The growing competition from Fintechs has accelerated digital transformation in order to optimize the customer experience in the banking sector. This is reflected in the report Global Banking Benchmark Study by Publicis Sapient, where 54% of the 1,000 senior banking executives surveyed in 13 countries indicated that rapid and decisive change, rather than incremental progress, is needed to achieve their digital transformation goals. Thirty-one percent of respondents in the study pointed to a lack of operational agility and regulatory challenges as the main barriers to digital transformation.
Banks that want to stay relevant must understand that optimizing the customer experience through digital transformation is crucial in the face of stiff competition from non-banking companies that are entering from sectors such as technology, telecommunications and retail, which tend to have a core product, and are not shackled by legacy infrastructure and regulatory obligations, allowing them to operate faster and at lower cost.
“Unless we totally disrupt ourselves, we are going to be too slow at innovating things like personalized financial advice to compete with the technology-driven Fintechs. These companies are not shackled by the complexity and opacity of legacy infrastructure”, says Chalee Asavathiratham, Chief Digital Banking Officer at Siam Commercial Bank.
How are banks approaching digital transformation to improve the customer experience?
For banks it is no secret that the biggest target they have to aim at is driving digital transformation to improve the customer experience: from serving clients through multiple channels, to expanding their financial products and services by adopting a comprehensive approach that enhances the customer experience, including personalization, new distribution channels, and other financial offerings.
To achieve this, the banks surveyed in the Global Banking Benchmark Study are combining their customer data, which is highly important in the industry today, with different systems. Thirty-six percent say that this enables them to better understand their customers, 35% use it to design new offers, and 33% integrate it to achieve greater personalization.
“Optimizing the customer experience through digital transformation is important for banks to stay relevant and competitive, so they must implement tools that allow them to create more accurate data profiles that help them understand how customers interact with their products and services. Technologies such as NBA, Subscription Rules Engine and Critical Events Gateway, all products by Latinia, are of great help to banks, as they allow them to take advantage of each transactional event so they can be useful, manage critical processes and control the information they receive, improving the customer experience,” states Francesc Perez, Chief Revenue Officer at Latinia.
Among the respondents, discrepancies are perceived between how industry professionals themselves view the progress of digital transformation in relation to the customer experience. 70% of C-suite executives believe they are ahead of the competition, and consider themselves better at optimization when it comes to personalizing the customer experience, compared to 40% of senior managers. The survey also reveals a significant difference in how they view the importance of these metrics: 85% of C-suite executives think customer experience is key versus 55% of senior managers.
A great example is the case of Nickel, a French digital-only bank, which emphasizes investing in technology to help them analyze customer experience metrics. “Two years ago, we launched a major initiative to continuously enhance client experiences, because it’s the only way to stay ahead of the competition” explains Thomas Courtois, President of Nickel.
“Banks that focus on improving customer experience through digital transformation will be able to anticipate their customers’ needs and deliver real value by solving important problems for customers, resulting in better market positioning and increased competitiveness,” explains Francesc Pérez.
Meeting client expectations by accelerating digital transformation
Banks must have the ability to scale and implement at rapid speed any technological advance that furthers their digitization processes, and eliminate stand-alone systems in order to put the customer first.
“Focusing excessively on launching new offerings is a thing of the past, now the focus of banks must be on meeting customer expectations. Banks must revamp legacy structures that are inefficient, so the ability to adopt change in an agile way is important. Digital transformation must focus on knowledge and understanding of customer circumstances and preferences,” concludes Latinia’s Francesc Perez.