What bankers can learn from retailers about customer engagement

What bankers can learn from retailers about customer engagement

For banking customers, engagement comes from the power of habit, as many of them stick to the local vendor they once chose, once and for all. It is also a good indicator and predecessor of loyalty, which is an ultimate goal of any customer-brand relationship. The smallest particle in this equation, satisfaction is easy to earn. But in the face of toughening competition, the major differentiator is the ability to predict and exceed expectations.

Today, it is widely accepted that customers’ expectations are shaped through their cross-industry experience. In this regard, retailers have already set a very high bar for putting their customers first. In this hilarious video, Tandem Bank summed up banks’ notorious customer service sins and applied them to… a pub to make their point about how easy it is to disappoint those used to a much better treatment.

It’s because retailers seem to get their foot in the door back when other industries were only starting to recognize how important – and fleeting – customer engagement is. By 2016, they have come to teach other aspiring ‘engagers’ a few lessons. We believe banks can learn too.

Lesson 1: Omnichannel is good, phygital is better

There is now a heavy emphasis on the digital. Yet, in the recent years, the physical channel has re-emerged to prove it is not dead. What’s more, it’s getting more and more robust as brands start to understand their customers still value human contact.

The fusion of digital and physical, aptly reduced to ‘phygital’, makes for an increasingly hybrid environment. Retail chains install smart, interactive gadgets right in their fitting rooms to assist shoppers, go for augmented reality and IoT stunts to reinvent shopping experience to attract the new breed of native-born digital dwellers. Meanwhile, mobile apps become vehicles connecting the user to the nearest location worth visiting (seasonal sales, special offers, events, etc.) via beacons and geo-targeted push notifications.

For bankers, this transformation can work both ways too. Online and mobile banking from such early adopters as Barclays (UK) see the introduction of human-powered customer service through video banking. The hottest banking technology, video banking is cited as one of the most promising ways to win customer satisfaction. In the physical world, customers expect a seamless transition to tech-aided assisted service, where technologies are to help them navigate daily banking routine with no hassle.

At the ‘meta-level’, however, each channel should both be self-contained and contribute to overall consistent experience across both digital and physical. This requires a well-thought out plan that covers strategies in business development, custom web development and mobile technologies.   

Lesson 2: Know thy customer

Studying customers’ needs becomes paramount to deliver value. Quirky new features and apps that push all imaginable limits do appeal to the most urgent target audience on banks’ agenda – millennials. Yet, appealing to millennials with technology-heavy offering doesn’t save banks from considering senior customers as a significant wealth-owning segment with their own expectations from banking.

Retailers have long realized that every customer is different, yet understanding them separately and as a whole seems to be the biggest challenge of banks today. To predict the next step before it happens, to guess the need before it is fully comprehended by customers themselves – these are the essential elements that will help today’s banking institutions to advance into the next day. They will also reduce prospects of customer churn because of better, more relevant offers from emerging financial market contenders.

Through trials and errors, retailers have come to understand that customer engagement makes relationships for a lifetime. They introduced the very concept of customer journey and journey mapping to outline where they are going with every relationship. Banks need to map out such journeys in advance too, emulating customers’ experience at every touchpoint throughout their history of engagement. Tracking each of these journeys will allow to identify bottlenecks in service and step up to eliminate them before they make a customer leave in frustration or, what’s even worse, publicly denounce their banking provider on the internet.

Afterword

Today, digital transformation is imperative for such businesses of yesterday as banking and financial institutions. The coming of digital has blurred customers’ perception of industrial confines. With this comes the necessity to redefine the approach. From online and mobile applications to assisted services, technology is breaking the conservative facade of banks to earn them new customers that belong to the digital era.

Written by Adriana Blum

Adriana Blum is Senior Technology Architect at Iflexion