There’s one thing all the speakers of W.UP’s digital banking webinar agreed on: improving customer experience will make or break banks.
Those who tuned in to W.UP’s webinar on 18 April heard a good deal about how next-generation core banking systems can make a world of difference to digital sales and how data-driven insights help financial institutions send relevant updates to customers just when they need them. Speakers from Mambu, MKB Bank and W.UP have agreed that banks today need new digital sales strategies to revamp customer experience and satisfy client needs.
“We can see a shift in customer behaviour: it’s not about mobile or online banking anymore. Instead, clients expect an entire experience centred around them and what they’re going through – whether it’s buying a product or experiencing an important life event like expecting a child, starting uni or moving house,” Tamás Braun, director of international sales and business development at W.UP, explained.
Big tech companies, like Amazon or Google, offer great solutions and experiences at such life events, and this is what today’s customers expect in banking too, he said. They now want banks “to be there for them at the right time, at exactly the right moment in their lives”. And let’s not forget that tech giants are eyeing the most profitable parts of the banking business: sales and origination. “So banks really need to take the plunge to protect this slice of their profit,” he added.
How to run a bank like a tech giant?
Clients are used to the first-class experiences and personalized customer journeys offered by tech companies and big retailers. The problem is that it’s not always that easy for banks to match up to these expectations, according to Sarka Bartova, partner manager at Mambu, a provider of a next-generation cloud-based core banking engine. The company joined forces with a number of financial institutions, ranging from digital-only banks like Germany’s N26 to tier one banks, such as ABN Amro or Oak North.
Only 28% of financial institutions are able to offer their products digitally, and just one in four business banking products can be applied for online. And mobile accessibility is even lower, meaning that banks are losing out on plenty of opportunities, Bartova said.
But what prevents traditional banks from cutting their digital lag? Most incumbents have kept building upon their core banking systems, possibly for decades. And these monolithic technology architectures don’t allow banks to move as quickly as they would like to, or make the most of customer data. They are, in fact, major obstacles to bringing new propositions to market, which are tailored to clients’ needs, she explained.
Benchmarks for banks
Fully replacing a legacy banking system often means ginormous investments and may take 3-5 years or more to implement. According to Mambu, the ideal approach for established institutions is to select a product or market segment, launch a completely new technology stack and start migrating parts of the portfolio to this new lean and agile platform. One example is Digibank, a digital spin-off launched by Singapore-based DBS Bank in India and Indonesia.
Tech mammoths are a good benchmark for banks when it comes to delivering the right customer experience and building entirely digitalized sales channels. Amazon, for example, provides tailored offers based on data points and can even predict the financing needs of small business customers, sometimes faster than they realize themselves. Capturing core customer information, transaction data or key life events, and segmenting client portfolio can help financial institutions develop similarly tailored offers and suggestions – even before the customer actually needs a new financial product.
Bartova also highlighted the significance of API-enabled open banking systems in providing outstanding customer experience. In many cases, it is very difficult for banks to “deliver on the open banking promise”, but APIs are the key ingredients needed to perk up user experience, come up with innovative offers or draw customer insights from third-party partners.
N26 and other challenger banks, for example, can also create additional revenue streams by providing third-party systems within their own interfaces and earn commission from reselling these third-party products. Mambu’s approach to API-driven open architecture is to create a full marketplace of complementary product partners, including W.UP, to make it easier for banks to bring new propositions to market.
Customers want to be engaged and awarded
Upgrading customer experience has been very much in focus at Hungary-based MKB Bank too. They are currently replacing their core systems, and digitalizing their processes and culture to reach this goal, according to data asset management and CRM director Attila Kezdődy. He believes we live in the “age of the customer”, where there are no longer any privileged players in the financial sector.
In this new era, customers are more demanding and they compare banks to the best service providers out there, including Amazon and Google. Financial institutions should adopt a new mindset, which puts their customer’s needs first, instead of pushing sales pitches, new banking products and services at them.
“Customers are not product requestors anymore, they don’t just walk into the branch and ask for a mortgage. It’s not what they want,” Kezdődy said. Instead, they should be treated as partners. Clients “want to be found, understood, engaged and alerted, but at the same time protected and awarded for their loyalty,” he said. They go through life events, have fears and desires, and need unique solutions.
Traditional campaigns can still be used to boost sales, for example, when products are expiring, but customers are quick to delete irrelevant messages in their inboxes. “We really must abandon the earlier practice of sending out hundreds of thousands of messages and getting only a few hundred sales.”
Data-driven insights help boost digital sales
MKB Bank uses traditional and new sources of data to better serve clients during various life events. However, only a portion of life events can be captured by a bank, and these events must be carefully combined with real-time events. For example, the bank knows the customer’s balance and that they are travelling by plane so it can be assumed that the client may need an emergency cash loan (as people traveling abroad normally spend more than usual).
“You may have all the data from the banking system, plus all the real-time data, but you still need the involvement of the client,” Kezdődy said. “Getting it right means the client will be happy to get more involved with you, and this is the time when we can really create value for them.”
Collaboration with fintechs can be very helpful, as they are better at building trust and cooperation with clients, while banks can be the digital hub focusing on value creation. For its part, MKB Bank works together with W.UP and uses its Sales.UP insight-driven sales and engagement tool to create relevant, personal and timely interactions with clients.
Missed our webinar? Catch up here and download the presentations.
If you’d like to know more about how banks can compete with new competitors, check out W.UP’s latest white paper about digital sales best practices in banking.
