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2023 Customer Trends Shaping Banking

Customer experience is driven by numerous factors, from engagement and marketing down to the flexibility of payment options. Financial and banking institutions are at the height of a shift, bringing together the collaboration of technology and payments to create a transformative customer experience. With numerous alternative providers to incumbent banks, the competition is growing with each brand striving to be the brand of choice. Evolving your payments experience can be the defining factor to grow your customer base, which is why we’ve noted key trends for 2023 to help you stay on track and succeed.
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Consumers are more knowledgeable than ever before, with an understanding of capabilities of data, independent investments, modern technology and expanding communication technologies. But still consumers feel that majority of businesses need to improve their customer experience, and businesses are grappling at the rapid evolvement of consumer needs in efforts to satiate the demand. In the world of finance, the mission has been to remove silos to accelerate transformation which will shift the dated focus on consumer communications to creating a more attuned customer experience. Whilst the banking industry seems to understand what is required to compete with alternative digital banking providers, there continues to be a hesitation and struggle to fully embrace the changes to progress. That hasn’t stopped numerous large financial names shifting from legacy culture, bringing in partnerships with non-bank organisations, but the number of silos remains high.

In an era of smart shoppers, customer experience goes beyond advertising, but rather smartly supporting the purchasing decisions and offering transparency so that consumers can make fair judgement of their own on qualities such as engagement, transparency, vision, responsiveness, and quality of product. These values alone have driven a world where we see fintechs and innovators taking the lead, drawing revenue at a faster pace than most incumbent institutions had in their formative years. Rather than asking why, we can look at clear data which shows the importance of customer journeys, with Zendesk showing that more than 80% of customers saying a positive experience will drive a future purchasing decision, and 61% say that a single negative experience will result in relationship abandonment. Additionally, a McKinsey report showed that 70% of the customer’s journey is based on how the customer feels that they are being treated, and so a customer is four times more likely to turn to a competitor if they face a service-based problem. 

To generate better customer pathways, innovations are being adopted across the financial services sector, and a Forrester report indicated that 35% of global banking executives are satisfied that they have digital banking initiatives to drive forward. But for numerous institutions with outdated yet heavily engrained processes, the struggle to evolve without dismantling their fragile infrastructure can feel near impossible. And so, we see a large number of banks turn to alternative providers for innovations which can be integrated and speed up their digital enhancements; and also break down the silos we see in the industry. Whether your business is observing trends independently, or you’re partnering with a payments provider who is already ahead of the curve, we’ve taken a look at a few of the top trends that will be driving customer experience in banking for the year ahead.

1. Enhanced personalisation

Alternatives to banks are doused in data-gathering technology, which is fundamental to enhancing customer service at a personalised level. Whether it is from predicting customer needs, analysing consumer behaviours, targeting product recommendations or delivering the right content to support financial wellness in our precarious financial climate; data is the key to unlocking these touchpoints. And with competition grappling to create the best possible customer experience, consumers have now raised their standards and expect the most dynamic experiences with their payments. Epsilon research indicated that 80% of consumers are more likely to make a purchase from a brand offering personalised experiences.

From a technology perspective, the data which can now be collated from each step taken by a customer on their purchasing journey are relevant data points which aid future decisions. Fintech’s and alternative banks are notorious for their usage of data which has untapped huge amounts of potential in providing personalised experiences. But is now the year in which we will see banks making steps to better use the data available to them to improve their products?

2. The ‘complete’ experience

Customer engagement is an essential element both instore and online, and that is why consumers are expecting an omnichannel experience which delivers the same level of service across the board. A Salesforce study showed that 75% of customers expect a consistent experience, regardless of which method they engage with a company; from phone and social media to in person and the internet. Additionally, the closure of numerous brick-and-mortar stores has been driven by the greater use of digital banking, and we are now seeing the emergence of financial hubs rather than independent branches to offer a singular location to access your banking needs for a number of banks. The risk lies in how these institutions will find a way to create better products and services to keep their customers engaged at each touchpoint, rather than leave for a competitor who will now sit in the same building.

From a financial perspective, this would be a holistic strategy across mobile applications, branch-based interactions, online access and even the use of the brand’s services through online marketplaces. Over the past few years we have seen a greater transition in communication with financial services, so customers can reach out to their banks by text message formats. Consumers have a greater sense of satisfaction when they have a two-way digital conversation, and 53% note that they are frustrated that they cannot reply to a mobile message from an organisation. The takeaway for 2023 is how banks and financial service providers will now build a better communication with their customers and develop their relationships in both the digital and physical world.

3. Privacy is key

Great customer experience will increase the number of customers, extend retention and draw in new faces; however, if customers feel that their financial provider is not doing the upmost for security, you could lose them. 86% of consumers say that data privacy is a growing concern for them, and 40% don’t trust companies to use their data ethically. The handling of finances can be a vulnerable experience for many, and so the need for institutions to make each experience feel safe and secure is imperative. As mentioned above, the expansion of communication through an omnichannel approach is key to growth, but it will also bring a risk of fraud and cybercrime if these aren’t handles with due care.

With the growing number of cyber-attacks, customers need the added reassurance that their goods will be protected at all times, and that steps are being taken to help people feel as though they are not a target of crime. In 2021, 55% of financial services institutions were targeted by ransomware attacks, which was up from 34% in the previous year. Whilst financial providers take steps towards this, there are also regulations in place which hold them accountable. And in the year ahead we can anticipate a greater level of transparency around the use of personal data and the steps which are taken to keep it secure and prevent distrust. This can be achieved through transparency with data policies and practices; and taking clear actions against previous mishaps to build trust and incentivise customers to continue their relationship with the bank or organisation.

4. Increased support for self-service

Customers are now expecting to move their communications with providers through an omni-channel approach, always giving them unhindered access. Zendesk data revealed a 5.4x growth in self-service adoption in financial services customers. Whilst mobile-friendly applications have been a driving factor for numerous years, customers are now seeking support through a variety of channels to make the decision that is best suited to them. Banks and financial institutions need to ensure that they have a knowledgeable self-service option to satisfy customers who are driving to make their decisions independently.

Not only do customers want to be able to find the right information without any unnecessary human contact, but they want to feel in control of the decision making process. Consequently, financial institutions are driving use of automation and improving their stance on transparency about knowledge, the brand and consumer options. The differentiator in experience that we will see arise in 2023, is the businesses who still strive to keep an essential stream of human contact on hand to help where self-service no longer serves the customers’ purpose. This combination of progressive customer experience and human intervention is a key point for banks and financial institutions to mitigate counterproductive use of time, that will result in a frustrated customer.

In summary, the consistent element we have seen across all of the customer trends is the need for a digital transformation. The rapid speed of digitalisation has meant that whilst challenger banks and alternative financial institutions are moving at great speed, we are seeing the challenges in matching customer expectations for incumbent providers. The major lesson we are learning from the trends of banking customer experiences for 2023 is the level of importance which is found in moving away from a product-focused approach and towards a more experiential one. Whether banks can rise to the challenge is yet to be determined, however as we see more consumers and businesses turn to alternative finances to manage their payments, we are reminded of the speed and agility needed to embrace a digital transformation.

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