In today’s increasingly customer-centric banking world, financial institutions seeking to build long-term, profitable relationships can reap significant benefits from providing positive experiences that keep customers happy, engaged and wanting to come back for more.

With consumers enjoying an unprecedented array of financial service providers to choose from, and able to switch between providers more quickly and easily than ever before, banks are often not able to get away with simply saying “Here’s our platform; take it or leave it.” Institutions that cling to that outmoded way of thinking likely will find droves of their customers taking them up on the latter option.

But how do banks go about conceiving, designing and implementing the exceptional customer experiences it takes to maintain market share in the increasingly fragmented financial services landscape?

To help guide FIs in addressing this critical question, we’ve put together four key principles to keep in mind. Read on to learn more.

1. Think customer–not fees–first 

Charges for Insufficient Funds (NSF) can add up quickly for both the bank and its customers. According to The Federal Reserve Payments Study: 2022 Triennial Initial Data Release, both the number and value of non-cash payments (cards, automated clearinghouse [ACH] transfers, and checks) grew faster from 2018-2021 than any other time period the Fed has measured since 2000. Based on consumers’ increased use of credit and debit cards and other non-cash payment methods, consumers’ NSF fees can mount up more quickly than ever. 

Re-Thinking Overdraft to Maintain Profitability while Ditching Fees

However, the FI that wants to create customer-centric banking can re-imagine how they view NSF fees. A financial institution that thinks “customer first” may find more value from looking at the customer’s perspective. 

Let’s take a hypothetical case of a customer who accidentally incurs NSF charges after forgetting to transfer money into her checking account. In this case, the customer views her zero balance situation as a service and data problem, and asks the following questions to herself: 

• Why can’t the representative treat me like the bank knows who I am? 

• Why doesn’t the bank know that I’ve never had an NSF situation before and act like it? 

• Why didn’t the bank help me avoid NSFs by using any of the money I have in other accounts with the bank? 

• Why can’t the bank prevent this situation by automatically putting more money in my account at the right time: before bill payments were attempted? 

NSF fees don’t help less profitable customers either. Less profitable customers may also need personalized services to help them avoid fees and to pay the fees that they incur. Banks can provide those services to encourage these customers to maintain balances and better manage payments. By doing so, it is likely these customers can become more financially secure and more profitable to the bank. 

Generally, customers benefit from more personal and actionable advice and processes–even before their balances reach zero.

Impersonal customer service experience and endless NSF fees might be the final push a customer needs to push her to open an account at another bank, acquire a new debit card and make her transactions from that account. She might not close her account, but your bank won’t be making any more money from her transactions.

2. Target channel-to-channel friction

The legacy customer service processes that many FIs still deploy in channel siloes may create more obstacles to customer-centric banking. 

Generally, these processes assume that customers follow the same steps to get help or service. They assume that customers can or will use these tools in one channel, device and session. In reality, the customer may be forced from the website to telephone banking with a PIN code the customer never created. Or the customer has to use the browser website because the mobile app doesn’t offer secure email. Moving from channel to channel, the customer will probably have to repeat information over and over again.

Often, FIs pay a high cost for this channel-to-channel friction. The customer’s inability to get helpful service and to move easily between channels to get that service may inhibit her relationship to the FI. Customer service friction can create a customer experience that disengages customers and motivates them to seek out alternative FIs or fintechs for the same services.

In 2023, this siloed approach essentially tells your customers that your institution doesn’t know who they are. If a customer must recreate her experience with your FI with every interaction, siloed customer service processes add debilitating friction. Financial institutions often can’t afford any impersonal interactions.

How can your FI help reduce channel-to-channel friction?

1. Stop dragging your legacy customer service around. Deconstruct and redesign your customer service processes for the digital era. If you assume that your customers want to check balances in a hurry, you can assume that they want service the same way.

2. Break customer service steps from a preconceived notion about how customers will behave. You don’t know.

3. Infuse customer data into every customer interaction. If your mobile app or online banking solution knows that the last action the customer attempted, push that information to customer service.

4. Demonstrate that the bank has a full picture of that person wherever and however a customer interacts with your bank. A Chatbot or customer service representative must have that picture and be able to work with the customer based on that data. 

Learn more about Galileo’s Cyberbank Konecta conversational AI engine.

3. Design customer service for engagement and loyalty

To overcome these challenges and redesign customer service for better engagement and loyalty, your FI should consider changing the way it views customer service. Banks tend to think about customer service as a one-off situation: one question and one answer. Banks also tend to think of customer engagement as an ongoing series of interactions connected in a “customer journey” that the bank creates and controls.

In reality, customers create their own journeys and experiences that are composed of every interaction with your FI, including and especially, customer service. Thinking of customer service and engagement separately may prevent your bank from using its investment in digital banking technologies to build deeper, more profitable relationships with your customers. 

Trust can move customers from transactional services to real engagement with the financial institution. According to a 2022 Morning Consult report, customer service and trust are critically important to customer relationships. The report revealed that:

• The No. 1 reason customers lost their trust in a financial service provider was a bad customer service experience. 

• 29 percent of consumers who lost trust in a financial services provider would never use that provider again. 

• 48 percent of consumers reported that bad customer service triggered them to not use that financial service provider again.

Efficient, reliable customer service can increase trust and reduce the friction of the customer’s experience with your FI. This trust helps open the door to more opportunities for the FI to deepen its relationship with customers.

Data-Driven Support is a Competitive Edge in Digital Banking

4. Choose a digital banking platform to deploy emerging technologies 

Before digital banking, banks often built trust through the reliable branch managers and tellers who knew customer names, the company they worked for and everyone in the neighborhood. Generally, when it came time for a car loan, customers sat down with the branch manager who knew these details and used them, along with the bank’s processes, to determine that customer’s eligibility for a loan. The manager was often able to suggest the appropriate services and the customer trusted his suggestions. 

There’s no going back to that era. But banks instead can use a digital banking platform to help deliver an exceptional experience. This digital banking platform should go above and beyond transactional capabilities and replicate pre-digital customer service processes. Dragging these outdated processes into your digital banking platform may inhibit your bank from delivering those experiences that transcend channels and incorporate data into every customer interaction. 

Banks seeking to provide  customer-centric banking experiences can leverage the following tips and guidelines:

• Offer personalized advice and guidance in every channel, whether in a mobile app or from a chatbot or human customer service representative in a branch or on a phone call. 

• Allow customers to opt in or out of automated processes based on advice in any channel, on any device. 

• Facilitate true omnichannel capabilities for any transaction or service. Your digital banking platform should not require you to push customers to a specific device or channel to get a service or perform a task. 

• Keep channel-to-channel friction low by using new customer authentication and security technologies and methodologies. 

• Support both human digital assistants to respond to and learn from customers. Both legacy customer service processes and older chatbots used scripts and algorithms based on the FI’s needs rather than the customer’s needs. Human or chatbot responses that use the bank’s lingo make it even more difficult for customers to get answers to their questions and help with their needs.

• Create and reconfigure products to respond to evolving customer needs. To attract and keep customers, your FI must be able to change more quickly than ever. A digital banking platform must let you quickly identify and change existing products and services and create new ones that reflect customer challenges and needs. Digital banking platforms that let you do this will help your FI stay relevant to customers.

• Coordinate interactions across and with all channels and devices. Digital banking platforms must follow the customer as she moves from channel to channel. 

• Enable collaboration between digital personal assistants, chatbots or other AI-assisted tools and humans so that all can work together on behalf of and for the customer. 

Drop us a line to learn how Galileo’s can help your bank create the exceptional experiences it takes to win and keep customers in today’s banking market.