In past 2-3 years, many Retail Banks have accelerated their efforts to move from customer satisfaction & loyalty to customer empowerment.
With the advent of many digital first banks like mBank, Moven, Metro, Simple, Atom & Fidor Bank, consumer banking business landscape is being redefined fast. Customer acquisition costs of these banks are much less than traditional banks and they are more aggressive to realize revenues from customer lifetime value projections.
They follow their customers wherever they are and truly offer anytime anywhere banking. Their services are designed to ensure every customers interactions (even non-transactional) adds to customer stickiness to bank.
Additionally many new players have emerged in forex, online payments, mobile wallets & remittances space like Remitly, WorldRemit, TransferWise, Venmo, Google Wallet, Alipay, Facebook P2P Payments which have started impacting banks existing revenue streams & growth prospects.
Customers have now opportunity to experience these services and expect similar or better experience from their banks. Traditional retail banks earn their major revenues from one of these banking services and many of these will face decline as customers switch their loyalty or shift gravity center of their financial transactions to new players.
Traditional Retail Banks Revenue Streams
Checking and savings accounts (Service charges apply)
Deposits (Domestic & Foreign Currency)
Lending/ Mortgages (Home, Car Loans)
Credit Cards (Service charges apply)
Lines of credit (Personal Loans, Overdrafts Limits)
Forex, Payments and remittance services
I recently got to see Fidor Bank banking demo and was delightedly amazed to see how smartly they have integrated collective wisdom of community and collaborated with their customers to design new products.
Fidor Bank take their services wherever their customers are, be it Facebook, Twitter, Mobile Devices or Online Games. They created a banking operating system which allows them to create new applications in partnership with 3rd parties & partners. Developers Community is creating mobile payments, wallets and eWallets to integrate Fidor banking services into various eCommerce and Online games (be it Steam, Skype, Xbox One, PSP4) covering proximity and remote payment services.
Fidor Bank Account is a fully integrated universal account for multiple products, commodities, currencies including virtual gaming currencies and crypto currencies accessible from multiple channels at customer convenience.
Many traditional but smart banks have also started offering services to suit customer digital life style and giving them self-service power to do what they wish to do and when they wish to do. Kotak Mahindra Bank from India is another such example who are leveraging all channels to empower their customers (See more details here)
"All the data now tell me the highest levels of customer satisfaction are coming from those customers who self-serve", Anthony Thomson. Founder of Atom & Metro Bank, UK.
Focus of digital banking has been to not only expand the reach of Banks but more to empower existing customers to perform transactions at their convenience.
Online Banking, Mobile Banking, Mobile Wallets, e-Wallets, Mobile Payments, Payments via FB, email, SMS & Cash withdrawal using Mobile are just some of the ways of empowering banking customers. Digital Banking solutions must consider that “One size doesn’t fit all” and all solutions should be uniquely designed for target customers to deliver exceptional customer experience.
Banks using Digital Banking to engage & empower their customers will not only reduce customer acquisition costs but are more likely to realize revenues from customers lifetime value and sustain business growth.
Experts predictions of growing decline in Retail Banking revenues in next few years can be dismissed.
It’s possible with Customer Empowerment & Digital Banking!!!.