Summary
There has been a tremendous change in services provided by financial institutions globally. With advanced technology eliminating face-to-face communication with tellers in the banks, financial institutions are doing their best to guarantee customers the best services experience to stay relevant in the industry. Most of the strategies are technology-based with applications and the internet at the center of the evolution and the effort to maximize customer relationship. Though some of the existing statistics and scholar research studies see a significant improvement in customer experiences based on the existing strategies financial institutions are using, some of them suggest otherwise. There are many scholars and documented statistics indicating that financial institutions are yet to tap into the potentials that come with the current technologies with an effort to maximize the customers' experiences.
Introduction
It is the year 2029, and you need some cash. You drive to the nearby Automatic Teller Machine, but you do not need to look around for your Bank Card. What you need is yourself because the ATM can scan you before an automated robot bank pops up on the screen and gives you access to all the banking services you need. Such is the nature of customers' experience, which the banks need as a digital platform takes center stage in the banking industry. Customer experience has become a competitive factor in the banking industry.
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According to an observation made by Rod, Ashill & Gibbs (2016), technology firms such as Amazon, Rakuten, and Alibaba are taking over financial marketing. The customers, mostly the young population, are trusting technology companies such as PayPal and Amazon Cash with their money because of the high-level tech-oriented customers' experience that are superior to the bank experiences. What such tech-corporate have are what the banks possess in minimal to boast customers Experience. Such is digital prowess and large customer bases coupled with proper coordination to improve customers’ experience. However, financial institutions need to be more active in improving customers’ experiences with the evolution of technology to stay relevant in the market.
Previous Approaches
The traditional and current banking institutions are investing in strategies to improve customers' experience. According to Zeinalizadeh, Shojaie, & Shariatmadari (2015), the findings demonstrate that face-to-face communication with the customers was the most convenient means of improving customer relationship with the financial institutions. The research findings establish that call centers and tellers were convenient as they could be available for the customers who had issues with their transactions. The problem the researchers note with the use of call centers and tellers are that it was a source of time-wasting. For instance, a research by the Citibanamex, a Mexican based-financial institution revealed that workers spend at their branches approximately five billion minutes per annum, with most of the time dealing with customers before the institution changes its strategies on customer services.
ATM has been the revolution of the traditional and current banking services with an effort to improve on customer's experience. According to research by Moysan & Paparoidamis (2016), many financial institutions moved most of their financial services to the ATM. In doing so, there was an establishment of ATM card or Visa cards which have to improve customers' facilities and experience. With ATM came a reduction in the number of customer-teller interactions in many financial institutions. As a result, the customers did not have to wait on the line for services. Currently, there are millions of ATMs operating which are not only convenient with services they provide to the customers but are also convenient with regards to the locations. Customers thus do not need to travel to the bank to withdraw some cash as long as they possess their cards. According to a review by Moysan & Paparoidamis (2016), the customers' satisfaction rate is high with ATM. However, Financial institution needs to do more because some clients complain that some ATM don did not allow them services such as depositing cash. The pie chart below is summary of the ATM effectiveness rate as extracted from data provided by Moysan & Paparoidamis (2016). It shows that though most customers rate ATM as effective, some have other opinions.
The current financial institutions are also adopting technology to make services more convenient for customers with an effort to improve on the customers’ experiences. The advanced technology was missing on the recipe of financial institution services in the older days. Mobile applications which make it easy to deposit money while at homes are dominating the market in the current banking institutions. The introduction of the smartphone has made it even easier for such institutions as they make it easy for them to access the online services which are provided by some of the financial institutions. The banks are also making use of numerous mobile phone applications. The mobile apps are convenient as they are specific and effective for the customers. The young people are custom to mobile usage, and this is the reason that is pushing most of the financial institutions to migrate most of their services to mobile applications.
Despite the shift, questions are still hovering about customers’ experience strategies in the banking industry, and how financial institutions are implementing changes to make customers comfortable. A section of research studies still argues that the customers' satisfaction rate in most of the banking institutions are still scoring low. The 2019 American Banker/Reputation Institute Survey of Bank Reputations revealed that public perceptions of top banks are slipping. According to the institution, the number of banks that earned an "excellent" reputation rating from its customers fell from six banks to two from the year 2018 to 2019. The 2019 American Banker/Reputation Institute Survey of Bank Reputations compilation, the noncustomers ranks shows a poor performance from most banks with none of them getting an excellent rank from the list. The image below shows the ranking from noncustomers’ viewpoint.
The New Findings
The Banks have adopted technology into their operations, and this is a credit. However, they have not tapped into the potentials that come with technology that can make the customers experience the best services. According to Sia, Soh & Weill (2016), the banks are still struggling to make use of digital tools to meet customers' expectations. The authors acknowledge that the present demographic system consists of people who prefer the use of the website and mobile applications for their scheduled banking transitions. Sia, Soh & Weill (2016) state, “In the UK, for example, consumers give an average Net Promoter Score® (a key metric of loyalty) of 35 to their routine transactions done digitally, higher than the 20 points for transactions done through employees at the branch or call center" (213). As much as the current financial institutions are making use of applications and websites for their customers, Sia, Soh & Weill (2016) believe that such applications and websites are still underachieving. They claim that refining such website and mobile application to be multifunctional, effective, and usable still presents a significant challenge to the banking institutions. Regarding this matter, Sharma (2018) also claims that customers are not rating such websites and application positively. In Sharma (2018) report, 45% of the UK customers assert that their primary bank application and websites are not automated, but let them do everything they need. The image below is reported by Research New Customer Loyalty in Retail Banking Survey, 2017 that justify the inadequate use of technology to fulfill the customers experience by UK and US banks.
They need to use a convenient and modern system such as voice assistants such as Siri, Alexa, or Google Assistant on their smartphones to make it easy for the customers during transactions. A few Banks in Australia, UK, and the US, are already using the voice automation; however, some banks are still relying on other alternatives approaches such as Chatbots which are good but not well developed (Sharma, 2018). Chatbots are critical, and most of the financial institutions from around the world, according to Quah, & Chua (2019), use them to improve the customers’ relationship and experience. The pia chart below is a compilation of the data from Quah & Chua (2019)which shows the number of banks that have adopted the Chatbots. From the pia chart, there are those institutions that have adopted Chatbots as an alternative form of interacting with the clients. However, others have not adopted this approach fully. Chabot allows for instant quires and feedbacks. It also enables the customers to the opportunity to interact with the banks through the use of technology as they make their routine transactions.
Quah & Chua (2019) also note that Chatbots are not efficient enough to facilitate a better customer relationship and increase customers' satisfaction. According to the report by the authors, Chatbots have some challenges which need rectification. For instance, Quah & Chua (2019) argue, “such problems may include the requirement for commands like ‘What's my payoff quote?’ for an auto loan.” It implies that banks can work better with such Chatbots if they can integrate voice automation such as Alexa which could allow the integration to take the form of a conversation rather than chatting. Such a strategy can make interaction precise, lively, and also productive and thus can increase customer loyalty and experiences.
The use of episodes is also another area where there is untapped potential to make customers experience increase by financial institutions worldwide. Episodes are typical activities that customers need to perform or fulfill. According to data from Singh, Ramasubramanian, & Shivam (2019), only 26% of the banks around the world have developed right customers’ episodes which can help boost their customers' experience and ratings. Singh, Ramasubramanian, & Shivam (2019) recommend the use of Agile episodes to make use of the episode to improve on the customers’ experience. According to the authors, Agile methods to help the banks arrive quickly at a minimum viable product. It further helps them gathering data to provide feedback from customers.
Another finding is on hidden defections. According to Elkhouty et al. (2015), financial institutions have many hidden defections which they need to correct to improve on the customer experiences. For instance, Elkhouty et al., (2015), claims that only a couple of financial institutions offers financial training and education to the clients. In the current world, financial challenges are pushing people to opt for financial loans which they use to cater to their needs. However, most financial institutions are ready to offer customers loans with limited education on how to plan for such loans to enable them to repay them with fewer difficulties. , Elkhouty et al., (2015) suggest that institutions that can adopt such a strategy can succeed because they will help the customers experience a feeling of togetherness, and these will increase their satisfaction.
Further, Elkhouty et al. (2015) note that banks are not directing the clients to make a purchase on different products or services they offer. In doing so, they create a situation where the customers either need to search for such services or products on the internet or purchase them from the competitors. According to the authors, purchasing additional banking products and services from other competitors takes place everywhere in the world with statistics hitting 25 to 45%. The authors present research from USA banks which show that 45% of the defectors did so after researching and purchasing additional banking services from other competitors. Some also claim that they saw such products from adverts of the competitors’ organization. In this case, the banks need to adopt “ask for sale” strategy that would act as a reminder to the customers in case they need additional services or products from the banks. It could be an excellent strategy to increase customers' experience.
Conclusion
In a recap, the current financial institutions have done well in improving and evolving with technology to increase customers satisfaction and experiences. However, research studies indicate that despite such efforts, there are still loopholes which the financial institutions need to adjust to increasing customers' experiences. The migration from face-to-face communication with tellers to automated banks services has improved the customers' interaction with the banks. Also, the introduction of sophisticated applications with well-designed websites has made it easy for customers to interact with the banks effectively. However, research studies also reveal that the same areas also have some critical issues which the banks must adjust well to achieve better customers’ experience scores.
References
Elkhouty, S. M., Ibrahim, M. M., ElFrargy, M. M., & Kotb, A. S. (2015). Measuring the effectiveness of banking risk-balanced scorecard in enhancing bank value. International Journal of Economics and Finance , 7 (6), 139-152.
Moysan, Y., &Paparoidamis, N. (2016). Can beacons be a source of inspiration for banks to increase sales and improve customer experience?. Journal of Digital Banking , 1 (1), 53-61.
Quah, J. T., & Chua, Y. W. (2019, June). Chatbot Assisted Marketing in the Financial Service Industry. In International Conference on Services Computing (pp. 107-114). Springer, Cham.
Rod, M., Ashill, N. J., & Gibbs, T. (2016). Customer perceptions of frontline employee service delivery: A study of Russian bank customer satisfaction and behavioral intentions. Journal of Retailing and Consumer Services , 30 , 212-221.
Sharma, Y. (2018). How Customer Analytics and Digital Technologies Drive Banks to Understand Consumer Awareness Towards Financial Inclusion. In Marketing Techniques for Financial Inclusion and Development (pp. 66-85). IGI Global.
Sia, S. K., Soh, C., & Weill, P. (2016). How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive , 15 (2).
Singh, A., Ramasubramanian, K., & Shivam, S. (2019). Building a Chatbot Solution. In Building an Enterprise Chatbot (pp. 55-69). Apress, Berkeley, CA.
Zeinalizadeh, N., Shojaie, A. A., & Shariatmadari, M. (2015). Modeling and analysis of bank customer satisfaction using a neural networks approach. International Journal of Bank Marketing , 33 (6), 717-732.
