How Banks Can Deliver Exceptional Customer Experiences in a Post-Digital World

Banks prioritising building strong, lasting customer relationships will discover new growth opportunities. However, they must act quickly. Fintech and BigTech companies are rapidly advancing, and banks today face a choice: invest now or risk losing customers to these tech-savvy competitors.

This article will discuss how banks can act now to deepen customer engagement by leveraging the power of AI, Big Data, and Open Banking APIs.

Investing in Digital Innovation

Gone are the days when a bank manager personally knew customers and offered tailored advice. Today, digital banking often feels like it lacks human connection. Despite having more data on customers, banks struggle to use it effectively. For example, Imagine I had a salary account with a well-known private bank for ten years, yet I largely get calls about pre-approved loans and notifications for new credit cards. They rarely reach out to offer personalized financial advice, investment planning, or saving strategies tailored to my needs. According to a survey, 60% of mobile subscribers receive three or more spam calls on average daily. The survey also reveals that 54% of respondents receive these calls from financial services like banks.

Before modern banking, banks kept basic records like names and account numbers. Digital banking lets banks gather detailed transaction data to identify credit concerns, manage risks, and gain insights from customer surveys. Despite having valuable data, current core banking systems make it hard to get useful information. Most data is trapped behind complex coding and isn’t easy to access. Analyzing this data can be very slow, often requiring help from specialized IT staff, and by the time the information is available, it might no longer be relevant.

Advances in AI can solve this by creating a “digital brain” that analyzes spending patterns to reveal customers’ lifestyle preferences. This allows banks to build a complete, structured picture of each customer, much like a personal bank manager would, fostering stronger connections and trust.

Enhancing Customer Experience

Today’s customers easily switch between different ways of interacting: they research online, check comparison sites and social media for reviews, chat with a bot for details or negotiations, and complete the transaction on their mobile devices. Throughout this process, they want to be recognized as unique individuals and expect a consistent experience no matter their channel or device. Banks need to consistently optimize the customer experience and reach them where they are. Studies show that banks that do so consistently grow 3.2x faster than competitors that don’t.

Integrated Service Approach

One of the main reasons banking feels so disconnected for customers today is that most banks focus on products and separate their services into different channels. The “bank of the future” must fit into customers’ lives and experiences rather than just pushing products. To meet customer expectations, banks must merge digital and physical services into a smooth, unified experience. 62% of customers think experiences should flow naturally between physical and digital spaces.

For example, imagine you recently opened a savings account for your child’s education. Instead of stopping there, the bank sends you personalized recommendations for educational savings plans, scholarships, and even discounted rates for educational tools and tutoring services. This thoughtful approach shows that the bank understands and supports your long-term goals, making you feel personally valued. Providing this kind of personalized service consistently helps build a deeper, more enduring relationship with customers.

The Rise of Open Banking

Open banking and APIs are becoming popular for three main reasons: higher customer expectations, competition from fintech companies, and stricter regulations. Open APIs are now the standard for collaboration in the busy financial world, where traditional banks, neobanks, fintechs, and big tech companies all compete. This financial ecosystem is split between creating and delivering banking services.

To succeed in open banking, banks need to clearly define their role in the financial ecosystem and create new value for customers. Open banking has led to embedded finance, where any market player with customer access can distribute banking products. Embedding fintech integrates financial services into platforms customers already use, like e-commerce or social media, allowing seamless financial transactions within daily activities.

This approach aims to enhance accessibility and convenience, integrating banking into people’s lives for a better user experience. For instance, DBS Bank’s Marketplace platform has integrated services like car sales, interior design, and education since 2018. Embedding fintech into digital banking enhances technology delivery and customer experience, integrating financial services seamlessly into daily activities through platforms like e-commerce, and making banking more accessible and user-friendly.

Adapting to Technological Change

Business needs and technology are evolving faster than ever before. This rapid pace requires banks to rethink their innovation strategies boldly. Why? Unencumbered by legacy systems, Challenger banks innovate quickly to meet customer demands, posing competition. This drives banks to adopt microservices and cloud-based solutions, moving away from old ways of thinking. A well-planned architecture helps manage these changes effectively. New delivery methods and partnerships ensure the smooth deployment of innovations, aligning with the bank’s strategic goals and customer needs.

Also Read | Tech-Driven Transformation Enhancing operations and customer experiences in rural areas

In conclusion, traditional banks will face extinction if they fail to prioritize customer relationships and harness technology. Today’s banks are more proactive rather than reactive, demonstrating increased digital proficiency. Their focus on digital innovation is shifting from merely becoming the best possible digital version of themselves to invention and innovation. As a leading cloud-based digital banking engagement platform provider, NPST empowers banks and regional rural banks to revolutionize the banking landscape through bold and innovative digital capabilities.

Views expressed by Deepak Chand Thakur, Co-founder and CEO – NPST