Customer centricity is a business philosophy that puts customers at the core of business operations and decision-making. In the banking industry, it does not limit customer centricity to good customer service but includes product delivery, innovation strategies, marketing communications, and financial wellness support.
With data collected and analyzed regularly, banks and credit unions can better understand customer buying behaviour, interests, and engagement across the entire customer journey, identify opportunities for new products and services, build segmentation strategies for increased loyalty and lifetime value, and empower employees to better democratize experiences.
Four ways financial institutions can directly impact the customer experience to become more future-ready are transforming traditional brick-and-mortar facilities into “experience centers,” collaborating with FinTech and other third-party providers to overcome business model gaps, increasing assistance with consumers on their financial wellness journey, and establishing an “owner” of the overarching customer engagement.
Transform Traditional Branches
Banks and credit unions are reimagining the functionality of branches because building a full-service office facility can cost more than $1.5 million in the United States, with an annual operating cost of almost $1 million per branch. With labor costs increasing, and operational costs remaining higher than digital alternatives, few branches are profitable.
Despite this metric, most consumers still find branches relevant. Capgemini’s World Retail Banking Report 2022 indicates that 75% of customers believe branches are an important channel, but they want more than just transactional capabilities.
Specifically, 64% said they wanted self-service options, 44% seek an extended workplace, and 31% indicated an interest in a more immersive (augmented reality/virtual reality) experience.
The challenge is to integrate the branch with other channels for an omnichannel experience.
Purpose-Driven Fintech Collaborations
To respond to increased demands from a more digitally savvy customer base, banks and credit unions are increasingly pursuing collaborations with fintech firms and third-party providers. These partnerships (and acquisitions) help to overcome business model gaps, leveraging each other’s strengths and addressing their respective weaknesses, creating mutual benefits.
Fintech collaborations can also provide innovation opportunities that offer both speed and scale of deployment.
Recently many traditional financial institutions have looked to third-party collaborations for the building of improved digital account opening processes, enhanced rewards programs, and better mobile banking experiences.
Help with Customer’s Financial Wellness Journey
As the economy becomes less predictable and cost-of-living pressures increase, more consumers are looking for ways to improve their overall financial wellness. Banks and credit unions are well-positioned to assist consumers with their search for financial wellness assistance and help them make informed financial decisions.
Financial institutions also have strong infrastructures and technology capabilities that can be leveraged to develop and deliver financial wellness resources and tools, such as mobile banking apps, online financial management tools, financial planning calculators, and highly targeted financial wellness content.
Financial institutions that offer robust financial wellness programs and resources can differentiate themselves from competitors and gain a competitive advantage in the marketplace.
The future of customer centricity in banking involves a combination of tech and business model transformation. Leveraging digital technologies, combined with the power of marketplace collaboration and enhanced utilization of data, financial institutions can offer a seamless, personalized, and superior omnichannel experience.
As financial institutions increase their focus on customer centricity, the importance of improving experiences and moving from transactional engagement to relational engagement increases.
Financial institutions can transform traditional branches, create purpose-driven fintech collaborations, and assist with customer’s financial wellness journey to become more future-ready.