It is expected that mobile banking will be more popular than visits in the next two years in a branch of a large bank. And while the banking sector is continuing its digital journey, Mark Grainger, Vice President, Europe at Engage Hub, says consumers are now expecting greater control over their data, greater convenience, and greater accessibility. " any time, anywhere. "
First mobile consumer
Up to now, most banks around the world have managed the mobile era in the same way, simply reducing their traditional bank accounts and placing them on a smartphone screen without offering real innovation or a real commitment.
But pouring millions of dollars into innovation clusters and piece-scanning strategies will not produce the kind of results that will appeal to those tempted by competing banks. Traditional banks need to move up a gear and use the valuable information they have to offer customers seamless interactions across multiple channels.
Meanwhile, banks need to understand that the digital banking revolution is more than a mobile application. It's about creating a complete experience. Not allowing a seamless multichannel customer experience to meet the growing expectations of customers has enormous implications. Today, consumers have more choices than ever before, thanks to the ramp-up of Fintech start-ups and exclusively digital banks, and they do not get the level of service they need. they expect, they will not hesitate to take their business. elsewhere.
Subscription Service Model
The use of a service model inspired by Amazon Prime or Netflix may seem strange to many retail banks, but competing banks are already experimenting. Would consumers pay a subscription to get the same service as Amazon and Netflix? The answer is yes.
Revolut is already at the vanguard of the subscription bank. The challenger offers a "freemium" model, which offers users a free UK current account and a free Euro IBAN account, free of charge in 24 currencies, up to £ 5,000 per month. Revolut also offers monthly subscription plans with higher thresholds at no extra cost, as well as instant access to crypto-currencies, cash back, travel insurance, insurance and more. 39; free health insurance abroad, access to airport lounges and priority assistance.
Research shows that in the United Kingdom, 57% of people would be willing to pay a monthly supplement for additional services provided by their banks. Most consumers – 45% – would like additional media services such as Netflix and Amazon, while 40% prefer cash back and 37% overdraft.
Given that currently 72% of clients do not pay monthly fees to their banks, it is fair to say that financial institutions have great potential to take advantage of these services and improve their game against the competition. banks and unconventional financial services.
Confidence and Value
In addition, traditional banks have an essential advantage over competing financial institutions, namely trust. Traditional banks have a much longer and apparently more robust security record.
The paradox is that many people trust their major financial services provider but do not trust the financial services industry in general. As a result, banks that want to convince their customers to adopt new models and pay a potential monthly fee must prove that they are committed to defending their customers.
One of the ways to achieve this is transparency. The financial services sector is still lagging behind other sectors in transparent policies, costs and customer data. This must change and they must show that they keep abreast of market trends and customer expectations.
Another crucial aspect that banks must keep in mind when it comes to monthly subscriptions is the added value that they would bring to customers. If they accept additional costs, consumers also expect additional benefits, not just the same benefits they were entitled to before. Without additional value added, it appears that banks are simply trying to earn extra money, thereby confirming the distrust of customers with financial institutions.
If they accept additional costs, consumers also expect additional benefits, not the same things that they had the usual to get free.
Bank of America, for example, learned this lesson the hard way when they wanted to charge their clients a $ 5 fee for using their debit cards for their purchases. The reaction was quick and strong and the bank had to cancel the plan within six weeks.
To avoid such situations, banks need to focus on the financial health of their customers and create personalized and holistic value propositions that will give them a competitive advantage and convince millennia that they can provide safe solutions and innovative to the complex challenges of life.
By understanding these strategies and taking into account the changing consumer buying patterns, financial institutions will be able to create new ways to generate recurring value for their customers and new ones. predictable sources of income.
However, to transform their approach to digital transformation and subscription models, banks will also need appropriate skills and capabilities.
A new CBI / TCS report highlights the rapidly growing digital talent gap in the UK as new technologies transform our way of life and work. Currently, the UK loses GBP 63 billion a year as companies struggle to find people with digital skills. The banking areas that are to be the focus of investment include the use of AI in establishing customer profiles, money laundering detection and the Improvement of customer services. All these investments require the implementation of emerging technologies and the provision of employees with the necessary skills to manage them. Banks will need to implement training programs, smart hiring strategies and strategic digital transformation programs to attract technical talent and implement a customer experience comparable to that of competing banks.
And if providing subscription services to their customers may require considerable resources and a significant shift in strategy and policy, engaging the new generation of digital customers first is paramount if traditional banks want to stay relevant and protect themselves from competing financial institutions. Leveraging this opportunity will provide a critical competitive advantage, inspire loyalty and inspire customers to feel valued.
Many industries have already adopted this system and are already reaping considerable benefits. It is high time that traditional banks also question the current status quo and take advantage of the benefits of a subscription model.