Branching out: Why improving digital experiences is key to fending off challenger banks

When the pandemic hit, people quickly grew accustomed to carrying out a number of key tasks online, from grocery shopping to catching up with their friends and family. However, they were more enthusiastic about some areas of their lives turning digital than others, with research showing people want to return to physical bank branches post-Covid-19, rather than continue banking online. Rather than being the moment their investments in digital systems paid off, lockdown was a wake-up call that many banks do not yet have the finished article when it comes to online experience.

Consumers continue to report superior mobile and digital offerings from challenger banks like Monzo and Starling Bank, which use customer-centric mobile and online systems to make account holders’ lives easier. High street banks must address their own digital shortcomings if they continue to close branches. If not, their ability to service their customers will be limited, with account holders pushed towards digital-first challengers.

Big change can start small

Becoming more customer-centric does not need to involve a large amount of organisational buy-in and budgetary support. Instead, banks can ‘start small’ – focusing their efforts on adopting specific technologies to improve parts of the customer experience. This could be as simple as mapping customer journeys on mobile services so that the bank can understand and address pain points, or adding new services, such as real-time advice.

Adding value

The value of a digital offering is when customers are offered information or services beyond what they already know, or have received on existing channels. For instance, notifying a customer that they’ve just spent £5 in a coffee shop isn’t adding value at all. But if the service can recognise that the current account is nearly out of funds and offer to transfer money from a linked savings account or extend its overdraft, then the customer will truly benefit.

Nothing to fear

The good news for banks is that it’s not a case of needing to start from scratch; they already have a solid base of digital channels to build on to add more value for customers. The first step is consolidating customer data and channels so customers have a unified experience. Technology can then be used to put that data to practical use and ensure the relationship is two-way, benefitting both parties. This will enable banks to catch up with the challengers, build loyalty to keep hold of their customers and demonstrate the benefits of using largely online and mobile services over regular branch visits. One-way relationships typically don’t last long, and customers who don’t see their bank investing in their digital experience are likely to switch away.