A recent survey shows that 60 percent of smartphone or tablet owners have switched their primary banks. The primary reason being ‘mobile banking capabilities’, which was considered as ‘important’ or ‘extremely important’ in their decision to switch. Further, the U.S. Federal Reserve research report too reveals that U.S. consumers spend more time using mobile devices for banking transactions, including for checking bank balances, looking at monthly statements, making account transfers, and paying bills.
Thus, banks and financial institutions (FIs) need to continually re-aligning their services to suit changing customer preferences to retain their brand equity and customer loyalty. One of their immediate priorities is to adapt themselves to the changes and challenges presented by disruptive technologies. The industry needs to provide mobile-friendly services by catering to the fast-growing breed of tech-savvy consumers who increasingly utilize mobile banking.
Here are a few ways for the banking industry to transform their business by embracing digital technology:
Support gamification to woo millennials and beyond
Banks have realized that sustainable success depends on the future customers that are now in their youth. This has led them to leverage on tools such as social media and gamification to re-brand themselves in order to appeal to Gen-Y or millennial customers. They can formulate elaborate social media strategies, specific social business models and utilize web technologies like social networking, gamification, micro-blogging etc. For instance, games can be developed in accordance with the social strategies and objectives of the banks and FIs, which will lead to a strong customer base.
Offer personalized financial plans
Banks and FIs must be able to offer their services in tune to the financial behaviors of Gen-Y customers. FIs can offer mobile-friendly services to keep Gen-Y customers on top of their finances. Based on customer details captured at the time of registration, FIs must be able to offer services in tune with customer’s income and expense behavior. Offering services with a large personal value proposition to the customer would boost customer satisfaction.
Finding the right mix of location-specific & location-agnostic services
Leaders that achieved superior capabilities in understanding what their young customers wants are able to improve their demand forecasting. It also enables them to roll out customer-centric products and services, and provide tailored offerings to targeted customer segments. For instance, mobile remote deposit capture (RDC) and mobile photo bill pay are some of the innovative services offered by banks and FIs. They offer a win-win situation for both banks and consumers. The mobile-savvy consumers can conduct their business from any geographic location, at their convenience. At the same time, banks can also offer their services to consumers not bound to any geography.
On the other hand, banks can offer location-based services such as sending personalized messages to high net worth customers depending on their browsing or spend pattern on their mobiles and tablets.
Leverage spend characteristics to increase cross-selling and up-selling
Banks can offer deals and rewards to their customers before a purchase is made, depending upon their spend characteristics. For instance, some of the major players in the retail industry have been successful in offering customized services to their customers by leveraging big data and predictive analytics. It enables increased cross-selling and up-selling that widen and strengthen the customer base. Traditional banks are compelled to take the cue from such industry practices and apply them to improve the efficiency of their offerings, and increase customer penetration.
Digital technologies in itself cannot guarantee any competitive advantage. The ability to tap the potential of digital technologies to offer innovative services that improve customer satisfaction and loyalty is the key to achieve increased growth and profitability.