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Banking’s top value creator in 2020? Technological customer service

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handshake across a deskLeaders in U.S. banking say their focus on customer service and relationships will double between now and 2020, becoming their No. 1 value-creation priority. This and other key industry findings were uncovered in a recent Grant Thornton survey and discussed in the webcast, The Future of Growth and the Banking Industry.

Prioritizing customer service is critical in an environment of increasing aggression. Competition for customers is surging, fed in large part by technology and its advances. Technologically revolutionized financial institutions and outsiders — e.g., fintech firms and Amazon — are rapidly drawing customers from traditional banks.

Emerging from the fray will be those banks that take control of technology now and use it to discover and deliver on customer expectations. They will recast their business to prioritize discovery, delivery and transformation.

Leaders can begin the transformation via three technological action steps:
  • Reorient business/operating models to a customer focus
  • Review fintech’s potential
  • Reset risk priorities

Reorient business/operating models to a customer focus “We’re seeing the first generation of true digital natives who can’t remember a time before the internet,” says Tom Joseph, managing director in Grant Thornton’s Financial Services practice, in the firm’s 2017 report, The Future of Growth and the Banking Industry: Adapt Decisively to the Disruption of Everything. “They have new expectations of their financial services providers. These customers are completely comfortable with digital banking, rarely visit a branch location and consider it a baseline expectation that their bank provides a mobile app.” To serve them, institutions will reassess their business models — from brick-and-mortar branch locations to digital services — for more personalized engagement.

Through fintech — programs, tools and systems supporting banking and other financial institutions — a customer-focused business model is built on a collection of information about needs and preferences, and analytics to determine the best approaches to address them.

“…banks have the ability to know me digitally and still make me feel I’m part of a community. That’s something millennials care about — shopping local, farm to table. This is the version of branch to table.” –Tariq Bokhari, CEO and Co-founder of Aggressant, Inc.Today’s business and operating models need to be agile and uncomplicated. Legacy core banking, says Tariq Bokhari, CEO and co-founder of Aggressant, Inc., is neither. And these systems are costly. “Incumbents have an anchor around their neck,” Bokhari contends. They can take a lesson from startups, he says, by focusing on newer, less cumbersome alternatives, and use of big data and predictive analytics to simplify operating models. Transforming business and operating models to become more user-friendly and satisfying positions a bank for growth, as Bokhari explains: “What made community banks special in the 20th century — I walk in, they know me, they know my dad, they know about my car I just bought and my driving — doesn’t exist anymore in this way, but banks have the ability to know me digitally and still make me feel I’m part of a community. That’s something millennials care about — shopping local, farm to table. This is the version of branch to table.”

Review fintech’s potential Beyond its traditional use for financial performance and regulatory reporting, data is now collected, processed and analyzed as a means to understanding customers’ expectation in order to enhance their experience. As banks advance their digital programs to capture and analyze customer data, they uncover insights about trends, the products and services to improve, which to discontinue, and where to devote resources. This results in institutional cost savings, but more importantly, in greater customer satisfaction.

Satisfying customers by understanding and offering what they want can come from monitoring internet browsing and uniting customer, product and pricing data, says Bokhari. With this knowledge, a bank can nuance a solution and target ads to specific consumer groups, including influencers, identifying them through digital research. “Seventy-six percent of millennials’ decisions are driven by word of mouth,” Bokhari says. He recommends mapping purchasing data to see who’s first to buy new consumer products, and targeting those influencers when rolling out initiatives such as a new kind of credit card.

Speedy, convenient customer service
Technological advances can boost process efficiency, which translates to faster, around-the-clock responses to customer inquiries. A standout is robotic process automation (RPA), which automates manual, repeatable tasks, including those in legacy systems, explains Vivek Rodrigues, senior manager in Grant Thornton’s Advisory Services practice. RPA is an internal process improvement resulting in greater customer satisfaction.
Along with products, service offerings are benefiting from technological advances. Many banks create new customer services through collaboration with fintech startups and entities such as universities and technical colleges. One result is real-time lending. Bokhari offers the example of Eastern Bank, a mutual bank based in Boston that acquired a group to build technology for small business loans. Eastern can now process a loan of up to $100,000 in five minutes — approved and sent to the borrower’s account. 

Reset risk priorities “Define your priority, because it drives your culture.” Kat Sanchez, Grant Thornton director in Compliance Risk Management Advisory Services, offers this advice in explaining that valuing risk and return has an ultimate benefit for the bank customer.

“Are you competing solely on cost or customer service?” Sanchez asks. “Understanding what your priority is will help you with your compliance function and help you leverage the new technology and opportunities before you.

“Competing on cost might mean shortcuts on system upgrades, product complexity, or the ability to prepare and train your front-line staff to provide sound customer service.

“But competing on customer service might mean your institution is prioritizing and listening to what your consumers are telling you, whether that be via complaints, call monitoring, surveying or focus groups following a new product launch.

“Prioritizing sustainable customer value over short-term wins means your compliance can be more predictive in managing risk,” Sanchez says, and a compliance officer who mines customer feedback data will be an asset in discussions about proceeding to product and service development.

See how risk can deliver value; visit “Make risk a strategic advantage.”

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Financial institutions that thrive will be those using the power of technology to prioritize customer satisfaction.

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Contacts
Tom Joseph, Managing Director, Financial Services, Grant Thornton LLP  +1 704 632 3970
Tariq Bokhari, CEO and Co-founder, Aggressant, Inc.
Kat Sanchez, Director, Compliance Risk Management, Grant Thornton LLP  +1 703 637 2617
Vivek Rodrigues, Senior Manager, Advisory Services, Grant Thornton LLP  +1 212 542 9980