How Contextual Banking Improves Customer Experience

With mobile devices fully embedded in society as commonplace, banking demands have increased: a user experience similar to that offered by the digital giants is demanded. Also, connectivity facilitates access to a new sector, Fintech, which offers new alternative financial services that compete with traditional banking. Digital banks have now become more mainstream and you’ve probably seen a lot of Chime Bank reviews, N26 ads or other forms of marketing campaigns nowadays online and this is because of their rising popularity.

In this context, traditional banking has to lead the re-founding of retail banking using technology to reduce operating costs. Also, to create new business models that provide convenience, advice, and savings to customers.

Banks can only achieve this through contextual banking solutions. The best retail banking is conducted with a superior user experience, and the best user experience is through contextual banking. The client no longer goes to look for the bank; it is the banking sector that finds the client where they need it to help them achieve their vital objectives: their progress.

The combination of Big Data, mobility, or security tools, among others, allows providing the best service, with advice and in real-time. It evolves from the offering, for example, a new car loan to offering the best car, at the best price, at the nearest dealership, and with the most appropriate financing for your circumstances included.

Improving Customer Experience in Banking

About 20 years ago, there was a time when banks competed with each other on the interest rates on savings accounts and the mix of their products. Customer churn was very low, mainly because account holders preferred a local service. It was difficult to transfer funds from one bank to another. Credit and savings cooperatives caused some neglect, but banks generally maintained strong balance sheets and strong ties with clients.

Then the Internet appeared. Digital communications technologies radically changed the traditional relationships between banks and their account holders and between retail stores and their customers. 

From their experience with online stores, consumers began to expect to have all of their personalized and detailed digital interactions based on past activities. Google, Amazon, Facebook, and Apple – often referred to as “GAFA” – are the main drivers of this shift in customer expectations. More than any other in practice, these four companies have led the evolution in customer experience thanks to their ability to personalize interactions and quickly serve the best offer or best action.

Customers today expect the same type of pervasive personalization in all their digital interactions with all service providers.

This expectation paved the way for non-conventional financial service providers, who focused on customer experience first. Also, they were not constrained by the traditionally risk-averse and highly regulated traditional banking sector environment. A bank can significantly improve its balance sheet, as a recent Gallup study revealed. Retail banking customers who are fully loyal bring their primary bank 37% more annual revenue than customers who actively disengage.

The non – traditional financial companies know that the customer experience makes a decisive difference. As a consequence, they focused their business models on attracting customers better than conventional banks. They have been very successful, with the results of a Capgemini / Efma study. They indicate that 57.8% of North American consumers had a positive experience with non-traditional financial service providers compared to 49.5% of bank customers traditional. However, traditional banks still have an advantage because, as Accenture recently discovered. 87% of American consumers plan to use a local bank branch in the future and prefer to be served by people when they visit.

These two statistics seem contradictory, but they offer traditional banks an opportunity to regain lost market share. The difference in customer experience between non-traditional financial institutions and conventional banks is less than ten percentage points. Only 13% of consumers categorically rule out the possibility of frequenting a branch in the future. Instead, the fact that the vast majority of consumers are potential customers of a bank branch can improve the customer experience.

Banking marketers need to understand that consumers want a consistent experience across all channels and devices. As banks can satisfy this desire for consistency across multiple devices through contextual banking strategy to build customer loyalty, consumers will realize this and show more brand attachment. This customer loyalty is necessary for banks as technology continues to drive a wedge in the financial services environment.

If you belong to this sector and want to receive guidance on improving the customer experience in banking, do not hesitate to contact us at lpors.com, or request your demo.