home banking screen - are key to retaining customers, especially in a context in which a movement towards open banking is also envisioned open banking. The latter is a business model in which the exchange of customer data is allowed in the financial ecosystem (provided customers consent). In this sense, research indicates that more and more banks will partner with fintech to offer banking solutions as a service (BaaS), allowing third parties to offer banking products.
47% of financial services companies around the world would be willing to collaborate with a fintech to grow through new digital services.
For this reason, it is increasingly important for banks to have a full understanding of the customer journey and to be able to map it in order to know how, when and where to market their products.
Another trend in banking is the growing use of content marketing: banks must reach out to their current and potential customers with relevant and interactive content that can be delivered using the right channels at the right time.
At the same time, another move that banks cannot put off any longer is tackling the field of social media with their sales campaigns. Banks must develop effective multichannel marketing to stimulate the growth of new and organic customers.
Financial institutions are increasingly looking for artificial intelligence to improve their business operations and customer experiences using chatbots and fraud and risk detection capabilities.
In 2023, the integration of chatbots in mobile banking applications is expected to account for 79% of chat-driven customer interactions.
Conversational banking is here to stay. And, using voice-enabled devices, more and more customers want to check their balances, transfer money, pay bills and report fraudulent transactions. In fact, an investigation carried out in the US in 2019 indicated that 51% of Internet users already noticed the benefits of voice banking, compared to 41% in 2017. More recently, the Coronavirus pandemic also prompted the use of WhatsApp to manage finances, especially in that segment of the population that does not use computers on a daily basis.
In parallel with all these technological developments, banks will need to ensure that a human contact is part of their omnichannel proposition. Operating over digital banking platform channels has become the default mode for many customers, but there are still those who value a personal contact or prefer face-to-face interactions for complex financial products (mortgages or investments).
A study conducted in developed markets prior to the Coronavirus pandemic found that 60% of active banking customers used digital channels (online and mobile), while 80% of contact points occurred in the digital arena.
However, investigation also indicated that despite these transformations, most sales, whether at the branch or by phone, still involve human interaction.
Ensuring a smooth shopping journey within the framework of omnichannel banking, with timely human intervention, is the great challenge facing banks in the current context of banking digital transformation.
Success or failure in this endeavor will define a bank’s ability not only to prosper, but to survive, in the short and medium term.
How is your financial institution ensuring the development of digital channels and their proper articulation?