CEO at Urjanet, helping organizations impact people, planet and profits using our innovative cloud-based data service.
Digital transformation in banking and lending has been underway for several years, but the pace is accelerating as a result of the Covid-19 pandemic. As banks pivot from branch footprint expansion to an omni-channel strategy, the truly digital customer experience is finally here.
To be competitive throughout the pandemic and after it, building a customer-focused, digital-first institution is a must as customer-centric banks outperform their more traditional peers. Investments in data innovation can help streamline this shift to online experiences and also yield substantial returns. One study showed that banks and credit unions that digitize processes can achieve a 20% increase in revenues and a 30% decline in expenses.
This requires not just financial services institutions but also their partners and suppliers to rethink how they leverage data and technology. My own company has had to refocus our product roadmap, service model and support tools for our financial services customers in light of the Covid-19 pandemic to deliver better digital processes. Corporately, we’ve also had to adjust how we interact with banking and lending customers, most recently shifting our annual customer conference from an in-person event in Atlanta to a series of digital events. In September, we met virtually with these industry leaders and their solution providers to hear how they are adapting to the new global circumstances with data innovation and new customer experiences.
Consumers demand simple, trustworthy experiences from financial institutions.
Customers’ expectations are rising when it comes to banking and data privacy. According to EY’s customer research, only 60% of consumers are comfortable sharing personal information with their primary financial service provider without any assurance regarding data protection and security. Features like full price transparency, hyper-personalization and clear ownership over financial data can dramatically improve customer trust.
The experience at the beginning of the customer relationship is also critical, with digital tools and process automation required to meet omni-channel expectations. When establishing a new bank account, 40% of consumers will abandon the onboarding process if it is too lengthy or complex. Consumers, particularly millennials and Gen Z, are willing to switch financial services providers to get a better experience. As a result, banks that require customers to download, print, sign and scan or fax documents are losing business.
A critical point in the onboarding process that needs digitization is document collection. For example, utility statements are commonly used to verify addresses; yet they’re also some of the easiest documents to falsify. Lenders should look for digital methods of accessing and verifying the documents they need, to make it more convenient for consumers.
Lenders can leverage data to deliver more tailored customer experiences.
According to a report from Everfi, across industries personalized experiences lead to a competitive advantage—yet the financial services industry is still lagging behind.
For banks and lenders, insights from personal account data can be used to craft a more personalized customer journey, enabling them to provide offers that better align with the customer’s current financial situation. Accessing this personal data only with the appropriate customer consent is critical to meet consumer demand for data privacy, as well as regulatory compliance with legislation like the General Data Protection Regulation (GDPR).
Digital data sharing can strengthen credit risk assessment.
The pandemic triggered an economic downturn and record-high unemployment numbers, with millions of consumers struggling to make ends meet. Due to deferments and forbearances, traditional credit data is increasingly unable to provide the complete picture, so banks and lenders should incorporate additional data points to enhance credit risk assessment.
Enhancing the customer experience by providing a way to share both traditional and alternative financial data can help consumers better prove their creditworthiness, which aligns with growing the consumer preference to maintain control over the data used to make credit decisions. It can also help set interest rates and loan and credit card limits with better precision for applicants. With offers and terms that tightly align with each customer’s needs, banks and lenders will be better positioned to grow sales and prevent losses.
Investing in the customer experience unlocks value for financial institutions and their customers.
When lenders leverage data to build a more customer-focused business, the outcome is a win-win for both financial services providers and their customers. Banks and lenders that execute this well can not only improve the customer experience but see tangible benefits to their business:
• Automating manual processes helps consumers and gives time back to staff. Digitizing processes that traditionally involve gathering paper makes things easier for consumers and allows staff to save time and improve internal efficiency.
• Enhanced risk decisioning is a function of having more predictive data sources. Incorporating additional data sources into the account opening process can offer declined customers another chance at credit and fuel growth for lenders.
• Strengthening business continuity must be prioritized by business leaders, especially as we learn from what the global pandemic has taught us. Ensuring that customers can still open new accounts, apply for credit and receive exceptional service in a digital environment is a critical requirement for the success of a lender.
Capturing authenticated data with consent from the consumer is a powerful tool to help lenders build a digitized customer experience, gain deeper visibility into customer financial behavior and continue to fuel growth. Even in today’s uncertain economy, lenders can take advantage of these unique opportunities to offer the exceptional service that customers demand.
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