Study recommends banks develop data-centric capabilities

According to the 2022 Retail Banking Report (WRBR), published on April 21 by capgemini Y EfmaRetail banking is currently at a disadvantage when it comes to delivering true omnichannel experiences, as customers gravitate toward competitors that offer more personalized experiences. 75% of surveyed customers are attracted by the profitable and ongoing services of FinTechs, which significantly increases their expectations of digital banking. However, traditional banks are struggling to meet them, as 70% of bank executives are concerned they don’t have enough data analytics capabilities. So now that customers can switch providers at the touch of a screen, it’s critical that banks better leverage data and Artificial Intelligence (AI) to tailor the experience, create stronger connections and maximize customer value.

The recent rise of FinTechs in the sector has caused a paradigm shift in what consumers now expect from their banking experience, challenging the revenue and relevance of many traditional providers. In the report’s “Voice of the Customer” survey, nearly 75% of respondents say they are attracted to these agile new entrants because they offer fast, easy-to-use products and experiences that are readily available, as well as because the fact that they are low cost. On the other hand, nearly half of those surveyed say their current banking relationships are neither rewarding (49%) nor emotionally connected (48%). 52% point out that dealing with issues related to banking is not pleasant. The report says that to keep pace with these competitors, retail banking will have to rethink its business models and focus on driving greater customer engagement.

Customers want rewarding and engaging experiences that are easy and accessible

With improved data governance models, banks can collect proprietary customer information to improve the competitiveness of their digital marketing capabilities. Combining this with AI and machine learning (machine learning) It will open up new possibilities to identify, retain and engage customers with real-time experiences. However, many of these benefits are lost to traditional banks that currently lack the capabilities to process the enormous volume of customer data. In the report’s executive survey, 95% of top global banking executives say legacy systems and outdated core banking platforms inhibit efforts to optimize data and customer-centric growth strategies, while 70% % acknowledge that they lack the resources to process and analyze the data.

“The growth formula seems simple. Customers want to be offered personalized experiences, regardless of where they are on their own digital journey. The challenge, however, remains in the execution»says Nilesh Vaidya, Global Head of the Retail Banking and Wealth Management Sector of Capgemini’s Financial Services Strategic Business Unit. “Retail banking must rethink its broader business models, restructuring itself to focus on achieving the same degree of satisfaction in the different phases of the customer experience, thanks to personalized services capable of guaranteeing the lifestyle that customers seek in their digital interactions. If the disparity and striking inconsistency between a customer’s digital and physical banking experiences are not addressed, traditional banks risk losing customer value to their more nimble FinTech counterparts.”

Banks must leverage platform-based models to optimize growth

According to the survey, more than 70% of banking executives indicate that traditional banks lack data and analytics capabilities. As traditional banks race to keep pace with nimble FinTechs, many providers are combining traditional offerings with non-financial lifestyle products. Others offer Banking as a Service (BaaS) and integrated banking solutions through non-financial third-party ecosystems. Platform models can help collect data for personalization, so they are well positioned to mine data ecosystems and gain real-time insights.

However, although platform-based models are not new to banks, many banks continue to struggle with execution. In the executive survey, 78% of respondents are concerned about product destruction at the hands of ecosystem partners, and 72% are concerned that their brand could disappear. The report concludes that challenges remain to deliver the omnichannel, personalized experiences and ecosystem journeys that customers want, which will depend on adopting new technologies and breaking down internal silos.

“To thrive in this highly competitive environment where digital native FinTechs continue to capture an increasing amount of market value, we are seeing retail banking finally adopt innovative technologies and platform-based models to optimize this data-driven growth,” says John Berry, CEO of Efma. “Although this has evolved within the digital channels of many of these incumbents, customers continue to expect branches to be hubs of experience, full of self-service options and financial advice. By strengthening their ability to collect and analyze data, providers can identify what customers want, which ultimately is a consistent omnichannel banking experience.”

Bank marketing directors must be positioned as customer strategists and Chief Engagement Officers to deliver a true omnichannel experience

As they rise to the data- and technology-driven challenge of strengthening customer relationships and personalizing their banking experiences, CMOs must step up and play a critical role in this evolution. According to the survey, 75% of CMOs in the global banking industry say they have direct responsibility for brand building (25% say it’s a shared responsibility with other C-suite executives), and 63% for new product development and launch, demonstrating that these leaders are expected to focus on the customer lifecycle and manage every facet of their customer relationship. Yet many of these CMOs are ill-equipped to guide the transition from product-centric to customer-centric marketing, according to the report, in large part because the data required to carry out these customer-centric strategies they are sparse, siled, and focus only on internal data, ignoring external data sources.

For example, only 22% of CMOs admit that they directly manage end-to-end customer experiences or have access to the comprehensive customer profiles needed to effectively tailor their product or service. However, by using this critical data, CMOs can deliver a true omnichannel experience by anticipating customer needs and creating personalized offers. To achieve this, CMOs will need to follow the lead of fintech companies in crafting targeted content, enhancing the banking experience with continuous process improvements, and establishing an effective data-driven value chain that prioritizes engagement over long term relationships. In this way, retail banking will be able to create, realize and capture lasting value for the customer.