Recent societal and technological changes have rendered old ways of doing business less ideal in today’s retail banking environment. Not only have consumer-focused banks or banking departments been forced to reexamine their customer-facing processes, but they have also had to make significant investments in tech just to keep up with current trends.
Below are some of the most important consumer trends retail banks need to consider in the 2020s.
1.) Customer-Centered Mobile Apps
The way a bank configures the customer-facing parts of their banking software is more important than ever before. Mobile app design, in particular, has become a focal point in retail banks’ efforts to attract and retain customers. While mobile banking apps are nothing new, the expectations of consumers on what makes an app usable have shifted significantly in the past generation. Just having the bare minimum functionalities used to be enough a decade ago. In comparison, current banking apps are now being meticulously designed to consider every part of the mobile customer journey.
Because a growing number of customers exclusively do their banking remotely on mobile devices, consumer-oriented institutions have been compelled to compete in the delivery of a seamless mobile experience. Retail banks are now competing with each other to have mobile apps that cover the breadth of their services while remaining fast, easy to use, and free from glitches.
2.) Revamped Brick-and-Mortar Experience
Because more customers are doing the majority of their transactions through mobile and desktop apps, retail banks have had to rethink the roles of their increasingly sidelined brick-and-mortar locations. The COVID-19 pandemic had further accelerated the worldwide adoption of mobile banking, making these real estate investments increasingly less relevant and harder to justify outside of high-traffic areas.
This has led a growing number of retail banks to reimagine the roles of their brick-and-mortar locations. Apart from being a place to do the usual banking transactions, these locations are also taking on the role of a showroom for the different services that the bank offers or as “training centers” to teach customers how to use their mobile banking software.
3.) AI-Driver Customer Service
AI-driven chatbots are now commonplace and are mandatory for any retail bank that wants to offer 24/7 service or handle high volumes of inquiries. However, this type of rudimentary AI application is only the beginning. Soon, all competitive retail banks will be using AI to enable data-driven decisions that also benefit customers.
With so much data being collected, it’s becoming difficult for human analysts to effectively handle the volume of information presented to them. For this reason, effective artificial intelligence and machine learning components are now essential for current generations of retail banking software.
When properly set up, AI enables banks to shorten processes without sacrificing legal compliance or data security. This can smoothen customer journeys at all points of contact online and offline, resulting in superior customer experiences.
4.) Extreme Personalization
New approaches to banking software design and more sophisticated AI also make it possible to take customization to new levels. The customization functions on today’s customer-facing banking apps coupled with innovations in machine learning make it possible to not only deliver the kinds of online experiences individual customers already want but also by giving them options and services they didn’t realize they wanted.
5.) Sophisticated Multichannel Marketing
Going off the previous point, this personalization can also extend to the kinds of marketing channels that a customer interacts with. Banks are now interacting with customers through a growing number of channels, including social media.
While they have not let go of traditional media just yet, retail banks are now more likely to run campaigns over email and social media than they’ve ever been. Because of the reciprocal nature of digital channels, retail banks can gain deeper insights into the needs of their different customer bases.
When leveraged properly, banks can use these technologies to deliver targeted offers to highly defined sets of customers. This approach prevents customers from being desensitized or annoyed by irrelevant mass marketing and helps build deeper, more satisfying customer relationships based on real needs.
6.) Ethical Banking
More than ever, customers are concerned about what businesses do behind the scenes. Attempts at corporate social responsibility (CSR) are also now being met with skepticism more often, sometimes with serious consequences for businesses that are caught not living up to their supposed ideals.
B2C institutions such as retail banks are generally more affected by this scrutiny compared to banks that primarily engage in B2B or B2G financing. This makes it very important for these institutions to do more than just pay lip service to CSR, as their main market is now much more likely to react negatively to perceived unethical business practices.
What’s in Store for Retail Banks?
Customer expectations have evolved significantly since the explosion of ecommerce in the late 1990s. The high expectations of digital experiences have already affected retail banks and other B2C financial institutions. They can no longer just simply follow the strategies that have worked in the early days of digital banking. More than ever, there is a need to not simply adopt new technologies such as new mobile apps, better banking software, and more sophisticated AI, but to use these innovations in a conscientious manner.