Listening to the voice of our clients: Retail banks continue to reinvent their business models through digitization

Andy Schmidt

Last year, we met with 111 retail banking executives to learn about their trends and priorities as part of our 2020 Voice of Our Clients (VOC) program. Based on those interviews, I shared in a blog last November six ways retail banks can accelerate their digital journey. This year, as we begin to kick off our 2021 VOC interviews, I’d like to provide an update on the digitization progress we are seeing among retail banks as they continue to navigate the pandemic and reinvent their business models. While the challenges of the pandemic have been intense, retail banks have made the most of a difficult situation, increasing their investment in digital technologies to accommodate pandemic-driven customer service changes while maintaining security and driving innovation.

Agilely moving beyond the bank branch 

Initially, pandemic lockdowns forced retail banks to close their branches on a temporary basis. This closure trend continues, even as more economies open up. Top banks are closing branches, not because of the pandemic or costs, but because of their digitization successes. While many of these banks are permanently closing up to 20% of their branches, experts estimate that up to 30% of branches could close with no negative impact on service levels or outcomes—a definite benefit to the bottom line.

Why do people visit a branch in the first place? Mainly to ask questions (or to discover which questions to even ask), as well as to receive personalized service. Retail banks, however, have agilely embraced digital technologies to satisfy these requirements without the physical branch. New technologies, such as video conferencing, chatbots, and artificial intelligence, enable customers to receive much of the help they want online instead of in a branch. Further, with these technologies, banks can remotely serve customers not only in a personalized way, but also with greater efficiency. They also use the online experience to schedule in-branch appointments with the experts best able to meet a customer’s unique needs.

Branches are both a symbol of the past and a herald of the future

As retail banks move into new geographic territories, the branch will remain necessary, but those within established territories are learning they can serve customers as effectively online. As a result, their investment in digitization, data analytics, innovation, and a more resilient IT supply chain is increasing. Although Covid-19 may have inspired many of these digital transformation projects, forward-thinking CIOs are the ones pushing these projects onwards to capitalize on these initial gains.

Part of the reason for this is that network speeds are increasing, remote work capabilities are advancing (and becoming a key part of the future of work), and new customer service methods are emerging. For example, a customer can open a new account via Microsoft Teams or a bank representative can provide financial advice to a customer in a Zoom call. Bank websites also are improving with better navigation and features, along with the use of artificial intelligence to better anticipate and respond to customer needs. Overall, bank employees can now effectively both work and serve from home while remaining at least as productive as they were in the branch.

Ensuring security and satisfying regulators

New digital technologies not only can improve customer service and drive efficiencies, but also enable better security and regulatory compliance, which, in turn, helps to build customer trust and loyalty and regulator confidence. For example, regulators are happy when bank customers can find what they need easily and securely, when they need it, and how they need it. Banks that provide a secure, superior web experience combined with proactive and personalized customer care keep customers out of less cost-effective channels like phone queues while also keeping regulators happy. Essential to this is advanced data analytics that generate rich business and customer insights. Through data analytics, retail banks can better anticipate customer needs and wants, guide customers in asking the right questions, and direct customers to the right services throughout their financial journeys—all things that consumers have been asking for according to our research.

Voice of Our Clients: What’s in it for retail banks?

For the most part, retail banks are doing quite well despite all of the unprecedented challenges over the past year. Their bold digitization experiments are paying off. Now the question is how they can extend their innovation and progress moving forward.

For your particular retail bank, we want to help. Our VOC program provides insights into the work and performance of your peers around the world, helps you to evaluate your past and future priorities, and enables you to benchmark your progress in terms of your digital leadership, innovation ROI and level of IT satisfaction. In our VOC discussions, we listen to your concerns and respond with insights you can act on, based on our analysis of trends and priorities and experience across retail banking.

Our discussions are the most productive when we plan the meeting together to ensure the agenda focuses on your unique needs. This also gives us an opportunity to gather in advance relevant data, case studies and best practices. To learn more about how our 2021 VOC interviews can benefit your business, feel free to reach out to me.