Martyn Wilson, Head of UK Financial Services Sector, at NetApp, shares his insights and expertise on digital transformation in the financial services sector.
The digital drum has well and truly been beaten over the past few years. As we all know, the constraints of the pandemic pushed many of us to leave our non-digital habits behind and convert to digital ways. Ever since, many of us haven't converted back.
However, while the digital favouritism within a lot of industries is growing in leaps and bounds, the financial services industry really isn't. Of course, we have online banking and chatbots which many consumers use for simple tasks. In fact, in the UK, 72% of customers prefer to access information and services via their banking provider's website, according to NetApp's recent research.
Yet, when it comes to the bigger banking decisions, there seems to be much more faith in banking services provided by humans than there is in the latest banking technologies. It's a clear explanation as to why banks remained open during the pandemic, and why they always had a queue of customers waiting outside no matter what time of day. For example, almost half (46%) of UK consumers say they still prefer to go into a bank's branch to access information and services.
In some ways it's good news for more traditional banks who have relied on having physical locations to service their customers when making big decisions. However, if we consider that online services are popular when it comes to the day-to-day banking of consumers, it's clear that there is an opportunity to lean into digital and earn the trust of consumers who are currently reluctant to do anything more than check their bank balance online.
Banking automation is falling short
Automation is a critical component of online banking because it creates efficiencies that enable consumers to receive the fast-paced service they've come to associate with digital. However, automation is also a key reason why online banking is falling short when it comes to making big decisions online.
For instance, customers don't feel they can rely fully on chatbots and robo-advisors for advisory or truly interactive advice. Despite the convenience online can offer, 46% of UK consumers say they prefer going to a branch because they don't regard chatbots as an adequate replacement for human contact.
These findings suggest that the use of automation needs to become much more nuanced to consumers' problems. Rather than an all or nothing approach, systems must smartly ascertain as and when automation is appropriate. Thrusting a chatbot at a confused or frustrated customer is only going to sever consumers' trust in online banking further.
Innovating better relationships
The distrust consumers have for online banking and its automation also leads to concerns surrounding personal data security, which does nothing to improve the relationship banks have with their customers. For example, 48% of UK consumers say that if they knew more about online banking safety, they would use digital banking.
There needs to be some innovation conducted surrounding current digital banking setups to ensure banks can lean into the convenience of digital while also reassuring consumers about their data security. And now really is the right time for banks to consider how they can do this because there is an evident appetite from consumers for better digital services, especially for when they're making life-changing financial decisions.
For example, 82% of UK consumers like the convenience of paying through third-party providers like PayPal and Apple Pay, but the majority (67%) are afraid that their personal account data might be stolen if they do.
Ultimately what needs to happen is two things. Firstly, banks need to consider investing in emerging technologies that provide smart digital banking for customers regardless of location. Secondly, they need to continue educating and reassuring consumers on the digital developments happening - because we must remember that these changes are new and can be scary, especially when they concern personal finances.
By innovating through two-pronged approach, banks are much more likely to satisfy the needs of their customers, compete against digital native brands, and solidifying a much stronger and trustworthy relationship with customers.