Digital banking transformation is forcing financial institutions to reconsider how they serve customers as technology companies introduce new alternatives and consumer expectations continue to rise. Banking customers increasingly compare their experiences not only with other financial institutions but also with the convenient, intuitive digital services they encounter in other industries.
For banks and credit unions, adapting to these expectations requires moving beyond the traditional branch-centered model. Digital, self-service, and assisted-service channels are becoming important components of banking strategies designed to provide customers with greater choice while creating a more consistent experience across channels.
“The Banking industry is at a digital crossroad as it faces both a wave of technology companies poised to disaggregate every facet of the business and a changing consumer that is increasingly demanding that banks products match the state-of-the-art digital services they are receiving from other industries, writes German Pugliese-Bassi
Banks today are now facing the prospect of either sticking to their “tried-and-true” strategies of the past or embracing innovation and rethinking their business as they move forward in an increasingly competitive environment. The decisions banks make today will define the marketplace in the years to come, as those who fail to keep pace with the disrupters may find themselves permanently and fatally left behind.”
The evolution of financial institutions’ strategies continues on, far beyond the traditional, full-service branch business model. This has also been a major theme in recent Mercator Advisory Group research on banking channels and the move toward digital, and ultimately, omnichannel banking.
Today’s banks and credit unions are increasingly realizing that their customers and members are embracing self- and assisted-service channels in their banking experiences, with many (if not most) including such choices in their short-to-intermediate-term strategies in order to meet – and hopefully exceed – customer expectations.
The transition toward digital banking does not necessarily mean eliminating branches or personal service. Instead, financial institutions have an opportunity to reconsider the role each channel plays and create an environment where customers can choose the method of interaction that best fits their needs.
Routine transactions can increasingly migrate toward mobile, online, ATM, and other self-service channels, while assisted-service options can provide additional support when customers require guidance. Branch employees can then focus more attention on complex financial needs and relationship-building activities where human interaction provides greater value.
Creating this type of experience requires more than simply adding digital capabilities alongside existing channels. Banks and credit unions must ensure that customer information, services, and interactions work together so that consumers can move between channels without unnecessary friction or repetition.
Technology companies and other financial services competitors will continue to raise expectations for convenience, speed, and ease of use. Financial institutions that remain tied exclusively to traditional delivery models risk falling behind as consumers become increasingly comfortable with digital alternatives.
Digital banking transformation therefore represents both a competitive challenge and an opportunity. Banks and credit unions that successfully integrate self-service, assisted-service, digital, and branch channels can move closer to true omnichannel banking while providing customers with the flexibility and experience they increasingly expect.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
