Over the course of the next 4 years, 81% of bankers agree that financial institutions will seek to differentiate the customer experience they offer rather than their products and services.
This is according to the findings of a newly-published report by the banking software company Temenos, which underscores the importance of customer experience in light of recent long-term structural changes to customer banking behaviour that have been triggered by the pandemic.
In addition to this, The Fintech Times recently provided coverage regarding the retention of banking customers in relation to the experience they have with online banking.
The report, titled “Demanding More”, is based on a recent global survey of 305 senior banking executives conducted by the Economist Intelligence Unit (EIU). The report highlights how financial institutions have been forced to adapt to the sudden movement of customers managing their finances online, which has proved beneficial to digital-only banks.
As an example, as of January 2021, 14 million British citizens (27% of UK adults) had a digital-only bank account, representing a 16% growth from January 2020 and a 3-fold increase compared to figures from January 2019. Almost three in four (71%) global respondents expect cash to represent less than 5% of all retail transactions globally by 2025.
The shift towards online banking has highlighted the evolution of how financial institutions manage relationships and the demise of the traditional branch. Global banking executives’ top strategic priorities are all customer-focused. Improving customer experience and engagement, including personalisation and intimacy, was viewed as the top strategic priority by 30%.
The report further reveals that consumers, particularly Millennials and Gen Z, are increasingly demanding that companies follow responsible business practices. This is leading to business engagement with issues that are important to consumers, such as combating climate change and promoting diversity and financial inclusion.
Additionally, banking executives are prioritising the financial empowerment of their customers. Findings show that around one in three financial institutions are considering growing microfinance for entrepreneurs (34%), deposits for unbanked populations (33%), and responsible lending to under-banked populations (32%) in the next one to three years.
“Banking is a very human experience, and yet for so many, banking doesn’t happen the way we live our lives. In today’s world, the relationship financial institutions have with members or customers is more critical than ever,” comments Joaquin de Valenzuela Muley, SVP and Business Line Director for Temenos Infinity. “Banks are moving their customers from physical into digital channels and the winners will be those who can inject intimacy into those channels. Banks will need to provide a digitally-driven customer experience in assisted channels and online – offering advice, value-added services, and ‘always on’ banking, helping individuals, families, and businesses to meet their dreams and aspirations. This report showcases what should have already been obvious: banking is about the people, and the products need to reflect that.”