How can banks ensure their savings tech is fit to handle surging customer demand?

In today's world, where technology is seamlessly integrated into our everyday financial activities, the management of savings is primed for significant evolution. Platforms like Hargreaves Lansdown’s Active Savings, which allows customers to manage money across multiple banks and building societies from a single platform, are transforming the way savers interact with their funds. The main drivers behind these technological upgrades are choice and convenience, which have become top priorities for customers when evaluating new financial products. Notably, more than half (52%) of 25-34-year-olds prefer using challenger brands over traditional banks for managing their finances, as these brands often provide more tailored services.

Banks and building societies now face a pivotal decision: adapt digitally to thrive or remain stagnant and risk obsolescence. Now is the ideal time for these institutions to refine their digital infrastructure and enhance their offerings. This effort isn't just about keeping up but also about leveraging technology to handle high volumes of applications and deliver swift, customer-centric solutions that resonate with today’s savers.

Moving away from paper-based applications

We have reached a tipping point where digital application processes are no longer optional; they are a necessity for banks to remain relevant in an increasingly tech-savvy world. As the demographic of “digital natives” grows, the expectation for a seamless online experience in financial transactions has become the norm. Although many banks and building societies have expanded their digital offerings in recent years, a significant portion of these efforts fall short during the critical moments of account opening. Astonishingly, 50% of digital applications in the UK are abandoned, with the requirement to submit physical documents for identity verification being cited as a key reason.

To address this bottleneck, banks must embrace technologies that provide a truly digital experience rather than a pseudo one. By integrating solutions that allow for biometric verification and leveraging Open Banking for fund transfers, institutions can eliminate the friction associated with rigorous KYC (Know Your Customer) processes. These advancements not only improve the efficiency of application processing but also align with the modern customer’s expectations for convenience and speed. This strategic move towards digital fluency in the application process is essential for banks aiming to reduce drop-off rates and capitalise on the growing pool of tech-savvy savers.

API-driven benefits

Adopting API-driven services open up new opportunities for banks and building societies to enhance their visibility and appeal, especially during high-demand periods like the ISA season. APIs serve as the backbone for a symbiotic relationship with aggregators - platforms that consolidate the best financial deals and enable savers to explore a wide range of savings accounts under a single umbrella. However, many institutions remain disconnected from these valuable channels due to outdated onboarding processes. This gap not only limits their market reach but also weakens their competitive edge in an environment where accessibility and visibility are paramount.

Moreover, the integration of APIs goes beyond visibility, facilitating a smoother and more secure onboarding journey through automated ID checks and fraud prevention tools. Banks that leverage advanced technologies like RiskNarrative from LexisNexis, which offers a no-code solution for building analytics-based onboarding, can significantly streamline their customer acquisition process and enhance conversion rates. Such technology can also play a vital role in customer retention: features like mobile banking apps and self-service portals empower savers to manage their accounts independently, fostering a sense of autonomy and control. This holistic approach to digital banking, from acquisition to long-term retention, highlights the critical role of API-driven services in modernising the banking experience.

Looking ahead

The journey toward digital transformation in the banking sector is marked by both progress and potential. While many banks and building societies have made strides in incorporating digital processes for onboarding savers, significant gaps remain, particularly with intensive paper processes and complex onboarding channels. By embracing API-driven services, Open Banking, and the integration of cutting-edge technology, banks can streamline operations, enhance customer satisfaction, and solidify their position in a crowded market. This strategic pivot is essential for institutions aiming to attract and retain a modern, savvy customer base, ensuring their relevance and success in the digital age.