I’m sure every one of us is looking at how our banks are going to respond to the winds of change. Disruption and disinter-mediation is in the air. The following is a summary of an article on this topic on BAI Strategies.

The most important task for banks in the age of Digital Disruption in Banking is to look beyond the traditional revenue models and prepare for the new ones. The silver lining is that as per a study by JD Power, overall customer satisfaction with banks is going up. The caveat is that customer satisfaction doesn’t necessarily indicate perceived future value or continued business. Rising customer satisfaction levels indicate better retention today, but the larger risks for the future are about maintaining banking’s position at the front end of the customer experience. That’s where transactions originate, even as fulfillment avenues tend to become commoditized or disrupted.

Based on the most impactful areas which are leading the CX away from banks, I proposed the following 5 initiatives that banks need to focus on with urgency to meet the challenge of digital disruption in banking head-on.

The full article is on BAI Strategies here so please do look it up for a more detailed description.

1. Orient mobile towards commerce and engagement: Banks have done well with mobile service. More than a third of bank customers regularly use mobile banking. This has improved customer retention as well. In 2016, however, the focus must start shifting to personalized marketing and affinity. According to a JD Power 2015 survey, more than 68% of virtual customers have not been contacted by the bank in over a year. It’s time for mobile banking to transform itself into a sales and consulting engine, leveraging simple marketing automation and lead nurturing principles to engage customers across channels.

2. Blend outbound and inbound channels. The benefits of broad relationships are well known. However, cross selling between product lines has been challenging and isolated at best. At the same time, 55% of customers say that being recommended products and services that will better meet their financial needs would strongly increase their loyalty to the bank. Instead of getting lost in the complexities of Digital Transformation, the first step should be address simple customer engagement scenarios across channels. Following up when a customers looks up a product online can be an easy quick win.

3. Innovate business models. Technology is enabling new non-banking disruptors to gain market share in areas such as person-to-person (P2P) lending. According to theMillennial Disruption Index, 53% of customers don’t think their bank offers anything different than other banks. More troubling is the fact that 73% of them would be more excited about a banking offering from a technology firm such as Google, Apple or Square. Instead of jumping headlong into FinTech, banks should keep an eye on retaining the customer front end. At the very least, initiating white labeled partnerships to provide these offerings to customers is key. Regions Bank has started this in 2015. It’s the right decision to avoid loss of customer engagement.

4. Improve payments capabilities. The consumer market has evolved to be much more demanding when it comes to the range and speed of transactions. P2P money transfers and small business payments are two typical areas where disruption is already occurring. As far as the future is concerned, revenue from payment transactions should not be the focus. Instead, preserving the ability to innovate business models by retaining the customer front end is vital. BBVA has partnered with Dwolla, and the ACH improvements have been announced. The market is picking up pace and momentum.

5. Rethink the branch network to be the sales generator, not the sales enabler.While branches are still useful for closing sales transactions, customers typically do not use them to originate those transactions in today’s digital environment. They most likely began with self-driven research on the Web. The branch should be leveraged for what it is. In an age when more than 75% of customers believe that their banking relationship is transaction- rather than advice-driven, the branch needs to start being the hub where customer goals are discussed. That transformation for the branch will mirror other industries like retail, where physical presence is becoming an important complement to online models.

The full article can be accessed on BAI strategies. I obviously leveraged the 5 principles from my book Dancing The Digital Tune. Photo credit: driver Photographer via Foter.com / CC BY-SA

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