Banks have to change because customers have changed

While the financial services industry grapples with digital transformation, there is another key change happening in the marketplace.

Of course, in our connected world, customers are demanding better tech, but they also want to feel that their bank understands their needs and aligns with their values.

Two recent surveys support the view that the banking industry has some work to do to stay ahead of disruptors.

Global consulting firm Forrester says that there are four themes that have emerged in the rapidly changing financial services landscape, which will be far more prevalent by 2025.

These themes will help address concerns about trust in the industry, customer expectations and regulatory influence.

• Invisible and autonomous: Having a prominent brand is set to become secondary to using tech and insights to insert financial services at the customer’s moment of need.
• Connected: Not just providing great technology but also ensuring a seamless link with human advisors. Branches will become ‘engagement centres.’
• Insights: Using customer data, banks will capitalize on their huge data mines to deliver tailored solutions. But customers will be cautious about how their data is used.
• Purpose: Customers will expect banks to align with their values, especially on ESG.

Financial wellbeing
A second report focuses on a group that has been hardest hit by the pandemic, 18-25 year olds.

Six in ten respondents to the survey by Mullenlowe Group found that customers want banks to help them build resilience to a financial shock.

Education is key for young adults with more than two thirds wanting to know more about money to help them find peace of mind, especially as 40% of 18-25 year olds said that thinking about money had a negative impact on their wellbeing.

This young cohort said that the digital experience is their top deciding factor when choosing a bank but there are other things they need:

• education on money management
• helping them keep on top of financial goals
• helping them save enough money to cope with the ups and downs of life

Young banking customers want to be rewarded by their banks for making better decisions with 56% favouring rewards for choosing ethical or sustainable options in their spending.

“Our findings are a wake-up call for digital innovation in banking relationships,” Howard Pull, head of digital transformation strategy at MullenLowe Profero, said. “With digital experience being the number one choice for selecting a bank, there’s a huge opportunity for banks to support individual wellbeing at scale by understanding and responding to our goals and anxieties to build better money habits.”