According to Michael Zetser entrepreneur, and a popular fintech investor and expert, the last few years have seen a drastic change in the way people interact with banks. Banks have seen the era of digitization usher in, thanks to digital-savvy neobanks and fintechs. Financial institutions need to approach digitization progressively and focus on aspects that help them in delivering a seamless customer experience if they want to retain their position in the market. There has been greater emphasis on customer-centricity and digitization in the past couple of years where banks are concerned.
Customers are looking for emotional connection, loyalty and empathy from businesses, which means that banks will also have to widen their perceptions and use emotional connection for enriching the digital experience. They can accomplish this by being aware of the top digital banking trends that are thriving in this year and will continue to do so in the future.
The banking arena is already seeing the API economy materialize, which means there is a great deal of potential in developing new and improved financial services. Thus, Michael Zetser entrepreneur believes it is one of the top banking trends globally because open banking enables banks to share financial data with fintech firms. They do this through Application Programming Interfaces (API) with the consent of customers. In this way, banks and other financial institutions are able to collaborate with one another to offer a wide range of financial services to customers on a single platform.
Bridging customer expectations and needs
Whether it is the traditional, or modern banking system, there is a gap between customer expectations and what banks deliver. In the event of a significant difference, it is likely that customers may switch banks. There was a time when doing so was difficult for customers because they only had limited options, but with digitization, there are more choices. Therefore, financial institutions have to address this gap to succeed in a competitive market.
It means banks have to collect customer feedback and also act on it by incorporating it in different processes. Likewise, they also need to develop high quality financial products and services and offer their clients value. Banks need to collaborate with fintech firms in order to accomplish this goal.
Focusing on customer experience
A consistent banking experience has become a pressing priority, whether it involves reaching out to customer support, filling out a loan application, or just walking into the bank branch. Customers want their banks to understand their needs and help them in addressing their financial aspirations. This means that banks have to introduce personalization in their services, become more intuitive and data-driven in order to anticipate their clients’ needs. Michael Zetser says that banks that are prioritizing customer experience in their digitization journey are likely to have a strong position in the market.
Since the primary focus is customer experience, most financial institutions will evaluate their performance through experience-driven metrics. It requires looking at key performance indicators to assess just how customers are engaging with digital banking products. Not only do the metrics need to consider operational efficiency, but also look at how comfortable customers are when using them. User feedback should be considered, which includes ratings, comments and recommendations.
The good news for financial institutions is that they do not need to make new investments for collecting these metrics. App store ratings, active customer volume, app switch rates and retention, net promoter scores, reasons behind customers’ queries and customer lifetime value and other similar parameters can offer the necessary information.
More fintech collaborations
There have been an increasing number of collaborations between banks and fintech firms for digitization purposes. Fintech entrepreneur Michael Zetser says that this is because it is not easy for banks to digitize in a short amount of time, considering their size. Phased digitization results in fragmentation due to which banks have opted to partner with fintech companies for delivering convenience and innovation to their clients. Rather than competition, the concept of co-opetition is becoming more popular, which has seen and will continue to see more partnerships between banks and fintech firms.
Automation and EQ
Another major trend that appears to be gaining prominence in the banking industry is the requirement of emotional intelligence. In the traditional market, financial institutions and banks marketed their IQ, but now it seems that EQ is becoming just as important. Fintech institutions have been becoming less robotic due to newer technologies, such as artificial intelligence (AI).
This indicates that banks not only need to automate their processes, but also add EQ to deliver a better experience to their clients. One such banking platform that has been introduced is BELLA and it is the perfect example of how EQ can be integrated into banking. It takes a conversational banking approach, which is directed at fostering a community.