Customer Experience: The Currency of Competition
Bankruptcy comes in two ways, Ernest Hemingway wrote: “gradually, then suddenly”.
Facing extinction in the street, banks are trying very hard to create tech-enabled, inclusive ecosystems where customer experience is the king. Bankers believe that they will have to differentiate on customer experience rather than products. Mastering customer experience and digital marketing are ranked as top strategic priorities over the next four years to let their businesses evolve into seamless eco-systems. The pandemic has jolted them into action, spurring a culture of experimentation and collaboration among previously complacent banks. But as tech becomes more critical to competitive differentiation, the threat of competition from major tech and e-commerce disruptors is becoming existential. New, nimbler competitors, including fintech startups, payment players, super app platforms, and tech giants continue to gain market share from traditional banks as more non-traditional players gain the ability to offer more traditional banking services. But the banks are coming out fighting.
The stumble of some consumer challenger banks over the course of the pandemic—firms such as Monzo and Revolut struggled with sharp falls in revenue and customer complaints about missing funds—has put smartphone-friendly, slick interfaces in sharp contrast with the dour reliability and brand recognition of established banks. Customers appear to remain reluctant to trust digitally native challengers with salary deposits. Many established banks, spurred by rapid consumer change forced by the pandemic, are hopeful that through strategic partnerships and investments in technology they can be the best of both for consumers: a trusted banking partner, and purveyors of whizzy, consumer-friendly banking experiences. Customer experience and digital marketing are top priorities for executives as they strive to compete with challengers’ frictionless on-boarding, budget planning, and perks such as free international payments. This forces old and new banks to take a very close look at how much they know about their customers and their behaviour.
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