Modern banking – a client-centric future for banks

07.11.2019 – Adrian Berger

Modern banking – a client-centric future for banks


Expert article for the Fintech & Insurtech Special of Netzwoche from 6 November 2019

Will the modern bank of tomorrow be purely digital, or will branches and advisors still have a role to play? How can customer retention and loyalty be assured? How have new fintechs offering traditional services, such as account management and payments, managed to create online forums that attract 15,000 user posts in a month?

The buzz-term “customer centricity” – i.e. a focus on the customer rather than on the product – is often used to explain such phenomena. The value chain is specifically set up to begin with the customer, whose expectations, needs and desires are the starting point for all decision-making. When properly implemented, customer centricity is far more than a marketing strategy. In a best-case scenario, it is a holistic approach that defines the vision, culture and strategy of a company, seamlessly encompassing every department and employee.

In order to cover its customers’ needs comprehensively, the company must be smoothly integrated into its customers’ day-to-day lives and services must be on tap 24/7. For many customers, especially the younger generations, digital living has become a reality and decision-making about purchases has progressed accordingly as people move away from routine acquisitions to spontaneous impulse buys. The “moment of sale” can come at any time – in a queue, on a bus, or at home. The questions raised by Generations Y and Z are entirely reasonable: why go to the trouble of using traditional channels when the same service can be accessed more quickly from the comfort of your living room? A consistent multi-channel strategy is, thus, required for all services provided. The customer must be able to access the company at any time to complete a given interaction – and the same is true vice versa.

Adrian Berger, Ergon

“Trust in the banks is the key to sustainable customer success.”

Adrian Berger Managing Director Finance & Telecom Solutions, Ergon

“The customer is king” is a familiar motto, so what’s new in the digital era? Today, it’s all about ubiquity and the need for end-to-end professionalism in user interactions. The customer is not only king at the bank counter but on every channel, anytime, anywhere – simplicity, flexibility and effectiveness are what really count.

When configuring services, the following parameters are critical to success and achieving the desired positive “image” in the minds of users:

  • Speed: nowadays, users expect services to be performed as quickly as possible – ideally instantly. Why on earth should it take several days to complete a payment? The significance of this aspect is borne out by the success of fintechs that have reduced their onboarding process down to 15 minutes; registration operates entirely automatically, with no human interaction and no papers to sign. Speed of communication between customer and bank is also a decisive factor – rapid support and agile responses to questions engender trust in service provision.
  • Transparency & honesty: customers expect a clear presentation of all relevant information – pricing must be explicit from the outset and should contain no hidden costs. If information relevant to decision-making is hard to find the customer will move on in seconds and the slightest feeling of not being taken seriously will immediately result in loss of interest. This does not mean that everything should be handed over free of charge. On the contrary, modern customers have always been ready to pay for something of worth and this added value must be communicated transparently.
  • User-friendliness: the design of the user interaction must focus uncompromisingly on simplicity, security and effectiveness, allowing the bank to create added value for new and existing customers. Accessing services must be a positive experience. This can be successfully achieved only when the customer journey and user experience have been tailored to the customer’s core needs.

The power of the community must be harnessed

Positive experiences result in satisfied customers and satisfied customers are the quickest route to finding new customers – they actively recommend services or products to their peers, compare notes online in discussions forums and give positive feedback on digital channels and social media. These are often perceived as sound and trustworthy first-hand recommendations, which are like gold dust to companies.

Customers have, thus, recently morphed into “sales advisors” that companies are keen to identify and mobilise – think “customer empowerment”. The secret to success here is the company’s readiness to adapt continually to its clientele’s needs. An obvious and old-fashioned approach? Amazingly, it is often overlooked, especially in a digital world undergoing rapid change. Customers can play an active role in decision-making, through feedback and recommendations of individual offers, and they may even be able to actively influence the success or failure of a company.

Fintechs make use of close customer communication via forums as an important component of their business models, placing the future development of the firm, as it were, in the hands of their clients: “We let our customers build our bank.” Development plans are forged with the maximum transparency and users are allowed their say, which may involve submitting new proposals, voting on new features, etc. As a result, customers feel that their voice is being heard and that they are taken seriously and respected. This, in turn, reinforces trust and loyalty and, in a best-case scenario, binds them to the firm for the long term.

Loyalty is key to retaining customers over the longer term. This might seem difficult to achieve with the younger generation, a cohort of customers that typically makes decisions opportunistically, but modern banking can help here: institutions that catch the eye with an impressive, authentic and satisfying range of services will create not only loyal users but also motivated ambassadors.

A business model in flux

While fintechs have undeniably modernised and galvanised a listless, inward-looking industry, there is still no clarity about what will replace the existing business model, which has persisted, relatively unchallenged, since the dawn of modern banking. What is clear is that, now more than ever, the key to sustainable customer success is trust in the banks. Switzerland certainly has a long and strong track record here and its professionalism on this front still gives the country’s banks an edge over newcomers to the market. However, banking cannot simply rest on its laurels – it will have to translate these values into a viable future. Trust in banks is also closely associated with security; both digital and monetary. IT security should be cutting-edge, yet simultaneously unnoticeable. Ultimately, future banks’ commercial raison d'être will remain the secure and intelligent management/custody of assets.

Initiatives such as open banking and open interfaces (APIs), aided by third-party service providers and a partner ecosystem, give banks optimal scope to accommodate customers’ ever-growing expectations and requirements. They enable easy access to innovative and customer-centric services and may ultimately result in new revenue streams. A modern bank will therefore require a business model that consistently prioritises agility and adaptability.

What future do bricks-and-mortar bank branches have in an increasingly digital world? Proximity to clients will remain of primary importance to locally based banks, as they impart trust and credibility. Personal contact when dealing with weighty issues such as buying a house or dispensing complex financial advice has always generated added value for customers. Where a top-quality service is provided, customers are happy to pay an appropriate price. In a nutshell, modern banking must be as customer-centric as possible and this will mean striking the right balance between physical and digital proximity.

This article was written by Adrian Berger, Managing Director Finance & Telecom Solutions, Ergon Informatik.