With digitization, traditional banking services have totally changed.
Banking services are now delivered over the internet, using high level of process automation, through various devices, which results in faster, easier and more convenient access to banking services.
Digital banking is quite simply the moving online of all the traditional banking services. Activities that formerly required the customer to physically visit their branch and to spend face-to-face time with a bank employee inside the bank branch building are available on internet.
With digitization, that has totally changed. Banking services are now delivered over the internet, using high levels of process automation, through various devices, desktop computers, mobile phones and the ATMs that provide faster, easier and more convenient access to banking services.
The banking industry may have appeared slow to catch onto the benefits of web-based services in the beginning, but they are now fully committed and aware of the advantages:
- Digital banking provides the banks with methods for improving business efficiency, increasing accuracy, simplifying the verification process, increasing agility especially with risk management software, that can spot trends faster and more accurately than humans, and enhancing security.
- Digitization also provides the banks with a method to improve competitiveness, through digital marketing campaigns aimed principally to detect customer preferences and needs, but also to provide rewards for loyalty and satisfaction. And, however the banks like to play down cost savings, these are present in large measures, from replacing human labour with automated applications, to eliminating paperwork and reducing office space, energy costs, storage costs and maintenance costs.
- Digital platforms reduce costs even further through the synergies of more qualitative data and faster responses to market changes.
In the final analysis, it is not the number of digital services but the quality of those services which impacts the customer. Most recent studies seek to establish how satisfied customers are with the services.
Consistently, customer satisfaction is directly related to a limited number of variables, namely:
- responsive user-friendly websites,
- system availability,
- respect for privacy,
- contactability and
- the relevance of marketing campaigns to the individual.
These are all exogenous variables, i.e. they can be analyzed and measured. More importantly, they can be adjusted and changed. The JIBC (Journal of Internet Banking and Commerce) 2017 study, makes a direct correlation between an across-the-board quality of all the services offered by a banking institution and its customer satisfaction.
But how does one measure an endogenous variable like satisfaction, especially when as it is such an important factor to allow banks to sustain their competitive advantage?
- Digital programs establish internal systems that monitor and adapt banking services in real-time, as a time in response to a constant analysis of customer online behaviour, allowing the banks to capitalise on, and get ahead of, the rapid changes in banking use, to target their customers more effectively with specific services, to tailor systems and services to individual needs and to improve profitability.
- The permanent analysis is compared with available data from other sources.
- The resulting information allows the banks to study, understand and have empathy with customer behaviour and, by extension, to establish services adapted to their clients’ personalized needs. It makes banking services more helpful and easy to use –literally, user-friendly.
- This, in turn, allows the banks to internally monitor the functionality and profitability of each service and to digitally make adjustments immediately, when they are needed.
In addition to internally generated digital marketing campaigns, banks are facing stiff competition, especially for millennial clients, from FinTech start-ups, financial technology services that use computer systems that facilitate banking and financial services. This is forcing the banks to innovate, to create or commission back-end modernization programs, through which the banks seek to improve and maintain the quality of their overall goals in digital banking and especially that of heightening customer satisfaction.
If you want to lear more about leveraging technology to reach Millennials & Gen Z consumers, we invite you to download our last free webinar.