How digital can join the dots of the customer journey

By Matt Phillips Diebold Nixdorf

Lockdown has shone a new light on the strengths – and weaknesses – of the retail banking sector. With customers’ needs having changed almost overnight to comply with social distancing guidelines, the industry must now shift its sights to innovating for the future. But focusing solely on meeting the short-term needs of customers would be a missed opportunity; banks seeking opportunity in the challenges of today will be using this new, more digital-dependent retail banking landscape as a springboard to reimagine their entire customer journey. Successful initiatives will drive cost savings, a sharper competitive edge, and, importantly, the best possible service for customers.

Existing technologies lay the path ahead

Those who question why banks have been facing competition from challengers and lean fintechs for years need look no further than their existing tech offerings. New disruptors have built their service models with technology at the centre, combining agility and efficiency into their service as standard. High street banks and their legacy tech have lagged behind.

The shape of face-to-face service is shifting as we move out of lockdown, stripping traditional banks of one of their key retail banking USPs. Now, they must look to migrate these services – seamlessly – onto digital channels to meet their customers’ needs. But doing this alone is essentially playing catch-up. Getting ahead means looking beyond the horizon.

Consider contactless functionality in payments as an example: it is among the most significant retail finance trends of the last decade. For many card users, contactless payments have become the norm. Yet the potential for contactless functionality extends far beyond payments; contactless technology is that which minimises the need for human interaction and intervention. With this in mind, the technology already exists to make the entire retail banking customer journey contactless. Payments is just a small part of this.

One group which stands to benefit greatly from contactless retail banking services is small business owners. By pre-staging transactions, the need for those making business cash deposits to go to a branch during opening hours – potentially detracting valuable time away from trading hours – diminishes. Using an app, business owners can have their deposit pre-authorised, with a code confirming the request that is then used at a deposit-taking ATM (which runs 24/7) to identify and reconcile the deposit. The noted contact for the account receives both an e-receipt and confirmation of the cash drop.

This functionality is both safer under current guidelines and more efficient for the bank. And while these initiatives are not common at the moment, we expect to see them trending upwards in the near and medium term.

Digital and personal

We live in the age of the digitalised and the personalised – and these are far from coincidental, with data making it possible to tailor services and applications to individual customers. We cannot ignore that the majority of consumers are digital natives and are interacting with sophisticated biometric identification every day through their smartphones. Such advanced facial recognition software in such a casual context would have seemed closer to science fiction than fact just ten years ago.

Mass acceptability of facial recognition function is in no small part driven by big tech firms. But what if the same technology we use to unlock our smartphones could also be incorporated into accessing banking products and services? Technically, it can. The technology is primed for usage – and drives significant strides towards contactless Know-Your-Customer (KYC) processes and on-boarding. At present, adhering to KYC in retail banking can mean that customers have to go into their branches to be physically verified. Of course, customer willingness to accept and use these services is key to achieving critical mass usage and ensuring ROI. But, given how Covid-19 is shifting the needle around the use of digital channels, we may be on fertile ground for introducing new innovations for the longer term.

‘Portalisation’

Across the financial services industry, platformication has graduated from being a buzzy concept to a widely accepted noun. I believe that the next frontier for this, in retail banking at least, is portalisation. Thanks to increasingly sophisticated and seamless APIs and favourable regulatory tides – such as Open Banking – retail banking has the ability to join together software platforms, dynamic and tailored to the individual user. This kind of agile technology gives rise to the idea of the ‘customer portal’ – a streamlined, personalised dashboard for customers’ banking information. For some, this could be leveraging the Account Information Service Provider (AISP) element of the PSD2 Open Banking regulation – pulling together and displaying a user’s bank account information, such as outgoings and account balances, with explicit permission from the user – to offer an API-powered oversight of a user’s financial health.

For retail banks in particular, a permissioned user portal could centralise pertinent customer information. Consider this: a customer starts applying for a loan online but they don’t finish the application. There is no human staff-member intervention triggered to troubleshoot why the customer didn’t finish. Perhaps they changed their mind, or perhaps they didn’t fully understand the product, or the information required to apply for it. The unfinished application remains so – because bank tellers and contact centers have no way of finding out that the customer was interested in taking out a loan, unless they sought out support. The digital infrastructure just isn’t there.

But that digital infrastructure does exist. As an industry, banking tends to be quite siloed, and when the digital channels that retail banks offer their customers were developed and deployed, the technology was still broadly nascent. Integration and interoperability over the longer term was not a consideration. Yet banks cannot be encumbered by their legacy technologies forever: not unless they want to risk being beaten out by agile and digital-forward competitors. Centralising the full customer experience into a single personalised portal by harmonising mobile and contact center technology, along with customer, teller and self-service channels could create a more seamless and efficient way of doing retail banking.

What’s more, incorporating data analytics, AI and IoT into this digital offering could provide even more personalised and meaningful insights, such as the best loan product or banking account to suit their needs. The potential is enormous – but first requires a solid foundation of agile and integrated technology.

New foundations

Creative and thoughtful application of technology is trending upwards across the banking industry, spearheaded by challengers and fintechs. Yet as it stands, the industry is generally slow-moving. Traditional banking models are not agile, which inhibits the rapid adoption of new technologies – such as those we have discussed here. How can traditional banks inject and accelerate agility into their models?

At base level, it comes down to what banks consider to be the core elements of their business. Is IT central to their growth strategy yet? From the perspective of consumer trust and security, it should be foundational in any banking organisation and integral to the evolution of their services. What will customers need in future? How can technology be used to meet these needs while also driving efficiency and ease across user channels? How can technology be used to reimagine clunky, siloed processes?

These are all questions which require tech acumen and creativity. What makes the road ahead so exciting is that the trailblazers and leaders are yet to reveal themselves. With an effective strategic partner, there is an opportunity here for banks to really drive the agenda for the future of retail banking – ultimately showing their customers that they are forward thinkers and doers.