The challenges of banking so as not to become “obsolete” and grow

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The retail banking is at a disadvantage when it comes to delivering true omnichannel experiences. Today, customers gravitate toward competitors that offer more personalized experiences. So at least it follows from Retail Banking Report 2022 produced by capgemini Y Efma.

The rise of fintech

75% of surveyed customers are attracted to profitable and ongoing fintech services. This significantly increases your expectations of digital banking. However, traditional banks are struggling to comply, with 70% of bank executives concerned that they do not have enough data analytics capabilities.

So now that customers can switch providers at the touch of a screen, it’s critical that banks better leverage data and artificial intelligence (AI) to tailor the experience, create stronger connections and maximize customer value.

75% of surveyed customers are attracted to profitable and ongoing fintech services

The recent rise of fintech in the sector has caused a paradigm shift in what consumers now expect from their banking experience; challenging the revenue and relevance of many traditional providers. The study shows that nearly 75% of respondents say they are attracted to these new agile competitors. They say they offer fast, easy-to-use products and experiences that are immediately available; as well as the fact that they are low cost.

On the other hand, nearly half of those surveyed say that their current banking relationships “they are not rewarding” (49%) are neither “emotionally connected” (48%). 52% indicate that dealing with issues related to banking “it’s not nice”.

What are customers looking for in banking?

With improved data governance models, banks can collect proprietary customer information to improve the competitiveness of their digital marketing capabilities. Combining this with AI and machine learning will open up new possibilities to identify, retain and engage customers with real-time experiences.

However, many of these benefits are lost to traditional banks that currently lack the capabilities to process the enormous volume of customer data. In the report’s executive survey, 95% of top global banking executives say legacy systems and outdated core banking platforms inhibit efforts to optimize data and customer-centric growth strategies. While 70% recognize that they lack the resources to process and analyze the data.

Credit card.  Bank brands.

“The growth formula seems simple. Customers want to be offered personalized experiences, regardless of where they are on their own digital journey. The challenge, however, remains in the execution»it states Nilesh Vaidya, Global Head of the Retail Banking and Wealth Management Sector of the Financial Services Strategic Business Unit of Capgemini.

“Retail banking needs to rethink its broader business models; restructuring itself to focus on achieving the same degree of satisfaction in the different phases of the customer experience. If the disparity and striking inconsistency between a customer’s digital and physical banking experiences are not addressed, traditional banks risk losing customer value to their more nimble fintech counterparts.”Add.

Leverage platform-based models to optimize growth

According to the survey, more than 70% of banking executives indicate that traditional banks lack data and analytics capabilities. As traditional banks race to keep pace with nimble fintechs, many providers are combining traditional offerings with non-financial lifestyle products.

others offer Banking as a Service (BaaS) and integrated banking solutions through non-financial third-party ecosystems. Platform models can help collect data for personalization; so they are well positioned to mine ecosystems of data and gain insights in real time.

However, although platform-based models are not new to banks, many banks continue to struggle with execution. In the survey of executives, 78% are concerned about the destruction of products at the hands of ecosystem partners. 72% are concerned that their brand could disappear.

Over 70% of bank executives say traditional banks lack data and analytics capabilities

“In order to thrive in this highly competitive environment where digital native fintechs continue to capture an increasing amount of market value, we are seeing retail banking finally adopt innovative technologies and platform-based models to optimize this data-driven growth”it states John Berry, CEO of Efma.

And adds: “Although this has evolved within the digital channels of many of these incumbents, customers continue to expect branches to be centers of experience; full of self-service options and financial advice. By strengthening their ability to collect and analyze data, providers can identify what customers want. Which ultimately is a consistent omnichannel banking experience.”

The omnichannel experience in banking

When facing the challenge, the Chief Marketing Officers (CMOs) they must step forward and play a fundamental role in this evolution. According to the survey, 75% of CMOs in the global banking industry say they have direct responsibility for brand building. 25% say that it is a shared responsibility with other executives in the management. And 63% in the development and launch of new products; demonstrating that these leaders are expected to focus on the customer lifecycle and manage every facet of their customer relationship.

Yet many of these CMOs are ill-equipped to guide the transition from product-centric marketing to customer-centric marketing. According to the report, largely because the data needed to carry out these customer-based strategies is scarce; they are isolated; and focus only on internal data. Not taking into account external data sources.

CMOs must step up and play a critical role in this evolution

For example, only 22% of CMOs admit that they directly manage customer experiences from start to finish. Or you have access to the comprehensive customer profiles needed to effectively tailor your product or service. However, by using this critical data, they can deliver a true omnichannel experience; anticipating customer needs and creating personalized offers.

To achieve this, managers will have to follow the example of financial technology companies to develop specific content; enhance the banking experience with continuous process improvements; and establish an effective data-driven value chain that prioritizes engagement and long-term relationships. In this way, retail banking will be able to create, realize and capture lasting value for the customer.

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