What does a customer-first bank look like?
The central message for the coming years must be a return to the customer – alongside all automation and digitalization efforts. Banks must prepare themselves for modern customer journeys. To be more precise, customer usage behavior has changed, and a branch is no longer the linchpin of its financial world. Instead, the Internet is now the first point of contact. This starts with Google, continues with portals such as CHECK24 and often ends with reviews of individual branches. This is where banks should understand that every customer journey is different – it differs according to target group and financial product. For example, when it comes to special promotions for opening a current account for young people, TikTok can be a relevant touchpoint. When it comes to retirement planning for the 40-plus generation, it’s a different story, a different journey.
Traditional banks must be able to quickly understand the lifestyles of their (new) customers and identify those areas where it is worthwhile to offer services and solutions. Two aspects are extremely important here: early involvement of the end customer in solution development, and the supportive use of technology and data.
Once the financial institutions have updated their customer journeys, what measures do they need to take?
In addition to changing their customer journeys, banks should strive for a customer-focused organization and use clear KPIs to drive innovation step by step – even in times of crisis. Customer-first banking stands for a radical but also fundamental change of perspective. The needs of the customer are the sole focus here. For traditional banks, this means that they must gradually dismantle their current organizational structures and establish interdisciplinary teams that are completely customer-oriented and that network with each other. In this way, human resources are used efficiently, and the best result for the customer is achieved.
How easy is such a change process to implement?
Changes are always easier in theory than in practice. Certainly the organizational structures of traditional banks have grown over the course of a number of years, which is why many employees and managers are simply not used to taking on new perspectives. But such a change process works with consistent employee empowerment by top management and through pioneering teams that demonstrate success in the new structure.
And why do you think banks should now focus on innovation?
In order to convince customers in the long term, banks have to react much faster to the increasing demands now than was the case in the past. In the best-case scenario, they should set new standards in banking solutions before fintechs and bigtechs do. However, this requires a completely new culture of innovation – and this is precisely where many banks in Germany are struggling. Not much money or attention is left for innovation, especially in times of the coronavirus and economic uncertainty. But to just blindly stop all thoughts of innovation – that would be fatal, and the wrong approach.
The important thing here is not to distribute the innovation budget in an undifferentiated way, but rather to support promising projects in a targeted manner. Because innovation often starts on a small scale, a structured approach with short, iterative sprints and clear KPIs is crucial – instead of long planning cycles with countless committee votes. And after just a few weeks, it becomes clear whether a bigger investment will pay off – or not.
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