The fast developing world of technology hasn’t spared anybody. Today it takes more than reliability and security for banks to succeed. With financial technology companies not only occupying more and more space on the financial arena but also joining forces to innovate it, banks are facing new, much greater challenges.
It’s time they combined the reliability and stability of a financial institution with agility and the ability to innovate. Only then they’ll be able to move forward towards the ever changing customer expectations and to offer them services competitive with what the industry disruptors offer.
Apart from other traditional banking institutions or services like PayPal that’ve been in the market for a while now, banks need to find ways to handle such players as Apple, Google, and Amazon.
The wealth gap between banking institutions and the tech giants still seems insurmountable. In 2016 the world’s wealthiest bank, Industrial & Commercial Bank of China was valued at $3.47 trillion, America’s richest JPMorgan Chase valued its assets at $2.49 trillion, while Google, the world’s most valuable company was said to be worth $498 billion. Still, the situation shouldn’t be disregarded.
Even though banks have size on their side, they’re also more susceptible to volatile political realities and subject to the constraints of stringent internal policies, industry regulations and external privacy laws (now also the GDPR). When it comes to agility and the ability to embrace or inspire change, on the contrary, they cannot be compared with the tech behemoths.
The big trio – Apple, Google, and Amazon – have already proven their ability to bring sweeping changes to entire industries. To further complicate matters, they’re about to try to upend the industry as, alongside Intuit and PayPal, they’ve formed an alliance aimed at transforming the financial services sector. With its seemingly limitless access to information and ability to shape customers’ perceptions, Google is also a rival that traditional financial institutions should not disparage.
According to Ernst & Young’s Global Consumer Banking Survey 2016, “40% of customers expressed decreased dependence on their bank as their primary financial services provider and have used non-bank providers for financial services in the last 12 months.”
Having surveyed over 55,000 banking customers worldwide in their Bank Relevance Index, Ernst & Young’s data proves that banks are losing ground in favor of their financial technology counterparts. The reason is that banks are failing to keep pace with rapidly changing customer expectations. As a result, more and more customers globally are considering choosing financial services from non-bank providers.
EY BRI: average bank relevance, by country
Forty-three percent of American banking customers admitted relying on the services of banks having only an online presence; 23% are considering using their services in the future. It’s also important to note the growing trust in online banks among customers. More and more banking customers are likely to turn to online banking providers, or nonbank financial companies for credible advice. It suggests not only that personal customer service is losing in relevance, but that algorithms are doing much better job of recognizing and responding to customers’ needs.
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To gain traction, banks need to become even more customer-centric. They need to realize the importance of building more personalized and easy to use m-banking platforms.
It’s about time for traditional banking institutions to use their vast resources to innovate their products and services to directly compete against the tech giants entering the financial arena. Because of procedural constraints they’re less agile and slower to react to changing customer expectations and slower to correct the rough edges of their products. For this reason, conducting in-depth research of their customers’ needs and carefully designing their products in alignment with these needs seems to be even more important for traditional banks than for tech companies.
To offer competitive services, banks need to underpin their digital banking solutions with in-depth, granular insights into individual customer needs and behaviors.
Hence, banks need to put extra care when choosing the right analytics tool that would allow them to get such insights. They also need to leverage marketing solutions to make their customer-bank communication personalized and build a loyal customer base by offering a better digital experience that corresponds to their customers’ specific needs.
There are two more of Ernst & Young’s findings that banks should consider to make better use of their mobile platforms:
- Half of 55,000 respondents admit to being digital-savvy. 60 % of digitally savvy banking customers heavily rely on mobile banking. Mobile channels also boost client loyalty and referrals.
- Clients’ digital skill doesn’t necessarily correlate with financial acumen. This matters as customers that are adept at using e-banking or m-banking platforms but lack financial acumen are more likely to migrate to banking alternatives that seem to have a greater understanding of their needs and offer more effective guidance.
By investing resources in developing m-banking solutions, banks have a chance to improve customer loyalty as they accommodate the expectations of clients that are already avid m-banking users. They can also lower the customer churn as they prevent migration to alternative financial services providers.
Hopefully, we’ve managed to convince you of the significance of better understanding your customer and building well-designed digital solutions accommodating their needs. This is vital as m-banking has been gaining in relevance for some time now and the trend doesn’t seem to be waning.
We’ve also already mentioned strict internal policies and industry regulations –both local and international. They keep you from reacting quickly to constantly shifting customer expectations, or potential imperfections of your digital banking solutions.
All these factors lead to the conclusion that it’s vital for banks to monitor their digital solutions proactively to act on potential bottlenecks in their m-banking platforms. To achieve both, banks need to set the right m-banking key performance indicators (KPI).
The term key performance indicator (KPI) rings a bell for every web analyst. However, unless you’re a real web analytics pro with years of experience, you may feel daunted when facing the task of choosing KPIs to measure the success of banking services.
Setting KPIs for your m-banking platform need to be backed up by a good understanding of the project’s goals and ideally need to be done at initial stages of development. There’s of course no one-size-fits-all set of KPIs, but we’ve prepared a guide for banks with 15 perfect KPIs I’m sure you’ll find interesting.
In this FREE ebook we cover such topics as:
- How to identify the right KPIs for your digital platforms?
- Who should be involved in the process of defining KPIs?
- When to set up KPIs so to meet your bank’s strategic goals?
- What characteristics differentiate KPIs from other metrics?
- How to use a balanced scorecard to efficiently identify KPIs?
- How can KPIs help navigate internal processes in e-banking & m-banking?
Learn about 15 KPIs accountable for customers’ engagement in your e-Banking and m-Banking platforms. Follow them to boost conversion, UX and performance of your marketing channels.
Download FREE ebook