Why Banks Should Scrap Their Digital Strategy

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The last thing banks need when they pursue a digital transformation is a digital strategy.

Not too many banks get this right. Rather than create a digital strategy, companies instead need one cohesive enterprise strategy for how to be the best in serving their clients’ needs.

Setting up distinct channel strategies, or a digital strategy that runs outside of your bank strategy, only generates a bunch of disparate go-to-market ideas. That siloed approach puts your bank on a road to failure by generating and instigating conflicts, as teams vie for differentiated levels of support and resources to strengthen now-competing channels.

Instead of standing on its own, digital should shape and drive your single banking strategy. You are striving for integrated omnichannel delivery, which will translate into the best experience no matter how customers engage with you. Even if you want customers to handle the overwhelming percentage of their banking online, many will continue to walk into branches, particularly for complex transactions like mortgage applications, and call you with questions.

Granted, safer-at-home guidance in response to the coronavirus pushed digital adoption forward, more by necessity than desire. In July, nearly five months after the pandemic started, 91% of consumers conducted banking online, mostly to deposit checks or review account balances. Even more striking: 40% of consumers reported using their bank’s mobile app more often. But bankers shouldn’t take these adjustments for granted or consider them permanent.

Customers don’t care that different teams manage your digital, branch and telephone channels. They want to trust you to meet them wherever they are, and not have to explain who they are and what they want every time they interact with your bank. Digital allows you to walk that fine line with insights to follow their electronic footprints to specific products that match their financial needs.

Digital Is a Tool, Not a Product
This is so important that I need to repeat it: Digital is a tool, not a product.

I already know some folks are saying, “But, yes, it is. We produced a mobile app.” That’s not the same. You created that app for its own purpose. It also needs to be connected to something else — your banking systems — and deliver a real solution.

Granted, your bank needs digital visionaries who can envision powerful, engaging capabilities and stay ahead of customers. But these leaders must start with your banking strategy and weave their innovative ideas into that bedrock. Your team should be constantly stepping up its capabilities and services, and positioning them in a near-linear fashion alongside the customer journey so that customers can get what they want, when they need it.

And while you should never have a distinct digital strategy, you do need a dedicated team to monitor and track performance in this channel and identify new customer needs and opportunities. This is the essence of digital transformation, as you continue iterating your offerings and migrating more customers and transactions into your digital channel.

Changing the Internal Mindset
Digital transformation is about changing who you are as a bank and bringing that to your customers. The starting point is always your enterprise strategy, which anchors your value propositions on how you serve customers and your role in the community.

Every bank associate will have a role in achieving the future vision defined in that strategy. Be clear on how digital connects to your bank strategy and communicate expectations so that everyone from the call center team to the C-suite understands where they fit in. Even as your bank inches forward, it remains on a treadmill: continuing to advance to stronger performance that outpaces the competition but never crossing the finish line.

As you develop your bank’s enterprise strategy, establish and monitor metrics upfront to gauge success and maturity, including in the digital channel. Some metrics to consider include improved efficiency, the amount of customers adopting digital behaviors and successfully escalating the right transactions in your digital channel.

Be sure to measure progress in three dimensions: Are you getting more efficient as customers migrate to higher digital usage? Are you freeing up funds to invest in other initiatives? And are you maintaining the customer experience that defines your bank?

Because if you lose that in the long run, you’re going to lose your customers.

Fix Your Leaky Onboarding Funnel

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onboarding-1-16-19.pngCustomer acquisition is top of mind for most banks and their boards.

This usually translates into new, slick marketing campaigns. These campaigns mean enlisting your advertising agency to cut through the clutter, which is increasingly difficult to do. Or you could look to mine more near-term customers right from your own website and the online account opening process.

More and more banks are onboarding new customers by enrolling them through their website. This process is rife with opportunity. According to The Financial Brand, 40 percent of online bank account applications were abandoned due to a long or complicated enrollment process.

Think about that. Only six out of 10 prospects who arrive at your site—with the intention of creating a bank account—complete the journey. That’s tragic. It makes more sense to fix that leaky funnel than to spend big on another advertising campaign in the hopes of driving significantly more website or branch traffic.

We know that there are a few places in the online account creation process where banks fall down. Let’s dissect some of these pitfalls.

Identity verification. Thanks to Know Your Customer and anti-money-laundering regulations, banks and credit unions need to impose more rigor to ensure the person creating the account is genuinely that person. Thanks to a steady barrage of data breaches and advanced malware, traditional methods of authentication, such as knowledge-based authentication and two-factor authentication, are no longer in vogue. Increasingly, banks are turning to online identity-verification solutions that require a government-issued ID and a selfie to more reliably verify digital prospects. These solutions can be pretty fast and are capable of completing the online verification process within a minute.

Simple messaging. Banks that provide simple, clear instructions, written in plain English, experience much higher conversion rates. This includes providing a clear rationale for why you’re asking online customers for their ID documents and selfie, and what you intend to do with that information.

Fewer screens. Obviously, the more hurdles you put in front of your customers, the less likely they will make it all the way through the account-opening process. So, if you can reduce the number of screens to identify a new customer from seven to four, that will have a material impact on conversion rates.

Go omnichannel. When it comes to establishing identity online, you want to open up the experience to as many channels as possible. Many identity verification solutions only offer a mobile experience, not allowing potential customers to use their webcams on their laptops or desktop computers. By disabling this channel, you’re eliminating a large swath of potential customers who either don’t have a smartphone or would prefer to complete the process from their laptop.
Being omnichannel also means supporting API-based mobile web and native mobile implementations. For companies looking to cast the widest possible customer acquisition net, including some older generations who may not be comfortable with newer technology, it just makes sense for your identity-verification solution to offer the broadest number of channels to your prospective customers.

No more maybes. Another cause of online abandonment are the longer wait caused by manual reviews. Several online identity-verification solution providers return a “caution” decision when they can’t easily confirm that the customer is who they claim to be.

Every “caution” or “maybe” requires manual review by a team of analysts. There are real costs to manual review. Jumio offers an online calculator to illustrate these expenses. These are real costs to your business, and they create real frustration for your customers.

So, if customer acquisition is job No. 1 for 2019, maybe it’s time to fix your sales funnel and plug the leaks with an efficient onboarding experience—one that optimizes and simplifies the identity-verification experience.

You can do the math. Spend big on advertising with iffy results. Or, create a great online experience that is designed for conversion. You’ll end up with happier customers—and a lot more of them.

What Bankers Should Know About Conversational AI in 2019

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omnichannel-12-21-18.pngWe’ve come a long way since filmgoers watched nervously as the computer “Hal” struck out on his own with the bland yet threatening response, “I’m sorry Dave, I’m afraid I can’t do that,” in Stanley Kubrick’s “2001: A Space Odyssey.”

Today, humans are comfortable interacting with machines. Twenty-five percent of customer service and support operations will integrate virtual customer assistant (VCA) or chatbot technology by 2020, up from less than 2 percent in 2017, according to Gartner, Inc. And in some cases, consumers seem to prefer machines to humans. Therapy bots like Woebot are successful in part because users don’t experience the fear of judgment that may exist speaking with another human.

The technology that enables machine-to-human interactions is known as conversational AI. It powers virtual assistants across apps, websites, messaging and smart speakers. In 2018, we saw virtual assistants take off in banking – finding their way into the apps and websites of the world’s largest banks. Pilots turned into production, and virtual assistants started engaging with real consumers at scale.

This technology is a growth engine for banks by servicing customers more efficiently, engaging customers to boost brand loyalty and acquiring customers to increase their lifetime value. But all conversational AI solutions are not the same.

Here are three key trends for banks implementing conversational AI in 2019.

Think omnichannel, not multichannel
Consumers’ expectations for banking are evolving from siloed multichannel experiences to deeply personalized omnichannel experiences. They expect the experience with their bank to be consistent and informed, no matter which channel they interact on, and they expect to move smoothly between channels. Banks implementing conversational AI should support “channel traveling” and never lose sight of who the customer is – not just their unique ID, but their preferences, history and more.

Make sure your solution supports sophisticated customer journeys and hand-offs between channels. Your customer should be able to start a conversation with your virtual assistant on Amazon Alexa, and the virtual assistant should be smart enough to follow up with more related details in the mobile app. The virtual assistant knows the optimal interaction model for each channel and generates the right response for the channel of choice.

Conversations that explain “why”
By now, consumers are accustomed to automated assistants that respond to them. A virtual assistant that answers questions has become table stakes. In 2019 and beyond, we’ll see consumers gravitate toward services that can give them answers to questions and explain their finances. People will come to expect answers to “why” in addition to “what.”

For example, customers will want to know their balance, but also why it is lower than expected. Or, they may ask if they can afford a vacation now, and if they could still afford it in six months. They’ll want to know their FICO score, and why it is lower than last year.

Banking customers already know chatbots can give their balance and move their money. In 2019, their expectation will be that conversational AI will do more to help manage their money with context and insights.

The era of available data is here
After years of waiting for banking data to be available, the future is finally here. Inspired by regulations such as PSD2, or the Payment Services Directive, in the European Union, large banks around the world are adopting open banking standards and launching modern developer portals that enable a new world of banking services. This is good for conversational AI, because its real value comes from personalized, actionable experiences—experiences that require data and services. With financial institutions such as Wells Fargo, Citi, Mastercard and Standard Chartered streamlining access to APIs, building meaningful conversational experiences and integrating them with the banks’ other services will be much easier and faster.

In 2018, we’ve seen conversational AI is here to stay, and in 2019, we need to make virtual assistants do more than respond to FAQs and complete simple tasks. Banks implementing conversational AI should remember consumer expectations are growing every year. To meet those expectations, leverage the abundance of available data via APIs to create omnichannel customer journeys that can understand your customers and explain the context to them.