Banks and financial institutions across the world
are being challenged to adapt and innovate, moving beyond the
traditional ways of doing business. Changing customer behaviours
gained from interactions with e-commerce and technology giants such
as Amazon, Google and Facebook set the standard and bleed into other
sectors including banking and finance.
Importantly for banks and financial service
institutions (FSIs), consumer trends drive commercial banking
trends, so they do not require a crystal ball to predict imminent
change. As those expectations become the norm, and part of
customers’ everyday interaction with their financial provider,
eventually, the more traditional business banking market will need
to embrace those changes, or be left behind.
Exasperating the situation, and adding to bank
jitters is the influx of fintech firms, and non-bank market entrants
such as Square, Stripe, TransferWise and Apple Pay who are capturing
significant market share in areas such as point-of-sale
transactions, online payments, and cross-border payments.
Additionally, that fragmentation and increased competition is being
encouraged by governments who are in the process of regulating for
open data initiative in the UK, Europe and Australia, while startup
banks are being fostered in the latter.
The small business segment is easily the most
neglected by large banks, bundled as a retail customer, although
their needs are drastically different, and as such make a soft
target for small, nimble competitors.
Highlighting the demise of the small business /
bank relationship, is recent research from East & Partners which
found that in Australia, 1 in 10 small businesses do not want to
interact with their bank at all, while a majority prefer to conduct
their banking online. Further to this, around half of all Australian
small businesses say their business banking experience has fallen
short of their personal banking experience, compared to 90 percent
of CFOs and treasurers at large Corporates and Institutional
enterprises who report their business banking experience has met or
exceeded their personal.
With businesses expecting consistent service
across all channels, banks need to increase diminishing service and
satisfaction levels. Using the omni-channel approach, they will
benefit from capturing detailed customer insights, and a clear idea
of how best to allocate budgets.
By delivering and exceeding on expectations,
banks can reduce customer churn, which is becoming simpler as a
result of government regulations, provide a seamless experience over
any device, and highlight opportunities within the bank for other
products and services.
Unlike multichannel banking, which opened choices
and encouraged customers to use the best option, omni-channel banking
focuses on providing a seamless customer experience that delivers
focussed advice, products and service. For the banks, it is an
opportunity to really understand the customer, streamline systems
and focus attention on the most profitable.
From a business customer’s perspective,
omni-channel banking will offer access to financial services across
a variety of channels and introduces more consistent interactions
with their financial service providers across a variety of touch
points. For the bank, the information and data gathered will be
invaluable in building a clear profile of customer segments,
preferences and habits. The penetration in mobile technology,
smartphones and tablets will open more opportunities, and reveal as
yet untapped services.
Tailored offerings based on previous purchases,
recommendations, new product integration (including internet of
things, voice activation, virtual reality) same day on-boarding
should all be features and products banks are currently developing
to ensure a full omni-channel experience for the consumers and
business clients alike.
Where do banks need to focus and prioritise?
Smarter strategies that combine digital and physical channels
into a continuous experience
both their customer base, and wider market: Banks can use the
data tailor offerings to address the priorities of smaller
segments via the incorporation and integration of customer
test and adapt: Challengers to banks’ business models can
quickly change direction, and pivot a product or service
offering based on client and market feedback. To compete, banks
will need to deliver (and fail) on products at a much faster
While banks, and FSIs are moving in the right
direction, either by developing the necessary infrastructure and
business processes in-house, or by partnering with and acquiring
smaller competitors, business units continue to be siloed, stifling
their customers’ experience.
Financial service providers must consider how to
integrate all touch-points to deliver value through a consistent
customer experience. The channel by which customers chose to engage
with their financial provider is not as important as that customer’s
holistic experience. As such the entire business must be on board
in the transformation process, led by the C-suite.
To find out whether your bank is delivering a consistent
omni-channel experience to the business market, get in touch with
East & Partners.
To read previous Research Notes published by East & Partners,