Only CX can save banks from the rise of the fintechs
Every bank is aware of the rapid growth of the Fintechs (Financial Technology companies). These innovative startups have been carving out slices of...
My colleague Helen recently blogged about the changing nature of the financial services industry and how customers interact with their banks. I think that changes in the banking industry are taking place extremely fast, but they go deeper than just how customers are interacting with the customer service team.
Most customers now prefer mobile and internet banking, leading many big retail brands to consider rationalising their branch network. HSBC plans to close over 100 branches in the UK this year because their customers are just not using them.
This report featured in Finextra shows that customers are increasingly intolerant of friction in bank services. If services are slow, difficult to access, or feature long delays, customers will move to competitors. Given that most traditional banking services were all slow and difficult to access, this is quite a challenge for the industry.
The fintech revolution is really turning banks upside down by introducing a startup culture into banking where customer problems can be solved or improved through the use of technology. There are now entrepreneurs ready to test out a new service. With the cost of entry for companies designing apps extremely low, the challenge for the traditional banks is how to compete with services that are designed entirely around needs of the customer.
To my mind, there are four distinct areas emerging in retail banking today and each has its own advantages and challenges:
The traditional banks have an enormous advantage with their history and customer base in the millions. It’s hard for the new single service players to build up their customer base and requires a mix of great prices and marketing – nobody will use a service if they have never heard of it.
But the big picture is changing and all the traditional banking executives acknowledge the need to be more customer-centric. Gone are the days when applying for a car loan meant a visit to the branch and completing a 17-page form. They can remain relevant, but only if they explore what the new players are doing. Designing services around the need of the customer is essential for survival in this much more complex retail banking environment. This white paper explores how technology and regulation are impacting the UK retail banking industry.
What changes do you think retail banks need to make to be more customer-centric? Leave a comment below, or get in touch on LinkedIn and let me know.