How to drive digital innovation without alienating your consumer base

Two-thirds of consumers participating in a recent study by Broadridge say the companies they do business with need to improve the experiences they provide. In 2019, that share was just 35%.

Digitisation risks alienating retail customers who might not be ready to take the digital plunge

Why are consumers less satisfied today than they were three years ago? It’s unlikely that customer service has gotten that much worse. Instead, consumers—especially younger ones—have become accustomed to doing business with customer-obsessed companies, like Apple and Amazon. A relatively small number of companies are setting a standard for fast and efficient service, and for creating a communication experience that customers actually enjoy—exposing shortcomings in other companies’ experiences.

Some of those leading experiences are also coming from banks, but the industry at large has significant room for improvement – and that is one of the main reasons banks are rushing to go digital. Banks know that technology offers them an unprecedented opportunity to reimagine the relationships between themselves and their retail customers. It also has the potential to remake the economics of their business.

Replacing paper documents with digital forms, call centres with online help, and branch visits with remote payments and deposits are just a few of the ways banks are harnessing technology to lower the costs of servicing customers.

Due to these clear benefits, many of the world’s largest banks are in the midst of digital transformation initiatives that promise to enhance profitability while also making it easier and more pleasant for their customers to do business with them.

But as banks integrate new technology into their platforms, they face a unique and delicate challenge: innovating without alienating retail customers who might not be ready to take the digital plunge. For better or worse, our research shows more than half (56%) of bank customers still like getting paper statements and many also like speaking with the teller at their local branch. Even customers who enjoy the convenience of being able to check account balances online and make deposits with automatic apps on their phone might want to talk to a real-life person instead of a chat-bot when it comes to important questions about their finances.

How can banks use digital technology to deliver a world-class customer experience and lower costs, without alienating a potentially sizable segment of their customer base?  Here are four practical tips:

1. Banks need to take the customer experience seriously. As they incorporate new digital tools, banks should listen continuously to the “voice of the customer” for reactions. For example, banks can use customer feedback in A/B testing to roll out and perfect new technology tools and capabilities in an iterative process that ensures great outcomes and avoids overwhelming customers with sudden change.

2. At all times banks must give their customers choices. Digital can’t be an all-or-nothing proposition for customers. To create a great customer experience, banks should give customers a place where they can easily communicate their preferences about how they want to engage. Banks can do so by providing access to customer “preference centres” prominently within their online portals, mobile apps, and even on their printed statements (using a QR code). In these centres, customers can select the channels, frequencies, and even languages that work best for them. Providing a simple way for customers to enter their preferences makes it easier for customers to do business with the bank and makes them more likely to maintain or expand the relationship.

3. Personalisation should be a top priority. Digital tools can help customers bank more easily and efficiently. What technology can’t do is replace the human interaction these customers like to receive when visiting a bank branch or talking to a representative on the phone. For that reason, banks must make it a goal to imbue their new, omni-channel models with some form of personalised experience. There are many tools that banks can use to personalise the customer experience, including better leveraging the customer data as well as incorporating personalised videos and artificial intelligence applications that help the bank provide exactly the right content, through the right channel, at the right time.

4. Getting the switch to digital right isn’t easy and requires a new way of thinking. Fortunately for banks, they now have a host of capable partners ready to help. Not too long ago, outsourcing any technology may have run counter to corporate culture for a bank. Security was the main concern, especially the risk that third-party technology could open the door to criminals looking to drain accounts and hackers looking to steal customer data. Today, those concerns have been largely addressed. It’s broadly accepted both in banking and the technology industry that the best tech providers have security capabilities that match or even exceed those of big banks. At the same time, innovation over the past decade has made outsourcing much easier and has helped banks reduce their operating costs. Cloud computing, software-as-a-service (SaaS), and APIs that connect systems are making enterprise technology more “plug and play”, allowing banks and other businesses to select the best platforms and providers and seamlessly integrate them into their overall platforms.

By working with these external partners, banks have a unique opportunity to apply innovative technology to bring their customer experiences more in line with CX leaders while simultaneously lowering costs. And by focusing on principles like personalisation and customer choice, they can still delight customers who still enjoy opening the mail or making a trip to the local branch.