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Winning Over Customers to 21st Century Banking

Blog 21 Century 1

Much needs to be done to show customers that data-driven solutions can dramatically improve the ways they manage their money.

by Percy G. Johnson, Jr, Vice President Agile Solutions

What does it take for people to change ingrained habits? How can they be taught to trust, and to take advantage of, new systems and processes that will make their life easier? Change is always hard, but it gets even harder when it involves money.

There are so many advantages to 21st century, data-driven banking. More transparency, more efficiency, and more convenience, to name just a few. For those who have embraced the change, the advantages seem obvious.

Yet the data indicates that there is still great resistance to change. A McKinsey report shows that in Italy, 46% of consumers rely exclusively on ATMs and branches for all their banking needs, while in Germany, that number is 33%.

Consumer behavior is much the same on the other side of the Atlantic, where only 17% of Americans favour digital banking as their first choice. The same report predicts that “For the next three to five years the human touch will remain important for 30 to 50 percent of consumers in most markets.”

Source: McKinsey & Co Retail Banking Report

Creating Change

When it comes to the financial sector, people need compelling reasons change their behavior. What can those of us who work with technology - and believe in the promise that the digital economy offers - do to make it easier for consumers to transition into a new way of doing things?  

Deliver value. Deliver efficiency. Make the case that things can be done better. After all, it’s not like people love the old-fashioned mortgage process so much that they don’t want it to change. They just need to see that there is a better way.

Imagine a situation where a customer is notified that a document is missing from their application while they’re still online? Or if they visit an underwriter who can inform them the same day when an exception was identified. Those steps are relatively straightforward for an AI-driven, automated process, but extremely difficult for employees to deliver manually.

Consumers cannot fail to notice such compelling evidence.

The key is to streamline services

Using technology to streamline processes and align the workflow between back office systems and customer-facing services results in a more efficient process, and a more pleasant experience for everyone involved. AI Foundry has seen this to be true over and over again in the work that we do with financial service providers.

Let’s take a look at a few areas of the 21st century banking process where a little change can go a long way.

Smart Branches: Banks can do a lot more to dissolve the differences between branches and online services. Customers are looking for a seamless integration whether they visit the branch, the ATM or the website - it all needs to feel the same. Some banks have had success by giving employees tablets and encouraging them to roam the bank and help solve people’s problems online instantly using the tablets.   

Prove the data-driven difference: Customers need to see the benefits of change. When your systems begin to show them that you know who they are and how they use your bank, and you offer them products that make sense to them, their resistance to change crumbles and they become ambassadors.  

By studying the analytics generated from comprehensive consumer data, banks should be able to produce ‘next-best-product recommendations’ in real time that produce win/win results.

Employ targeted, relevant messaging: We are able to learn so much about our consumers and we should be using it to benefit them. Appropriate messaging, useful services, relevant tips….it all leads to an active online community that feels a sense of loyalty and trust with their financial service provider.  

Create system-wide efficiency: Automated processes improve efficiency and accuracy by reducing the need for timely, error-ridden manual entry. They align the needs of the back office and the front office, and provide a crucial link between the two departments. The process gets faster, more transparent and more successful when employees fully buy into the new model and work to enhance what the technology can do.

Let’s investigate a number of features that any new software should be offering in order to minimize risk and promote efficiency.

  • Timely collection of complex financial documents. This is a massive issue to deal with, as commercial deals often involve multiple guarantors. New practices require new technology that offers more automation, the ability to accept loan file documents from a variety of sources including mobile devices, interactive websites for both customers and operations, and an automated document classification and data extraction capability.
  • Deal with Information silos within the bank. Too often, certain divisions inside a financial organization feel they ‘own’ a particular consumer and as such, they only provide certain information on a client with other divisions, which often leads to missing and redundant data.
  • Automation can identify and rectify the data gaps immediately and elevate accuracy of data-capture to new heights.
  • Establish electronic communication methods between the bank and its borrowers. Poor communication makes it harder to deliver a good experience, and leads to delays which affect costs and morale on a project. Once again, automation and self-service tools are invaluable in gathering contact details and setting up channels of communication.
  • Involve the borrower with Self-Service Portals. The days of excluding users from the content that is collected on them should be over. A younger, mobile-first generation demands processes that are transparent and engaging. Make potential partners willing participants in the gathering and uploading of vital data, as it reduces errors and engages the lender in the process.
  • Strive for a ‘One Office’ solution. Make end-to-end processing and transparency the goals. Too often, a completed application moves the entire process to a back office, increasing delays and complicating status update communication with the borrower.

The presence of large paper-based systems, along with ‘stare-and-compare’ methods of data capture come at a high cost, both financially and in terms of delivering efficiency.

Build on what works

There are still significant portions of society where the latest trends in data-driven banking have had almost no impact. But every year, in every market, there is growth and development. Many people use online services to do simple things, like check their balance, transfer funds or get notifications when a purchase has been made. We can build on those simple success stories to offer more and more services.

The banks and mortgage lenders who started early on their digital journey are well positioned for the new wave of banking.  That shows the power of starting small, figuring out what works, scaling it up and migrating consumers to the new channels that you are using.

But with so many people in the developing world still unbanked, and with lingering resistance amongst ordinary consumers, there is still a massive upside to developing 21st-Century banking products that can change people’s lives.

To find out more about how AI Foundry can organize your data to create actionable intelligence, get in touch with us today.