The digital disruption of financial services is in full flow, and one area in which fintech firms are mounting a challenge against the high street lenders is customer service. Flavia Alzetta, CEO of banking technology specialist Contis, discusses the personal approach of mobile challengers, and what the incumbents can learn from their efforts.
Which? recently launched its latest list of the best and worst UK banks, detailing who comes out on top when it comes to delivering a quality service to customers.
For the first time ever, not only was a digital bank included in the listing for 2019, but Monzo squashed the bricks and mortar brands and come out on top.
This got us thinking: Is fintech setting a new precedent for customer service across the banking industry?
Customer attitudes towards banking services are changing – and fintech firms have been quick to adapt
Challengers are most definitely delivering change at the right time.
They’ve shown their ability to keep an ear to the ground and listen to those who will really decide the future of their business – consumers.
Traditional banks would do well to follow this strategy too – by putting time and resources to evaluate exactly what modern-day customers want and expect from their provider in a world very different from the one when traditional banks set up shop.
EY’s Global Consumer Banking Relevance survey revealed that banking in-branch is not going to disappear completely, but that there is a significant trend towards the complementary role that digital banking can play within financial services.
In further research, the scales are most definitely tipping towards digital, with 69% of the UK population using digital banking in 2018, according to Statista.
Furthermore, it looks as though the general population’s opinion towards traditional banks has been firmly rooted since the financial crisis of 2008.
YouGov found that even ten years after the financial crisis, 66% of the British population don’t trust banks to work in the best interests of UK society – which may be influencing the reasons why people are increasingly changing the way they bank as other options have emerged.
Changes in customer behaviours have accelerated the need for innovation, meaning the winners are the ones who are agile in innovation and approach, enabled by open banking and API (application programming interface) methods.
It’s clear that consumers are craving change in banking – fresh new ideas that address their preferences in how they like to approach their money management.
Challenger banks heard this cry for change and were able to do something about it.
Fintech companies have brought new approaches to customer service
Along came Monzo, Revolut, N26 at the right time, in the right place. But what are the factors that made them stand out from the crowd?
The answer lies in understanding their customer – primarily millennials (but not only) who don’t like waiting, and crave simplicity and ease, often finding it through using their smartphones.
Understanding this preference, and adapting accordingly by taking their services digital, has allowed these new market entrants to raise the bar for banks across the world.
The new wave of banks is designed around meeting current customer expectations by leveraging data insights, and offering a better-personalised experience along with a fully digital experience.
Challengers are much more flexible, user-friendly, and personal than traditional banks.
For instance, allowing new customers to sign up for an account using a video makes their services much more accessible than filling in long forms.
Their communication with customers is friendly and tailored, as opposed to blanket messages for the masses and impersonal call centre phone conversations between the consumer and various departments.
The account opening procedure is a perfect example of this.
It is a lot quicker and easier to open an account with a challenger than with a traditional bank, as they often only involve taking a picture of their ID and a video of themselves – rather than dragging themselves in-branch to stand in a queue, to then eventually speak to someone about setting up an account, and armed with paperwork (if they remember).
Furthermore, according to expert commentators within Citi’s Bank X report, by offering remote services via online channels, challengers are able to give attention to the unserved niches of industries such as retailers and SMEs on the back of improved user experience, in an attempt to differentiate themselves from the big banks.
Ultimately, what is key here is that these new banking and payments providers acknowledge that both consumer and business demands are by no means static – just as they have changed before, they will change again.
However, seeing the need to be fluid is but one part of the puzzle, and what really gives challengers the upper hand is their grounding in new technologies and platforms, and agile API methodologies which allow them to react to market and demographic changes with speed.
Traditional banks often struggle with this as it is costly and time-consuming to change from established legacy infrastructure and attendant business processes.
For banking, the cloud appears to be the way to innovate and scale at speed, as challengers are demonstrating.
Traditional banks can emulate fintech firms to enhance customer experience
Whilst challenger banks have by no means totally knocked the traditional banks off their pedestal, they raise learnings that traditional banks should not ignore if they want to even the score.
Embrace open banking APIs: Partner with great service providers to make the platform more accessible and feature-rich.
Don’t just acquire customers, win advocates: N26 has won hearts and minds through its excellent customer service and its position as ‘the bank of the future’.
Embrace new and exciting technology: Biometric and facial recognition technology is on the rise and challengers have shown us just how great this technology can be for those looking to use services quickly as well as securely.
The customer is changing: Don’t neglect the shifting customer base and opinions. Likes and frustrations change over time, especially with respect to millennial and subsequent generational affinities. The next generation to come will change again!
