The Weekly Extract: May 11, 2020

  • Alex Jimenez
  • May 11, 2020

The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.

Digital Banking is Critical

This week, PaymentsJournal had a podcast with Jamie Armistead, VP of Zelle at Early Warning. He discussed the need for banks and CUs to take the opportunity offered by the COVID crisis to help customers adopt digital.

He believes that FIs have solid digital offerings but now is “really an opportunity for them to serve customers who may have been on the fence or haven’t downloaded a mobile banking app, which really highlights the importance of having a speedy, seamless interaction so initial digital interactions are positive.”

He further illustrates the value of digital banking citing a study conducted by Fiserv and Bank of the West. The study found that engaged digital customers “transact at both a higher volume and a higher dollar value, with average monthly increases of nearly 13% after customers enrolled in a digital service.” They also have more products as they interact with their FIs more often than non-digital customers. Digital engagement also drives lower attrition. Over a period of 15 months digital customers were 35% less likely to leave their bank.

Jamie concludes, “now that you have an increasing number of customers engaging in digital banking, financial institutions must be there to meet that next round of financial needs their customers will have, and leverage that channel engagement already being seen with digital offerings.”

Given the level of unengaging digital experiences we see out there, even if the basics are strong, we wonder if it might be too late for some FIs that have had a “me too” or “fast (very slow) follower” strategy.

Analyzing Growth in Digital Traffic

Whether engaged or not, banking customers are searching the web for banking products more than usual. Our own Chief Data Officer, Mark Ryan, set out to find out more about the surge in traffic experienced by financial institutions today.

In this article in The Financial Brand, Mark notes that “much of this increased digital engagement is being driven by people being in quarantine, tracking interest rate changes and looking into government loan programs. Additionally, many consumers are in the unfortunate position of having lost their jobs, and are wondering if they can miss payments, if there is information about student loan forbearance, or if they can obtain a consolidation loan.”

He adds, “However, the growth in visitors performing bill pay, transfers, and other account activities is driven by customers that would normally have performed these activities on other channels, primarily at branches.” Will these additional customers adopt digital banking after sheltering at home?

Mark gives seven insights from the data, and closes with our favorite song:

“It is imperative that banks and credit unions respond to the current need in digital with a long-term strategic vision that can guide them towards a more resilient future.”

Message us if you need help.

Lessons from Senior Executives

Having reviewed banking customers searches, we were eager to hear what senior executives in banking and finance are thinking. Martin Boyd writes in Forbes, that he recently reached out to this audience “to understand how they are operating their businesses in this new state, and then consider how these recent experiences could influence or change their future plans, priorities or approaches to solving problems.”

From those discussions, Martin noted that it is clear “not whether, but how, business will change.” He reports that reprioritization of projects not just focused on what could be done another time but how more important projects needed to accelerate. “Artificial constraints no longer seem like the obstacles they did in the past, and this sense of urgency can be channelled into other projects.”

The same sense of urgency is driving heightened focus on differentiation, and eliminating anything that isn’t going to make a difference.  He notes that this has been freeing, as “you can stop looking backwards and instead look to the present.” Similarly, the ability to have open communications has allowed organizations to get to make decisions and solve problems faster.

He wonders “do we really want to go back to a time when progress is stilted by opaque communications, vague priorities or a lack of urgency? Or can we adopt these lessons for the long term?”

On a separate article also in Forbes, Allison Netzer, SVP Strategy & Marketing at Temenos, diagnoses the failings of previous FI digital transformation errors.  She notes that “Digital Transformation initiatives are failing to produce the results promised by technologists and anticipated by both customers and organizations.”

She makes the point that the reason for this failure has been the FI technologist mindset, focused on operational efficiency, and not customer experiences.

Netzer indicates that FIs already have people in-house whose mindset is better suited for digital transformation — the marketing team. Marketers already rely on data, reinvent for the new, collaborate, and are focused on a customer-first mindset.

At Extractable, we think along the same lines, although we use the framework of design thinking and not any specific marketing viewpoint. While some marketing teams do share these core competencies, not all do.

Either way, it’s not enough to have a single team in the organization with the appropriate mindset — successful digital transformations require a shared culture that cuts through all organizations.

Finserv Chatbots

We believe that forward-looking organizations should prioritize digital experiences to engage customers in all channels. To do so, we’re proponents of any tools that offer personalization such as AI chatbots.

Phil Britt in CMS Wire lists 7 Ways to Use Chatbots Effectively in Your Customer Experience. He indicates that companies can leverage automation capabilities to improve customers’ experience and asks organizations to consider:

  1. Provide Product Education and Selection
  2. Deliver Contextual Support to Lower Abandonment Rates
  3. Answer the Most Repetitive Customer Questions
  4. Increase Accuracy, Compliance
  5. Maintain Customer Relationship Through Asynchronous Outreach
  6. Improve the Employee Experience to Improve CX
  7. Answer In-Depth Queries

While chatbots are a great addition to an FI’s digital experience, Andrew Beatty, Head of Strategy at FIS, warns that “too often the fancy front-ends are essentially window-dressing, masking an outmoded core which is fundamentally unsuited to real-time, 24/7 digital open banking.”

Andrew offers that FIs should look to a new approach, “one that allows banks to strategically move away from monolithic legacy cores that are ill-suited to meeting today’s requirements (let alone tomorrow’s).” He advocates for “modern and digitally-enabled componentized architecture” augmented with artificial intelligence, machine learning, event streaming, and big data. All of these would be facilitated by dynamic APIs that “allow new features and functions to be ‘plugged in’ at a granular level, and intelligent rules and processes can provide unique customer experiences, without requiring new infrastructure or major investment.”

Applying AI to outmoded legacy systems isn’t the only pitfall. Ryan Lester, in an article in TechRadar notes that when applying AI organizations need to consider building customer trust on such tools. He notes that most organizations are using AI “to improve the user experience but for every ten examples of tech for good, there will always be someone looking to exploit the technology. For example, using automated chatbots to gather personal customer data and then using it for purposes for which it wasn’t initially intended. With this in mind, it’s important that those who are using it for the right reasons are effectively communicating their ethical use of the technology.”

Technologies, like AI, can be used to improve the customer experience that builds confidence in the brand. However, organizations must ensure that they aren’t just “putting lipstick on the pig” and that they are transparent and ethical on how they apply those technologies.

Extractable and Episerver Webinar

Connecting with the digital customer has never been more important. Join Extractable’s Craig McLauhghlin and Alex Jimenez, and Episerver‘s John Field for a conversation about banks are adapting to the new normal — the good, the bad, and some actionable steps you can take today to make some improvements. The webinar will be Tuesday, May 12, 10-11 AM EDT. Sign up here!

Let us know what you think of the Weekly Extract. Stay safe. And don’t forget to follow us on LinkedIn and on twitter.

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