3 Ways for Banks to Heal Stronger

How the coronavirus pandemic accelerated the future of digital banking

Crises have always been a catalyst for business innovation. History remembers prominent examples of successful companies being born in the hardest time of economic depression – from century-old mastodons like General Electric (launched in 1892) and IBM (launched in 1911) to massive startups like WhatsApp, Groupon, Instagram and Uber (and many more) founded during the 2008 Financial Crisis.

Although being known as conservative and resistant to challenges, the banking industry didn’t remain immune to such business model disruptions. The last global economic distress, combined with exponential technological advancement and millennial start-up mindset, fueled the appearance of the first pure digital-only players. Tech companies like PayPal, N26, Revolut and Chime (to name a few) not only entered the banking scene – they took the innovation one step further by putting the customer experience in the hearth of their agile operations.

The COVID-19 pandemic speeded up the trend by shifting overnight the global market sentiment to favor these new digital business models that are better-suited to the new order of social distancing. With only partially digitized functions and operations, Banks have to play a catch-up role in this pursue for delivering the best customer experience.  To address the challenge and take their business model to the next level, banks must evolve and do so quickly. This article explores some short to medium term strategies on how to address best the evolved customer needs while improving operational efficiency on the path to the next New normal.

1. Re-imagine the offering model

How can you empower your employees to provide advice to your customers remotely?

Pushing customers away from banks’ traditional brick-and-mortar branches, the coronavirus pandemic flattered the customer learning curve of digital adoption and demanded banks to start optimizing and automating their processes across all touchpoints. The operational effect of this development is moving their product origination, wallet management and payments to the digital space. The main risk is again linked to the level of customer satisfaction. Even prior to the COVID-19 pandemic, the product subscriptionexperience was the single most important factor leading to negative Net Promoter Scores (NPS) across the sector. The incorporation of interactive, digital-only tools for delivering seamless customer service and guidance across all channels, together with tracking the entire journey (not only single interactions) is becoming the new formula for a strong rate of customer attraction and adoption. The disruption factor in this context is linked to the use of predictive analytics and big data analysis as the main methods of understanding the customers and their behavior. And while most of the banks mastered their implementation skills for managing single-touchpoint journeys, delivering seamless customer experience across multiple touchpoints remains open for business innovation.

2. Happy employees mean happy customers

There are two main factors allowing digital-only players to be better positioned for the future:

  • keeping away from traditional banking culture;
  • not relying on legacy systems and data.

This is even more true in time of crisis when the speed and scope of adjustment are crucial. Building paperless, highly-automated and agile digital working spaces is imperative to empower culture of happiness and increase productivity. Everyone in the organization must be involved and supported to train, communicate and develop. The use of AI-infused assistants and tools are no longer seen as a treat, but rather indispensable help to deliver higher value – both internally and externally.

How can you empower your employees to provide advice to your customers remotely?

3. Personalize the digital banking experience

How can you empower your employees to provide advice to your customers remotely?

The pre-crisis period has been marked by a relatively low level of digital banking adoption – with millennials being at the forefront of the wave. Failing to offer their customers familiar, intuitive and personalized user experience, traditional banks faced a relatively low range of digital usage ranging from 47% in Europe [1] to 54% in the USA [2].

The COVID-19 pandemic led to strong overnight digital growth. First observations suggest an increase in the rate of digital use between 10% and 30% [3]. However, one critical finding has emerged – high speed and scale of digitization don’t automatically translate into positive customer experience. One of the reasons is the consumer desire and nostalgia for a personalized experience and the inability of the traditional banks to deliver it as part of their digital offerings.

The speed and quality of creating and managing end-to-end customer journeys are what will distinguish leaders from followers. Employing AI-driven methods and models in combination with a strong opinion based on data and deep customer insights is not only the key to a quick recovery, but also the key to long term success.

[1] according to a study conducted by McKinsey
[2] according to a study conducted by EBF
[3] according to the report “How the COVID-19 pandemic will accelerate digital financial services“, slide 39

3 Ways for Banks to Heal Stronger

How the coronavirus pandemic accelerated the future of digital banking?

Crises have always been a catalyst for business innovation. History remembers prominent examples of successful companies being born in the hardest time of economic depression – from century-old mastodons like General Electric (launched in 1892) and IBM (launched in 1911) to massive startups like WhatsApp, Groupon, Instagram and Uber (and many more) founded during the 2008 Financial Crisis.

Although being known as conservative and resistant to challenges, the banking industry didn’t remain immune to such business model disruptions. The last global economic distress, combined with exponential technological advancement and millennial start-up mindset, fueled the appearance of the first pure digital-only players. Tech companies like PayPal, N26, Revolut and Chime (to name a few) not only entered the banking scene – they took the innovation one step further by putting the customer experience in the hearth of their agile operations.

The COVID-19 pandemic speeded up the trend by shifting overnight the global market sentiment to favor these new digital business models that are better-suited to the new order of social distancing. With only partially digitized functions and operations, Banks have to play a catch-up role in this pursue for delivering the best customer experience.  To address the challenge and take their business model to the next level, banks must evolve and do so quickly. This article explores some short to medium term strategies on how to address best the evolved customer needs while improving operational efficiency on the path to the next New normal.

Pushing customers away from banks’ traditional brick-and-mortar branches, the coronavirus pandemic flattered the customer learning curve of digital adoption and demanded banks to start optimizing and automating their processes across all touchpoints. The operational effect of this development is moving their product origination, wallet management and payments to the digital space. The main risk is again linked to the level of customer satisfaction. Even prior to the COVID-19 pandemic, the product subscriptionexperience was the single most important factor leading to negative Net Promoter Scores (NPS) across the sector. The incorporation of interactive, digital-only tools for delivering seamless customer service and guidance across all channels, together with tracking the entire journey (not only single interactions) is becoming the new formula for a strong rate of customer attraction and adoption. The disruption factor in this context is linked to the use of predictive analytics and big data analysis as the main methods of understanding the customers and their behavior. And while most of the banks mastered their implementation skills for managing single-touchpoint journeys, delivering seamless customer experience across multiple touchpoints remains open for business innovation.

There are two main factors allowing digital-only players to be better positioned for the future:

  • keeping away from traditional banking culture;
  • not relying on legacy systems and data.

This is even more true in time of crisis when the speed and scope of adjustment are crucial. Building paperless, highly-automated and agile digital working spaces is imperative to empower culture of happiness and increase productivity. Everyone in the organization must be involved and supported to train, communicate and develop. The use of AI-infused assistants and tools are no longer seen as a treat, but rather indispensable help to deliver higher value – both internally and externally.

The pre-crisis period has been marked by a relatively low level of digital banking adoption – with millennials being at the forefront of the wave. Failing to offer their customers familiar, intuitive and personalized user experience, traditional banks faced a relatively low range of digital usage ranging from 47% in Europe [1] to 54% in the USA [2].

The COVID-19 pandemic led to strong overnight digital growth. First observations suggest an increase in the rate of digital use between 10% and 30% [3]. However, one critical finding has emerged – high speed and scale of digitization don’t automatically translate into positive customer experience. One of the reasons is the consumer desire and nostalgia for a personalized experience and the inability of the traditional banks to deliver it as part of their digital offerings.

The speed and quality of creating and managing end-to-end customer journeys are what will distinguish leaders from followers. Employing AI-driven methods and models in combination with a strong opinion based on data and deep customer insights is not only the key to a quick recovery, but also the key to long term success.

[1] according to a study conducted by McKinsey

[2] according to a study conducted by EBF

[3] according to the report “How the COVID-19 pandemic will accelerate digital financial services“, slide 39

About the author

Veselin Petrov

Business Development Manager, DACH

Veselin has been with BULPROS since April 2019. Prior to this, he spent 10 years on the strategy management consultancy, most recently as a Business Intelligence Manager at Boston Consulting Group. His industry expertise is particularly in Banking, Insurance, e-Commerce and Venture Capital with strong focus in Digital Business Models, Operations, Marketing and Analytics. Veselin worked for multiple Tier 1 and Tier 2 clients across Europe and North America. Veselin is based in Düsseldorf, Germany.