US bank lending to SMBs has been flat in recent years, while alternative lenders have seen robust growth. If #banks do not move quickly to engage with SMBs digitally, they risk losing even more share of the market to fintechs. Banks possess a wealth of strategic advantages in the battle for SMB business, but they must actively leverage these in order to stay competitive.
McKinsey Insights & Publications
The majority of people use their #mobile banking apps to check their balance. This is a fact that does not surprise most in banking, many of whom believe the industry’s #focus on “#money movement” as opposed to “money #management” is hurting engagement levels. Focusing on the movement of a consumer’s money, or P2P capabilities, has […]
Bank Innovation
Improving #customer #experience at #banks is a challenge and only a small percentage are actively working on i.
Tom Groenfeldt – Financial Technology
Leading Accenture’s #FinTech programme is one of the most exciting jobs in the business. It gives me a great ringside seat on the latest innovations in this space and the #digital trends that will transform every area of banking in the next few years. In this, the second blog in my ongoing series, I want to focus on the new #channels that are opening up, and what they mean for how #banks engage with their customers.
Channels are critical. They’re nearly always the first point of contact between customers and financial services providers and, as such, they set expectations around the type of service that’s likely to be provided from then on. Over the years, we’ve seen many startups in the labs looking at this area. No surprise. Digital affords unprecedented opportunities for completely reinventing the quality of experience that customers receive.
Banks are adopting various different strategies for evolving their traditional channels. Some have focused on the branch as a primary point of contact, and branch network optimisation has been a theme for many of our clients, maintaining branches where they identify value and pulling back where they’re either unused or not economically viable.
Some new challengers are going mobile-only. But many in the middle are looking at a whole range of approaches. With #customer #engagement of such high importance, a key priority is enhancing channels to make them easier to use: making use of voice as an authentication tool, for example.
Whatever the course of action, all the initiatives we see have one primary objective: providing an easier and more convenient customer experience. The latest leap forward in this regard is the use of chatbots. These are like ‘live chat’ services that let people interact in real time with online services. The big difference? There’s a robot not a person at the other end of the proverbial line.
Chatbots have been around for years in many different forms. Old-school messengers like ICQ, for example, had a simple version of this #technology that exercised call and response based on hard-coded logic and/or guesswork.
It might seem counter-intuitive that a command line-based interface would be the next big thing. But it’s a trend that’s been prompted by platforms. Facebook’s chatbot platform, for instance, has proved particularly popular with some sectors of the population. So have the platforms offered by WeChat, Snapchat and WhatsApp. The ease of interacting with all of these via mobile has been a major factor in their uptake.
The chatbot model has evolved from answering relatively simple questions to leveraging machine learning, artificial intelligence (AI) and textual analysis APIs to answer more complex ones. These models learn over time, getting better at interpreting our intentions and executing them quicker.
Some chatbots are standalone apps. London-based startups in this space include Plum, Chip and Cleo . Plum’s been promoted as the first AI-powered Facebook chatbot that lets customers ‘micro-save’ small sums without having to think about it. It does this by connecting to users’ current accounts, learning their spending habits, predicting how much they can afford to save and automatically depositing small amounts into their Plum savings account on a regular basis.
Chip’s another micro-saving chatbot. The startup’s USP is that it opted to develop its own iOS and Android chatbot, rather than depending on an existing messaging app. Cleo, meanwhile, is an AI-powered chatbot that lets users check all their bank account and credit card data in one place. By allowing them to keep tabs on their spending, it helps users improve budgeting and get smarter with their money. The chatbot also suggests ways to improve saving, whether that’s rationalising subscriptions or identifying better value financial products.
The next big trend could see people engaging with a bank’s/partner’s third-party proprietary chatbot as a servicing platform (“tell me my balance”, “send money to X”, “tell me when my repayment is due”…etc). A number of players have been looking at how services might be provided through other people’s channels.
But will incumbent banks be willing to provide APIs so they can form part of other people’s bots/platforms (like Monzo’s done by enabling its service to be used on Amazon’s Alexa)? It’s an interesting question. Will they be comfortable with sensitive customer data being relayed through other peoples ‘walled gardens’? In some respects, PSD2 may answer this question for them.
With 2017 being touted as the ‘year of voice’, expect to see more vendors seeking to launch similar propositions to Amazon’s Alexa. As that happened, perhaps we’ll leap from text to voice even quicker than we think. For banks, this will add momentum to their push to reduce the number of calls real people need to answer.
There’s a lot of opportunity right now. But banks should exercise caution in how they expand the channels through which they engage—and as they move forward, do so consciously and strategically. Otherwise costs will continue to go up, with customers fragmented across both low- and high-cost channels. Leaders in this area will have a clear point of view on their channel strategy, and they’ll apply this thinking to their response to PSD2/open banking.
That said, people still like to talk to people. And that’ll never change. We’ll be watching closely to see how this space evolves.
Thanks for reading.
The post New channels, new voices: Customer engagement goes digital appeared first on Accenture Banking Blog.
For years, we’ve heard people proclaiming the demise of the bricks-and-mortar #bank branch, supposedly swept #away by customers’ mass-migration to online and—increasingly—mobile alternatives. But as our latest UK banking consumer survey—Beyond Banking—confirms, there’s still plenty of life in the bank branch. Put simply, customers still want to be able to visit branches and experience the face-to-face contact they enable.
In fact, a major theme of our findings is how highly customers still value #human interaction, and how much they want to have a conversation with a real live person about their major financial decisions. What’s more, this desire isn’t limited to older people. Quite the reverse: As our research demonstrates, the younger you are, the more likely you are to be a regular user of a branch.
Given that this trend is coinciding in with an ongoing shift by younger consumers towards more innovative channels—the likes of wearables, social media and instant messaging—it’s possible that the continued strong usage of branches is a transitory effect. But our study gives no indication of that. And the findings will certainly give #banks pause for thought as they plan out future strategies for their physical branch networks.
So, what does the research tell us? As Figure 1 shows, while use of mobile banking services is surging, branch usage by all customers remains remarkably consistent year on year—and indeed in 2016 edged up to its highest level since this research began in 2010.
A breakdown of the 2016 findings by age (see Figure 2) reveals what many might regard as a surprising outcome—with millennials being by far the heaviest users of branches, tapering down to OAPs as the lightest. While this age profile is probably affected by factors such as millennials’ higher numbers of financial transactions and the fact that it’s easier for them to physically get to branches, the correlation between youth and higher branch usage is clear and undeniable.
And what are customers using branches for? The answer—as Figure 3 shows—is activities like seeking advice, accessing services and fixing issues. Indeed, branches far outstrip all other channels for advice and service access.
What’s more, the use of branches for research and advice is becoming more frequent, with a significant step-up since last year in monthly interactions for these activities (Figure 4). And a comparison with historic data from previous years shows that self-service initiatives in branches are gaining traction, underlining their evolving role as service hubs.
All of this leads us to the million-dollar question: What kind of banking model do customers actually want? The answer, as Figure 5 shows, is a blend of physical and digital channels—a proposition they find much more attractive than a pure digital bank with no branches.
The message is clear: Banks should create strategies that accept and optimise branches’ ongoing future role, while also looking to harness ongoing digital innovation to deliver better service experiences at lower cost. But the shift towards computer-generated services for customers cannot be at the expense of access to human services at their local branch.
In my next blog on our UK banking consumer survey, I’m #going to look at the findings on a key focus area for digital innovation in banking: so-called ‘#robo-advice’. Stay tuned.
[1-5] Source: UK findings of Accenture 2017 Global Banking Distribution & Marketing Consumer Study—Beyond Digital
The post Why bank branches—and human contact—are not going away any time soon appeared first on Accenture Banking Blog.
The pay-as-you-go model of SaaS — software as a #service &8212; has certainly gained traction in the world of #banking. SaaS has helped #banks and other traditional financial institutions to take advantage of apps or software offered (commonly) by fintechs, without having to buy or build out the #technology. But as fintechs are getting bigger, […]
Bank Innovation
The election of Donald #Trump has brought uncertainty and relief to bankers in seemingly equal measure. In terms of regulation, relief may be predominating these days, but there are plenty of reasons to stay on one’s guard, according to Pam Perdue, executive vice president and chief regulatory officer of Continuity, which provides #banks with compliance […]
Bank Innovation
Real-time #payments depends on network effects — if a large corporate bank is real-time but his supplier’s isn’t, the process still goes slowly. FIS and TCH are piloting an #incubator to begin testing.
Tom Groenfeldt – Financial Technology
For this episode, host Brett King spoke to some of the main presenters of the recent #Innovate #Finance #Global #Summit event.
Bank Innovation
#Pegasystems uses robotic #software to get #institutional clients into their systems across the globe and across lines of business while meeting the regulatory requirements.
Tom Groenfeldt – Financial Technology
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