With consumer retail banking going digital, banks aren't just competing with each other on customer experience any more. They're also competing with all of the other companies that consumers interact with in digital channels: their social media platforms, online retailers, and mobile apps. And new research from Cisco shows that consumers feel their digital banking experiences fall short of their expectations -- expectations that are being set by those other companies.
Those other companies that consumers interact with digitally can deliver personalized services to their clients based on past behavior. "Amazon, Netflix, social media -- they're setting the bar," Paul Jameson, Cisco's managing director of global industries, explains. "Think about when you open up a Spotify account. They get the transaction right out of the way because you open it with your Facebook account. Your information gets transferred automatically. Then it collects your behavioral information [like your music library], and now it can personalize its service."
Many consumers don't think their bank is capable of delivering that personalization. Of the 603 US banking customers included in Cisco's global survey, 43% believe their bank doesn't know them and can't offer personalized services to them. Although that sentiment was higher among Gen Y respondents (50% said their bank doesn't know them), it was also shared by more than a third of the Baby Boomers respondents (36%). And 31% of the respondents said that they will look into other banking relationships because they don't think they're bank is helping them reach their financial goals.
[For more on digital banking and payments, check out: Authentication Risks Tops Concerns Over Digital Payments]
The problem for banks is that their systems are built around recording and understanding transactions, not behavior, Jameson suggested. "Banks systems are triggered by a completed transaction, not by behaviors," he said. "If you're looking at lending products on their website but you don't buy anything, the bank doesn't know you're there."
In addition to personalization, customers are also demanding greater convenience in digital banking products and services, according to the survey. US respondents said they were interested in using mobile payments (72%), automated financial advice from their bank (48%), remote video conferencing with a financial advisor outside of the branch (54%), and banking with a smartwatch (47%). And 65% of the respondents across all age demographics said they'd be willing to switch banks for one of those services.
Cisco also broke down the revenue opportunities for banks that do offer such products and services based on respondents' willingness to switch. A bank with $10 billion in assets could gain $134 million in revenue by offering remote video conferencing with a mortgage advisor, $131 million by offering remote video conferencing with a financial advisor, $65 million by offering automated financial advice and $26 million by offering mobile payments, the study estimated.
To help capture that revenue banks need to collect behavioral data (with customer opt-in permission), and be able to deliver that to the customer in any channel where the customer wants to interact, Cisco's Jameson advises. He points to American Express' video conferencing with a remote expert as an example: "You click a button, and then there's a slight delay while the [customer's] information packet is sent to expert. Then when that information is received, you can speak to the expert and now they know you."
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio