Customer expectations are rising all the time in just about every sector, and financial services is certainly no exception. This doesn’t just mean easy and fast access to their funds through reliable and secure technology: customers also want to feel that they can trust their banking provider, and receive tailored financial advice from them, too.
All this means that delivering superior customer experience (CX) in financial services is critical for maintaining and increasing satisfaction, retention and loyalty. With 91% of consumers viewing digital banking capabilities as crucial when selecting a bank, CX technology has a vital part to play in this.
Why Invest in Customer Experience in Financial Services?
Customers expect the payment solutions they use to be fast, secure and frictionless, which has helped guide much of the work we at Ciklum have done with financial services firms over the years. But achieving this is often hindered by outdated legacy systems and fragmented customer journeys that put banks at risk of losing business.
Many legacy core banking systems haven’t been properly updated for decades, meaning that essential functions such as opening and setting up accounts, or processing deposits and loans, are still based around mainframes. Similarly, when communication channels aren’t connected or integrated, customer journeys are inconsistent and inefficient, especially when data visibility is poor.
73% of customers cite customer experience as one of the primary factors in their purchasing decisions, so getting these payment platforms right is critical. Adding to the pressure is the high level of competition in the industry, where traditional banks are competing with tech giants and FinTechs for market share.
FinTechs are increasingly providing banking options that are more user-friendly, efficient and personalized, supported by competitive interest rates and intuitive technology. This explains why banking executives are directing an average of 29% of their digital customer experience investments into machine learning and AI.
Three Keys to Digital Transformation in Banking
Modernizing Core Infrastructure
While customer-facing innovation is hugely important, this can only be delivered with the support of a modern core infrastructure behind the scenes.
Many banking firms have retained a traditional focus on compliance, security, and infrastructure over customer-facing aspects. This has often led to outdated payment gateways, cumbersome authentication and fragmented customer journeys, which is only now being addressed by firms making greater investments into customer experiences and digital transformation.
For example, legacy technology used by banks for payments often doesn’t have the flexibility or security that banks and customers need. They may have password and authentication technology at the front end, and fraud detection systems at the bank end, but no technology such as risk monitoring in between to ensure the customer using the password is who they say they are.
The key to building in this level of interconnectivity is to migrate to cloud-native, API-driven banking architectures that enable flexible, user-centric experiences. APIs will enable greater levels of integration and personalization, including with third-party products that can contribute to more comprehensive customer services and offerings.
They also enable innovation over time, through easier scaling of capacity to meet demand, easier ability to deploy generative AI and other automation tools, and the ability to strategically replace legacy systems and eliminate friction points in the customer journey.
Leveraging Data and AI
Data has become central to almost everything that finance firms do, and yet many still struggle with fragmented customer data in siloed legacy systems. Research shows that 66% of banks struggle with data quality issues, gaps in important customer data, and incomplete transaction data across systems. Furthermore, 57% of executives still lack a unified view of their customers, largely due to siloed data and other tech barriers.
Artificial intelligence is the key to bringing large datasets together, and gaining the new levels of insight and analysis that can help tailor customer experiences to the individual, and give banking firms much clearer and deeper customer visibility. However, the use of AI in banking is under the regulatory spotlight, with concerns around how AI use may lead to biased credit decisions, or risks around the sharing of sensitive personal data.
Understanding how financial services use responsible AI is an absolute must. Working with a partner for responsible AI can ensure that customer experience insights are generated while addressing regulatory concerns around model explainability and bias. Combining user insights and research, data engineering, and responsible AI generates actionable insights to influence banking customer experiences and make sure that everyone gets the service they expect and deserve.
Embedding Experience Engineering for Competitive Advantage
Both of the approaches above can come together in a wider strategy for enhancing customer experience in digital banking, based around the concept of Experience Engineering. This is the idea that complex business problems can be solved by leveraging the latest technology, in the context of the end-user experience.
From the perspective of the finance sector, this enables firms to follow a structured, customer-centric process to deeply understand pain points and unmet needs. Taking a comprehensive approach to customer experience design means that firms can embed customer experience at every touchpoint, instead of just as an afterthought, for seamless, personalized experiences that stand out in the marketplace.
Modernizing legacy infrastructure in banking can also accommodate the removal of friction points and enable rapid delivery of innovative customer experiences, as well as leveraging user research, data expertise, and responsible AI practices to generate actionable insights.
At a time when customers are ready and willing to switch banking providers if they’re not getting the customer experience they want, building comprehensive offerings around Experience Engineering delivers a solid platform to satisfy existing customers and attract new ones.
