The retail bank of the future may take many forms, but according to MoneyLIVE's November 2017 report, "The Future of Retail Banking," one form it may not take is that of a traditional bank. Regulations like the Revised Payment Service Directive (PSD2) and Open Banking reforms are changing the rules of the game by allowing new entrants to plug into incumbents' systems and access customer data. Tech giants like GAFA (Google, Amazon, Facebook, Apple) will hit mainstream banking in the next five to ten years. So is the retail banking industry on the brink of what MoneyLIVE is calling an "Uber-style disruption?"
If so, banks now have two options: quickly evolve or fall behind.
Traditional banks need to act now by investing in best-in-class customer engagement and relationship management solutions that engage customers in new ways and leverage on the strategic implications of PSD2 and the opportunities connected to Open Banking. Fintechs are giving customers a taste for new ways of managing their finances that are transparent, fair, easy, and safe. According to MoneyLIVE, customers are using this digital revolution to take back control, and this trend will only continue to accelerate.
Compounding this is the fact that client onboarding is a big pain point:
40% of customers abandon the retail bank onboarding process when applying for a new product or service
39% of banks can't onboard customers entirely on digital channels
Only 32% of banks can onboard new customers in less than 10 minutes and 25% take over 24 hours
MoneyLIVE's report also featured Appway's observations on the increasing relevance of a bank's first interactions with clients. Today's hyperconnected customers are demanding ease, speed, and personalization. The challenge for banks is truly understanding their customers, learning from each interaction, and then creating personalized offerings with relevant material and useful guidance. Digital solutions empower banks to deliver a ready-to-go shopping experience, like customers get when using Amazon; this reduces client onboarding to minutes, leads clients to suitable products, and delivers immediate value to their lives. The onboarding experience also needs to be secure and frictionless-across all channels.
In a poll conducted during some of our recent webinars, attendees stated that changing life circumstances is one of the main reasons they switch banks. So, what if banks could predict life-changing events and proactively anticipate customers' evolving needs? As MoneyLIVE found in its research, the future is not about banking. It's about customer relationships. Banks that succeed in the next decade will be those that are able to think outside the box, realize that it's about much more than products and services, and act as their customers' trusted partner during every step of their lives.