Banking Leaders Discuss How to Build Better Digital Customer Experiences
Earlier this month, Avoka’s Chief Experience Officer Derek Corcoran sat down with Doug Mackenzie and other banking thought-leaders on The FinTech Show to discuss the trends their seeing in banking customer relationship management in 2018. You can check out the video and edited transcripts of Derek’s interview, as well as Josh Bottomley, Global Head of Digital at HSBC and Mark Mullen, CEO at Atom Bank, below.
What Are The Biggest Challenges That Banks Face Today?
Their business models are fundamentally being disrupted. Challenger banks like Tandem are sharing profits with customers which is not something that banks have traditionally done. They are also leveraging digitization to help customers avoid actions that previously would have generated fee revenue. On top of this, banks are also dealing with the branch paradigm shift where people just aren’t going to branches anymore except for very specific tasks. And finally, you have tech companies like Amazon who are issuing billions of dollars of loans to small businesses, increasing the overall competition among financial institutions. To quote Charles Darwin, it’s not the smart or the strong that survive, but the adaptable. – Derek Corcoran, CXO at Avoka.
The biggest challenges are actually opportunities—opportunities to marry what customers want with what bank technology can do. It’s not our job to be at the leading edge of technology, but rather understand where customers are. For example, we are rolling out login biometrics which have resulted in a 70% reduction in people needing to log in using passwords. However, we’re still dealing with an issue of trust, and we’ve found that twice as many people would trust a robot to perform open heart surgery than open a savings account for them. So we need to use technology, but we need to take customers with us and make sure we resolve the issues of trust of security. – Josh Bottomley, Global Head of Digital at HSBC.
The biggest challenge for customers is that the banking industry looks strangely familiar compared to 20 years ago in that a small number of banks continue to dominate the banking landscape—they still have the majority of the customers, whether personal or business, they have most of the products, they have most of the balances, and they have most of the savings. The willingness of people to switch accounts is still low despite a number of efforts. Finally, the industry is still pretty low on innovation, with a long period of stable but low-growth, and then a health amount of uncertainty about the future health of the economy because of Brexit. – Mark Mullen, CEO at Atom Bank.
Why Don’t More Customers Switch Between Banks?
In the past 30 years that I’ve been studying this, customers don’t seem to see enough of a difference between banks to warrant the effort it takes to switch accounts. While customers are looking at rates, offers, and service, ultimately it’s about uniqueness, and frankly there just isn’t enough of it. – Mark Mullen, CEO at Atom Bank.
Fundamentally, banks are looking at customer onboarding from their own perspective out, and consumers aren’t used to that. They get a much different experience from Spotify and Amazon who are thinking first from a customer perspective. Banks need to build customer onboarding experiences based on how customers want to interact with them instead of how how their bank office is set up. Banks also struggle to measure how well the onboarding process is currently working for them. We talked with a bank recently that is experiencing a 90% abandonment rate on applications. That’s an extraordinary number that you would never see at a place like Amazon. Banks are struggling with measurement and continuous improvement to understand how and where they should enhance the onboarding experience. They are aware that they have challenges, but taken action on those challenges has proven to be difficult. – Derek Corcoran, CXO at Avoka.
Watch for our second blog in this series coming soon!