Reinventing retail banking in a post-pandemic world

Digitizing and personalizing the retail banking process for customers will attract more customers and ensure incremental growth

May 16, 2022, 10:30 a.m.

Last modification: May 16, 2022, 10:37 a.m.

Md Kafi Khan. Illustration: TBS

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Md Kafi Khan. Illustration: TBS

While a lot has changed over the past few years, especially in 2021, a lot more seemed to stay the same. Whenever the banking industry thought the end of the Covid-19 pandemic was near, some nascent variant of Covid would render their collective hopes redundant.

Despite these delays, banks have continually tried to transform the way they deliver services and have sought to improve efficiency and the customer experience. During 2021, the most successful retail banks showed leadership. The urgency of digital transformation grew as consumers continued to experiment with alternative banking options.

Let’s take a closer look at some of these trends.

Improve the success of digital customer onboarding

Banks need to completely revamp onboarding processes that lack communication depth, personalized recommendations, timely engagement, and cross-channel integration. One solution is to re-engage existing branch staff to help with the digital onboarding process, armed with insights that can empower teams to provide valuable contextual recommendations.

The future of customer engagement must be more personalized

Consumers were increasingly connected to their banks or credit unions across all channels in 2021, interacting with many touchpoints before opening an account or even making a simple transaction.

High performers had a holistic data and technology strategy that could be customized at scale to each customer and could adapt in real time to make smart decisions and automate the self-reinforcing cycle of experiences personalized.

Financial institutions need to move from using data and analytics solely for great internal reporting to using data, analytics and content for great experiences. Financial institutions should merge offline and online data sources.

Until this is done, the ability to optimize the customer journey will remain abysmal. If the customer profile includes hybrid customer channel information, the likelihood of content and channel personalization will be increased.

The transformation of digital banking is certainly not standing still

Financial institutions have begun to realize that digital banking transformation is a journey rather than a destination. Investments in digital banking transformation must continue to increase.

The benefit of a strong digital banking transformation process can become self-financing, reducing costs through efficiency and resulting in improved experiences driven by innovation, personalization, employee satisfaction and growth.

Generalize Banking-as-a-Service (BaaS) platforms

The expansion of the Banking-as-a-Service model to the entire financial services industry in 2021 has facilitated the creation of value as well as the exchange of value between financial and non-financial entities, with the consumer as the primary beneficiary .

BaaS platforms have increasingly democratized the offering and delivery of products and services, accelerating the innovation process, and enabling faster iterations as consumer behavior has changed. Banks should take steps to increase customer engagement beyond checking daily balances.

This requires financial institutions to move more towards the “integrated finance” that is part of a consumer’s daily life. The combination of financial services with social media, retail, transportation, hospitality, investment and advisory services increases the potential to add value for retail consumer segments or even on an individualized basis.

Illustration: TBS

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Illustration: TBS

Illustration: TBS

Modernization and scale of technology is not enough

Investment in new technology, by itself, did not improve conditions at most financial institutions in 2021. Clearly, the biggest challenge for most financial institutions was not legacy technology, but leadership and regulations inherited geographically.

There will be further crunch in the number of existing banks in 2022 and beyond due to the costs of doing business and behavioral changes that have accelerated as a result of the pandemic.

The greatest need will be leadership, vision, and a culture that embraces change, is willing to take risks, and is ready to transform their organizations into something completely different than they have been since their formation.

Embrace the cloud to stay competitive

The majority of financial services organizations have yet to deploy core systems in the cloud. Reasons include the perceived amount of complexity and concerns about security, risk, governance and control.

Most financial institutions were already actively using cloud services or planning to do so in 2022 and beyond. In other words, while banks of all sizes recognize the need to move to the cloud, the majority have not started this process.

Although there have been reservations in the past regarding cloud security and regulation, cloud computing solutions will become mainstream in the market for traditional and non-traditional financial institutions in 2022.

Organizations of all sizes will migrate to the cloud to stay competitive. Traditional banking systems will become outdated and inflexible, making it costly to deploy new solutions or protect against advanced security risks.

Re-training, retraining and new hires

The need to shift to digital engagement has accelerated in 2021 and expectations for speed, simplicity and empathy have replaced physical convenience as the key differentiator. This shift disrupted back-office processes, increased the need for real-time data and applied analytics, and put pressure on ill-prepared leaders and employees for this pivot.

The emergence of new jobs created explicitly to support the digital transformation of a financial institution is underway. In addition to new jobs, many existing jobs have been drastically changed as institutions begin to introduce new technologies.

While some hiring was required to support digital banking transformation, employee retention and retraining also needed to be prioritized. To prepare, financial institutions need to assess the skills needed in critical organizational roles not only for 2022, but also for the next three to five years.

Embracing the change that will occur will be the responsibility of each individual, at all levels. In the future, lifelong learning will become a priority. While the commitment to learning is a personal responsibility, every bank must step up its efforts to make it possible at a speed previously thought unproductive.

Outsourced solutions provide a gateway to innovation

A strong ecosystem of partnerships helps banks experiment, learn, and ultimately import the capabilities needed to adapt to acute and chronic disruptions. Ecosystems allow organizations to operate more flexibly, providing access to more collaborators and a greater range of potential innovations, thereby increasing the volume, quality and risk tolerance of experimentation and innovation. learning.

When hoping to create an improved process, add a new solution, or completely change existing business models, consider working with organizations that have already created a viable solution for other institutions. This allows focus on other initiatives that may require greater internal resources while allowing solutions to be built at scale and quickly.

Veiled attrition has shaken customer loyalty

It’s hidden by attrition that most customers don’t close accounts when they switch relationships. Instead, they divert their loyalty to alternative providers that offer more value. Sophisticated features such as applying predictive analytics to manage churn should be integrated with other marketing initiatives to stem the flow of customers using alternative providers. Focusing on improving the customer experience will also result in more engagement, increased relationship expansion, and less gender diversity.


Warning: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.

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