Customers are increasingly interacting with their banks through remote channels, particularly over the internet and more recently via mobile devices. Over two-thirds of UK customers now conduct the majority of their banking over the internet – a three-fold increase from 2005. The fact that very few transactions now require any ‘human’ contact with their bank has contributed to greatly improved levels of cost efficiency.
However, with increasing use of the internet, customers are well-informed and highly mobile. The brand loyalty that once existed has suffered. As a result, churn rates are now a major worry for banks. The cost of acquiring and retaining customers is eroding much of the savings made through the switch to digital banking.
This is a wake up call for banks to establish more effective approaches to customer acquisition and retention. The prize is the opportunity to claw back some of the commercial gains from the move to digital banking.
Make it personal – the key differentiator in the digital world
Heritage banks and new players alike have a real opportunity to differentiate through applying the personal touch. New players will capitalise on their technological agility and focus. Heritage banks will play on their extensive coverage and staff strength.
Engaging customers on their preferred terms will pay dividends for banks. Customers may prefer a more subtle intuitive, on-demand interaction. This will involve the customer – not the bank – dictating the rules of engagement, the bank must simply be in a position to respond accordingly. Subverting the relationship in this way places the customer in control.
Outperform – improving service requires a personal investment
At a time when complaints relating to banks’ service quality are receiving substantial press coverage, delivering customer satisfaction is again a top priority. Banks with a strong service ethic and a customer-centric approach, such as First Direct, have proven that a focus in this area is important to both acquisition and retention.
The new ‘neighbourhood centre’ model seen in many US retail banks, and the branch model adopted by Metro Bank in the UK, are extensions of this theme. From a service perspective, the digital and personal worlds can combine harmoniously. For example, online web chat support could replace frequently askes questions (FAQ) pages, named and dedicated mortgage case handlers could replace case numbers. These personal touches begin to build the bond of trust with customers, but must become a feature throughout the bank’s service portfolio.
Be innovative – move in step with your customers
Social media offers the ideal forum to engage and connect with customers on a personal level. The new generation of technology-literate customers will use this personal connection as a major factor in their choice of provider. The winners will turn their satisfied customers into their most effective marketers.
Banks wishing to benefit from the lower operating costs offered through digital banking must deliver efficient service with a personal touch. This will have a magnetic effect on customers – attracting them firstly, and convincing them to stick.
To find out more about building a digital bank with a personal touch or to speak with an expert from PA’s financial services team, please contact us now.