By Ashwini Dave, Digital Marketing Expert at Acquire
Once considered as one of the most rigid and traditional sectors, complete with archaic infrastructure and legacy systems, the Banking sector has undergone a sea of change. Today, this sector is continuously seen flexing its ‘digital’ muscle and driving technological disruption at an unprecedented scale. After all, the digitally-savvy customers are literally asking for it. Research by Accenture puts things into perspective:
“Consumers want better integration across physical and digital channels. More than half of the survey respondents expressed an appetite for a true omnichannel banking experience that would allow them to switch seamlessly between physical and digital channels.”
The real question, then, is not about whether the (digital) boat has sailed for banks and other financial institutions. Rather, the more relevant question that banking leaders should be asking themselves is how are they adjusting their bank’s model, approach, and strategies to accommodate their customer’s ever-changing needs?
Long story short, emerging technologies, banking, and customer service are standing at a crossroads where the paths, invariably, converge ahead. In this blog, we will look at this new and improvised – Digital Banking 2.0 – that is placing customers at its core and transacting with technology at its heart (and principle).
Why Every Bank’s True Calling lies in Digital Technology
If you’ve been reading the news off late (especially in these trying COVID times), you’ll notice a trend emerging: More and more banks and financial institutions are jumping on the technological bandwagon to offer a stellar digital financial experience for their customers:
- Emergence of a ‘shared’ economy: Get this: Google recently partnered with Citigroup to enable customers to seamlessly access their accounts through the Google Pay app. J. P. Morgan and Amazon are working towards creating a checking account. These examples are just the tip of the iceberg when it comes to banks/financial institutions and tech firms collaborating and extracting mutual benefits for the customer’s greater good.
- Greater focus on leveraging customer data for hyper-personalized service and customized offers: According to an Accenture report, “One in two consumers indicated an interest in personalized financial advice from banks that is shaped by their personal circumstances—including analysis of spending habits and advice on how to manage money.” Financial institutions, too, are realizing the importance of having contextual conversations with their users. One way of realizing this is by creating a 360-degree profile of the consumers by using emerging technologies to factor in data touch points such as banking history, customer analytics, purchase behavior, etc.
- Mobile banking technology allows banks to be agile and flexible: The importance of mobile banking technology comes to the forefront with economies reeling under the after-effects of lockdowns and the growing and unpredictable financial pressures of a pandemic. For banks, the need of the hour is to consolidate and present their end-to-end offerings to customers on a single mobile platform so that real-time and dynamic banking can become a reality and enhance user satisfaction. Whether banks wish to retain customers or acquire new ones, mobile banking is the way to go.
Dynamic Customer Requirements: Foremost Concern for Banks
At this point, you might be wondering why banks and financial institutions are bending over backwards to use technology and augment their customer service efforts? Data by Adobe nudges us towards the answer: “40% of financial services and insurance organizations cited keeping step with constantly evolving customer expectations and behavior as a key challenge, while 63% of financial services organizations placed customer experience (CX) at the top of their priority list:”
In essence, it is fair to assume that this concern has been ever-growing among the “always-on” digital customers of today. As with other sectors, banks are banking on technology to come save the day (more on this in the following section).
The Correlation between Banks & Emerging Technologies for Seamless CX
Contrary to popular opinion, banks and financial institutions are no longer playing catch up to adopt – and integrate – the latest emerging technologies (think: AI, blockchain, machine learning, deep learning, voice technology, among others) into their innovative offerings. The latest research in this area tells us about the current state of (AI) affairs in the Banking sector:
- AI opportunity in front-and back-end banking: As per the Business Insider report, “The aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023:” Banks on capitalizing on machine learning algorithms and other forms of futuristic technology such as NLP to streamline customer services by making it faster, efficient, and useful. Additionally, there’s an increased focus on front-end operations such as smooth customer identification and authentication, addressing customer queries through virtual agents and voice assistants, and creating deeper customer relationships by offering insight-driven customized advice and offers. Take a look at Zenith Bank’s live chat example:
On the other hand, complete automation of the back-end workflow such as capturing documents and gathering insights from the data captured is further enhancing work outcomes and cutting down back office processing time. That’s not all. AI is also being used to engage in fraud detection, analysis-led risk management practices, and amping up the security to prevent data breaches.
- Voice technology and speech recognition are already playing a larger role in the CX experience: Simple tasks like transferring funds and making deposits will only need a helping lending “ear” (pun intended). According to Mercator, “67% of smart-speaker owners said they are comfortable using conversational interfaces for banking transactions.” Additional research by Business Insider claims that “Implementation and adoption of voice payments is expected to increase from 8% to 31% among customers in the US by 2022.” Let’s take the example of the industry pioneer, Westpac that embraced voice-activated technologies to deliver secure, easy-to-use, and cutting edge banking services for their customers:
Westpac users can ask either Alexa/Siri/Google Assistant about any of the following issues:
- Complete automation of key financial tasks by using Robotic Process Automation (RPA): From financial advice and loan-related inquiries to compliance issues and credit card applications, this entire spectrum of financial services is readying itself for automated exchanges by using advanced technologies such as RPA. Author, Ron Shevlin summarizes it succinctly. He says:
“We’re nowhere near the point of removing the human element from these exchanges, but instead advanced technology will help streamline the “hand-off” moment when the customer is transferred from human to machine or vice versa.”
- Chatbots can streamline the CX journey:
“By 2020, chatbots will be handling 85% of all customer service interactions.” –Gartner
From a customer’s standpoint, one of the biggest advantages of using artificial technology is empowering them with friction-less, 24/7 interactions and delivering seamless digital customer experience. This is where chatbots and live chat can help realize this new reality and extend a positive CX in the process.
Virtual conversational agents such as Acquire can facilitate a smooth two-way communication offering customer-first advantages such as speedy service and personalized transactional support at its core. That’s not all. These chatbots can help address basic queries relating to the bank account, loan queries, etc. so that the customer service team can focus on solving other complex issues that require human intelligence and a ‘personal’ touch. Finally, advanced banking chatbots have the capability to monitor customer spending, provide credit scores, review budgets, among others. As you can imagine, this pays the way for a personalized, instant, and relevant user experience, making it a winning combination. Customers, too, find it easy to use bots instead of waiting on hold on the phone or downloading endless apps to get simple answers. Take a look at Bank of America’s chatbot, Erica which offers a host of financial services such as sending notifications, providing balance-related information, providing credit reports, and even helping customers make smarter financial decisions:
Other interesting examples worth considering are HDFC Bank’s virtual assistant, Eva:
And Citibank’s Facebook Messenger banking chatbot, Citibot:
“Conversational banking is a natural evolution of the digital banking experience, for many customers and many types of interactions. More people are looking to engage via these types of technologies, and financial institutions are increasingly looking to deliver them. The potential benefits are huge in terms of time savings and convenience for customers and cost savings and customer satisfaction for institutions.” – Bob Meara, senior analyst at Celent
Key takeaway: By infusing the combined powers of advanced technology (machine learning, RPA, AI, voice technology, etc.) and excellent customer service, banks can excel in the “Era of CX” while addressing the evolving client expectations in real-time.
In a Nutshell
As with most industries, the focus for the Banking sector going forward will not be to simply:
- Deliver basic customer service but elevate it.
- Meet customer expectations but exceed them.
- Stay on top of customer needs but preempt and address them in a dynamic and timely capacity.
Needless to say, banks can achieve all this and more by integrating the speed and power that comes with technology, the insight, and personalization that comes with understanding your customer’s pulse, and finally, the inspiration and courage it takes to go back to the drawing board and start afresh if the situation so demands. Agree?
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Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag
FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in a 300 million euro ($364 million) hit to revenue, weekly Welt am Sonntag reported, citing sources close to the bank.
The lender hopes to offset the drop by growing its loan business as well as by expanding its business with corporate and very wealthy clients, the report said, without giving any further detail of why customer numbers were expected to decline.
It also didn’t say if any specific category of client was most likely to be lost.
Commerzbank declined to comment.
According to the bank’s website it serves around 11.6 million private and small-business customers in Germany and more than 70,000 corporate and other institutional clients worldwide, so the reported loss of customers would suggest a drop of around 15%.
The bank earlier this month reported a $3.3 billion fourth-quarter loss, sinking further into the red as it continued a major restructuring and dealt with the fallout of the COVID-19 pandemic.
The bank’s restructuring plan involves cutting 10,000 jobs and closing hundreds of branches in the hope it can remain independent.
($1 = 0.8253 euros)
(Reporting by Christoph Steitz and Tom Sims; Editing by David Holmes)
Citigroup considering divestiture of some foreign consumer units – Bloomberg Law
(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.
The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.
“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.
“Many different options are being considered and we will take the right amount of time before making any decisions.”
The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.
However, no decision has been made, according to the report.
Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.
The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.
The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.
Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)
(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)
European shares end higher on strong earnings, positive data
By Sagarika Jaisinghani and Ambar Warrick
(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.
The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.
The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.
Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.
Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.
But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.
“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.
“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”
Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.
The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.
The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.
London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]
French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)
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