Banks putting customer experience before products

Banks will make customer experience a strategic priority over products in the coming four years as a way to differentiate themselves, new research has found.

A new report by the Economist Intelligence Unit, published by banking software provider Temenos, revealed that of the 305 senior banking executives surveyed, 81% believe that financial institutions will seek to differentiate themselves on customer experience rather than on their products and services in the next four years, as the Covid-19 pandemic triggered a global shift to online banking.

At 30.5%, mastering both customer experience, including personalization, and digital marketing, at 28.5%, are ranked as top strategic priorities for the next four years, according to the report.

“In today’s world, the relationship financial institutions have with members or customers is more critical than ever,” said Joaquin de Valenzuela Muley, SVP and business line director at Temenos Infinity.

“Banks are moving their customers from physical into digital channels and the winners will be those who can inject intimacy into those channels.”

De Valenzuela Muley added: “Banks will need to provide a digitally-driven customer experience in assisted channels and online – offering advice, value-added services, and ‘always on’ banking, helping individuals, families, and businesses to meet their dreams and aspirations.

“This report showcases what should have already been obvious: banking is about the people, and the products need to reflect that.”

Further findings from the report showed that consumers, particularly those in the Gen Z and millennials demographics, increasingly want their bank to demonstrate responsible business practices, while banking executives are prioritising the financial empowerment of their customers.

The findings showed that around one in three, or 34%, financial institutions are considering growing microfinance for entrepreneurs, deposits for unbanked populations (33%) and responsible lending to underbanked populations (32%) in the next one to three years.

The research also pointed to the diminishing role of cash, with 71% of global respondents expecting cash to represent less than 5% of all retail transactions globally by 2025.