Get digital or die tryin’

2020 was without doubt the year of Covid-19. A year of immense disruption, with people forced to stay home, conduct business and life remotely, and wear a mask everywhere they go. Did all of this disruption have an impact on innovation in retail banking? That doesn’t appear to be the case. The result of the Innovation in retail banking report 2020 shows that the big trends remain the same. Banks kept on moving in the same direction. But now it appears they are moving faster, as if they are now more certain of their destination.

Get digital or die tryin’

No room for gadget and innovation showrooms

The 2010s were years of innovation showrooms and labs launched by big banks to show their customers how innovative they are. But as flashy as a showroom may be, were these banks really all that innovative? The answer isn’t so clear. While banks can welcome their customers with robots and a virtual reality headset in a breathtaking space, that is a lot of money and energy for what amounts to very little tangible improvements for the customer. You need to fulfill your customers’ needs, not just satisfy your ego.

Get digital or die

The first need of your customer is to be able to make all service requests digitally. Going digital or, more specifically, mobile is a matter of survival for banks in a world where branches are closing. Each bank must be digital, which means offering their customers fully remote services, from customer onboarding to product sales to customer service. In other words, each bank should be a digital bank in the world we live in. And most Efma members have reached this stage now.

Nevertheless, there is still room for improvement in customer experience and customer service. Even with the emphasis on digital, the human touch is still essential. In Asia, we used to say that the consumer is king. That’s barely the case in the rest of the world. Most customers don’t expect to be treated as kings but maybe as friends. Emotional elements, such as trust and personal connection with an advisor or advisory service, account for 40% of investors’ perceived value of financial advice, according to 2020 Vanguard research. No doubt it’s the same for a retail banking customer. This means investing in technology like AI and data in order to better know your customer and offer him what he is waiting for at the moment he needs it. But beyond digital investments, there also needs to be investment in people. A motivated, informed employee who is always available with the best solution for your finances should remain a key element of any strategy. Even the biggest neobanks, without any branches to speak of, recognize the important of customer service. They have representatives available around the clock, via chat, and in multiple languages. The way customer service is delivered has changed. But its importance has not.

Offer the customers the tools they really need

Products will also make the difference in helping customers improve their financial health. In each country, banks are selling more or less the same financial products and the prices are similar. No differentiation. Nevertheless, some banks excel in offering the right products. Products that make the difference because they are built to help the customer. One good example is Commonwealth Bank in Australia. In 2019, they launched Benefits Finder. The aim of this product is to help connect customers with their share in billions of dollars’ worth of unclaimed government rebates and benefits. “We are determined to help our customers claim as many benefits and rebates as possible to free up money for essential expenses and reduce their financial stress,” said Angus Sulllivan, Group Executive, Retail Banking Services, CBA. Doesn’t he sound like a friend ready to help you? And in 2020, the bank launched Bill Sense, a new CommBank app feature that predicts future bills to help customers, especially those new to budgeting, to stay on top of their finances. That’s brilliant. And couponing and discounts fit very well in this category too. Bradesco did it well in Brazil through a partnership with Cuponeria, a local startup, delivering incredible discounts to their customers right in the banking app. These kinds of tools are flourishing and open banking allows you to integrate them rapidly in your banking platform and offer them to your customers and show them you are the right partner to help them save money.

Bank and big techs: Banks are not only banks

Neobanks such as N26, Revolut, Klarna and ZELF are changing the way customers bank with their exciting apps and brands. And many tech players are entering the banking competition, especially in Asia with brands like LINE, Grab, or more recently Razer. Banks understand the need to change in order to stay ahead of the game. More and more are launching their own challenger banks similar to the likes of N26 and Revolut with amazing customer experience and design, young and trendy branding, and services that go beyond financial services. The new version of imagin by CaixaBank is a good example of what a bank of the 2020s should look like. Same for Emirates NBD’s Liv. or the Tinkoff super app and ecosystem. This Russian app was so much beyond banking that Yandex, the tech giant in Russia, decided to buy it for what is the first purchase of a bank by a big tech company.

Again, in Russia Sberbank became Sber, a tech company and a brand uniting a universe of services. That’s disruptive. A first step in the concept of invisible banking. It is a whole new environment: Banks are becoming big techs, big techs are buying banks, and sometimes banks and big techs collaborate. That’s what happening in the U.S. with BBVA USA working with Google to offer consumers a digital bank account through Google Pay. Banks are not only banks. Deposits are not the only aim. This transformation opens the door to a new source of revenues but also to impressive potential customers’ data portfolio.

Times have changed. The major disruption of 2020 has only accelerated trends that were already present in the financial services industry. As the industry continues its evolution, the most innovative players that bring true value (which is nowadays primarily digital) to their customers will be the winners in the years to come.

Download the Innovation in retail banking report 2020 to read further on the biggest trends that are shaping financial institutions all around the globe.


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