Mobile banking transformation: The key to banking success in a digital world
By Peter Pleckaitis
It’s no secret that the world of finance is changing. Customers are increasingly empowered by a new generation of mobile banking and financial technology startups, with 75 percent of consumers saying that fintechs give them more power over their finances, according to Forbes.
Banks are ripe for disruption from fintechs because their traditional services and antiquated processes leave a gap of unmet customer needs. Adopting digital capabilities can help meet those needs, but banks need to do more than just roll out new mobile apps on top of traditional offerings.
Make the shift to mobile-first
What banks need is a complete mobile-first orientation. This means building a suite of mobile apps to make banking quicker, easier and frictionless for customers. At the same time, it also means giving customers the freedom to bank on their own terms. To do this, banks must create an omnichannel experience, where customers can enjoy the same level of service no matter how they choose to interact with their bank.
Although they aren’t the most convenient option for every situation, there is still a time and a place for physical branches: one study by Accenture found that 87 percent of consumers would continue to use bank branches in the future, and that they expect human interaction when they do.
But that human interaction won’t look the same as it has in the past — branch employees of the near future will be empowered with mobile. The days of waiting in line for service are numbered —as the customer enters a branch, employees will come to them, mobile device in hand. Those devices will give employees access to advanced tools, such as augmented intelligence, to help recommend the best possible product for each individual customer.
The mobile-first approach to banking should include both branch transformation and digital transformation. Anders Bouvin, CEO of Swedish bank Handelsbanken, put it best:
“There is no conflict between digitalization and the world’s best branch network. In that new world, if you are going to compete only digitally how are you going to differentiate yourself?… We believe that the branches are going to be even more important; it’s just the way they work is going to be different.”
Understanding the role of the branch in a post-mobile banking world
The idea that branches are the past and mobile-only is the future is patently false. A study by Bain & Company found that in the US, about 80 percent of new primary bank accounts are still opened in physical branches. In fact, branch transformation and mobile-enabled digital transformation should go hand in hand: by moving routine, low-value transactions from branches to mobile channels, banks can reduce costs in their branches, which in turn frees up even more money to invest in mobile innovation.
Integrating mobile banking technologies into physical branches enables banks to employ fewer traditional tellers and instead focus on hiring “universal bankers” who provide a mix of personal banking and teller services. PNC Bank predicts that 66 percent of its branches will be completely teller-less by 2019. This will make the branches more cost-effective while enabling employees to focus on high-value sales and advisory work.
Customers may come to view branches as places they only go when they have major financial decisions to make, but the personalized service and advice they receive in those situations will make the trip feel worthwhile.
Branch transformation helps fund digital transformation, while digital transformation helps enable branch transformation. To get the best results, banks must do both.
Case study: Umpqua Bank
One example of this can be found at Umpqua Bank, which was profiled in the Financial Brand in 2017. While many of their competitors were focused either on creating better digital channels or finding creative new ways to bring customers into branches, Umpqua didn’t consider it an either/or proposition. Instead, they built a “human + digital” strategy to maximize innovation across channels.
The centerpiece of this strategy is BFF, a mobile app that lets users interact directly with their Best Financial Friend — a personal banker the customer gets to pick for themselves — using voice, video or chat. The BFF app is enabled with AI to answer simple customer questions. Since bankers don’t have to answer basic questions or meet with clients face to face, their services are highly scalable: Umpqua estimates a single BFF can be assigned to about 1,000 customers, while providing personalized, high-value service to each one.
Although the BFF app allows customers to complete almost any transaction they could in a branch, this does not mean Umpqua will be completely abandoning its branches. The company does plan to reduce its total number of branches, but will configure the branches that remain to maximize customer value in a changing market.
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