Traditional banks are under pressure from regulators and customers to provide a seamless customer experience. The benefits and innovations offered by new digital challenger banks are attractive, with consumers making the switch from traditional banks at a rapid rate – nearly 230,000 customers switched bank accounts in the third quarter of 2019.
By re-imagining the role of the finance industry as an ‘enabler’ instead of simply a provider of financial services or products, these challenger banks are disrupting a market that has remained unchanged for many generations. According to the Global Fintech Report, 88% of executives are concerned they are losing revenue to the innovators, who are providing a more effective, more seamless customer experience.
Challenger banks are offering branch-free banking, easy-to-use apps, and 24/7 customer service at a touch of a button. In short, these challengers are harnessing technology, acting on real-time data, and providing a better customer experience. It is high time traditional banks adapt, innovate, and try to keep up with customer expectations, especially when we consider ‘business as usual’ isn’t working: customers made 4.29 million complaints about traditional banks to the Financial Conduct Authority in the first half of 2019.
Traditional banks need to actively identify opportunities for improvement that work in perfect harmony with business transformation, in order to achieve operational excellence and remain competitive. This requires a considered and purposeful analysis of all end-to-end processes, and constant monitoring and re-evaluation of all business operations. Having a detailed understanding of how internal processes are working, and how employees are engaging with each system or process is vital for survival – particularly if the process has an effect on the customer.
It is critical that financial organisations have a solid grasp on the operational processes that have the greatest impact on their customers, otherwise they risk receiving complaints and negative media publicity. This was the case for two major banks who failed to send, or sent out incorrect, PPI reminders to millions of its customers a few weeks ago. If those banks had a holistic view of all end-to-end processes, they could have corrected this flaw before it happened.
Traditional banks need to work out how their end-to-end processes function; benchmark and identify issues within their operations; develop solutions, simplify and standardise processes, and automate those that don’t require human effort. These steps will only be useful, however, if the relevant people within the organisation know about them. Many new ideas and processes fail because information is not shared and employees are not notified about changes – information sharing and internal training are key. This framework, if followed correctly, can lead to increased margins, improved product quality, and a reduction in customer complaints.
Challenger banks are disrupting the financial market by changing the focus from the bottom line to the customer experience – and it is paying off! Traditional institutions must look beyond traditional process methods and models and put the customer at the heart of all business operations. Getting your processes wrong means giving ground to the competition.