The bank of the future will use A/B testing to become insight-driven
It's 2021 and online interactions are more important than ever for financial services customers. Yet financial services companies are struggling to provide excellent digital customer experiences. They are still thinking in terms of products and channels instead of taking a customer-centric view.
Those banks and insurers that fall behind in the race to court customers online risk losing market share and customer satisfaction. They face an army of aggressive newcomers in the form of challenger banks and other fintechs that are rapidly gaining traction.
These tech-savvy challengers are adept at listening to their customers, both in conversation but also through the data that they generate online. They use those data signals to create customer-friendly digital experiences that are honed to eliminate friction.
Customers appreciate this sales proposition, with 57% saying that online banking offers a level of convenience that they can’t get at physical branches. Many are either already using or considering a move to digital-only banking. No wonder that fintech is currently enjoying a 24.8% 2019-2022 CAGR while branch banking has been declining at 2% annually in recent years. Organizing around the customer experience is good for business.
Fintechs aren’t winning because of a lack of regulation
Many modern financial services companies (fintechs) simply serve better digital experiences than traditional banks to their customers.
Consider “Marcus,” a consumer lending bank created by Goldman Sachs to harness technology and digital experiences without traditional brick-and-mortar branches. In four years, the company grew from $0 to $50 billion in deposits and 4 million customers.
1 Four challenges that banks and financial services face today
Financial services companies face several pressing problems, each of which threatens their profitability and long-term prosperity. Here are the top four.
#1 Financial conditions are making customers less profitable
As the economy continues to recover from the COVID-19 pandemic, the Fed has adopted a relaxed approach to inflation promising low-interest rates at least through 2023. That places extra pressure on margins, which makes increasing customer profitability a top-three challenge, according to PwC’s "Retail Banking Survey.
#2 Financial services companies are struggling to find, retain, and cross-sell customers online
The pandemic accelerated the profitability problem. Around one in three banks are finding it harder to engage with customers remotely, yet customers will want more digital engagement post-COVID-19. McKinsey found that up to 20% of customers expect to increase their usage of digital channels post-pandemic, while Accenture says that 60% want the same levels of support that they saw during the pandemic after the crisis is over. This represents an amazing opportunity for financial services companies to cement relationships with their customers.
#3 Customers are focused on convenient, friction-free banking
Banking customers also want omnichannel experiences with better integration between physical and digital channels. Roughly half (48%) of US online adults do their banking on a mobile website or app. Yet, many mobile banking websites do not perform well. In usability tests, Forrester found that difficult-to-find content affected prospects’ confidence and made them less willing to open an account.
#4 Financial services companies don’t know where to begin building powerful digital customer experiences.
Many banks and insurance companies are aware of the urgent need to address their customer relationships, but don't know where to begin. Only 17% of them feel prepared to develop customer-centric models, even though 61% say that it is very important. Globally only 13% of financial services providers consider themselves to be early adopters of new technology. Clearly, something has to change.
2 How bank, insurance and other financial services companies can respond
Start at the call center
Often, simple, customer-centric optimizations have the biggest impact on digital experiences. In addition to heat maps and customer journey recordings, which reveal where and how your customers are struggling to achieve their goals, ask your call center and customer service teams what are the top reported challenges they hear from customers. Aim your optimization efforts there.
Focus on fast customer-first interfaces
If there's one commodity more valuable than money, it's time. Online banking experiences must be fast and fluid.
Don’t believe that data security and great digital banking are exclusive
Security and privacy are key requirements for banking customers, and they are also growing regulatory requirements in the US. Banking and financial services companies must offer excellent digital experiences while giving their customers complete confidence that their sensitive information will be safe. These goals are not exclusive.
Offer personalized advice
Consumers want to feel that their financial services companies care about them and are listening to them as individuals. Avoid providing boilerplate web pages that don't reflect a customer's individual needs and experiences.
The bank of the future is an insight-driven one.
Financial services companies can build better customer experiences by using the practices of optimization and personalization to radically transform their customer relationships. This means organizing themselves around customers rather than channels or products, and designing digital journeys based on customer needs and behavior.
Learn how A/B testing and personalization can make your organization more customer-centric and competitive.
Download the Kameleoon ebook to learn:
- The three unique opportunities that banks and insurers have vs. other industries,
- How A/B testing and personalization creates digital-first, customer-centric cultures for banks and financial services companies,
- Easy examples of A/B tests and personalizations that generate growth for banks and financial services companies.