Published : 4 years ago, on 07/12/2020

By Gary Williams, Director of Sales and Consultancy at Spitch, examines what expectations and experiences customers want from their bank now, and in the future

For high street banks, standing still is the same as falling behind. The digital landscape has shifted so much in the past decade or so, that it’s fundamentally altered what customers have come to expect from their banking experience. It’s one of the reasons ‘challenger banks’ have been able to gain so much traction in comparatively little time. In the latter half of 2019, challenger banks won an additional 6 million customers worldwide, with brands like Revolut, Monzo and Yolt leading the pack. That growth is only likely to have increased in light of the COVID-19 pandemic, with many physical traditional bank branches having to close, but it’s little more than a catalyst for a movement that was already in full swing.

To see how the customer experience has changed, and what customers will expect from their banks as we move into 2021 and beyond, we need only look at the success of challenger banks. As the pendulum begins to swing in their favour, it’s clear that consumers are looking for digital experiences rather than physical ones, that they’d rather use apps instead of phone calls, and that technologies like voice recognition and artificial intelligence aren’t just fads or trends, they’re here to stay.

That’s not to say that traditional banks haven’t been keeping up with the pace, and some of them have excelled at retaining customers and onboarding new ones because of the benchmark set by challenger banks as they continue to win customers through convenience, online engagement, easier money management, rapid transfers and simplified loans and mortgages. This kind of innovation is present in other sectors, and consumers have been enjoying newfound digital conveniences for years already, but it’s taken small, innovative companies to engage those needs in a banking capacity that has helped set the new standard for the industry.

A recent 2020 report by Deloitte called The DNA Of Digital Challenger Banks confirmed this. They analysed more than 100 digital challenger banks from around the world and identified 6 characters that they shared between them. It was this ‘DNA’, the paper argues, that was altering consumer behaviour and lifting expectations within the industry. Among those 6 characteristics were digitally native services, evolving product offerings that had wellbeing at their centre, lifestyle marketing rather than money-marketing, and branding that emphasised the ‘emotional experience’ for customers, rather than just a run-through of services on offer. Reduced regulatory friction was also a key factor, making large scale money management easier for customers.

But it’s not just about marketing, new offers and initiatives, or even the services that are on offer – it’s the method by which all of that is delivered to, and accessed by, the customer. Customers don’t want banking to take up too much of their time in 2020, and that’s unlikely to change any time soon. That means banks need to embrace new technologies like biometrics and voice recognition to help people access and manage their accounts. If any proof of that was needed, we can simply look back to 2019 when, for the first time, digital-first banks overtook traditional high-street banks – not in numbers, but in customer satisfaction. Bear in mind, this was before the COVID-19 pandemic, when customers still had a choice of whether or not to engage in digital banking, and studies show that the majority do in fact prefer it.

Across the world, more than 73% of all banking is now done digitally, regardless of how big the bank is or how many physical branches it has. A recent study looked into this further, comparing how consumers chose to do their banking over the course of a four year period, between 2015 and 2019. Branch banking stayed relatively flat, with around 10% of consumers choosing this as their primary method of managing their finances. Mobile app banking, however, almost doubled from 22% in 2015 to 42% in 2019.

This shows beyond doubt how the customer experience is evolving, and if traditional banks want to keep up they’re going to have to reinvent themselves as technology companies, which many have already started doing by investing in new apps, online features, voice technology, biometrics and more. The same study referenced above found that 55% of young people (millennials and below) would rather bank with a technology-first company than an actual bank, mainly because they’re thought of as being easier to deal with, with more convenient service perks and features.

Challenger banks are technology companies first, and banks second, and that’s why they’re becoming pack leaders in terms of customer satisfaction. Things are likely to change even more as we move through 2021 and navigate ourselves out of this pandemic, but one thing is for sure – it’s consumers and their expectations that will be very much in the driving seat.