The Top 5 Customer Experience Challenges for European Banks

Jon Laughland, Helpshift’s UK Sales Director, weighs in on how digital customer support solutions can help banks in Europe, and beyond, address key customer experience challenges.

A few years ago, opening a bank account or applying for a mortgage would involve a trip to your local bank manager. Now, consumers have a plethora of options, from fintechs like the UK-based Monzo and Revolut, to the German brand N26, and incumbents like Barclays, Lloyds, The Royal Bank of Scotland (RBS) and Santander. Even Apple and Google are entering the competition.

The rise of fintechs has changed the game for the banking, insurance and finance sector globally — with the European market proving ripe for disruption. The rulebook on what consumers expect from their bank is rapidly changing. 

This has given rise to several customer experience challenges facing the sector. Namely around changing customer expectations, the need to use data, and how to balance innovation and new technology investment with legislation. 

Keeping up with the challengers

New competitors are changing the customer value proposition to become more customer-centric and individualised. Incumbents are fighting back, by investing in new technology, acquiring start-ups, launching innovation hubs and, most importantly, re-assessing what their customers expect from them. 

Indeed, Barclays now brands itself as the “largest digital bank in the UK” and has established several programmes to increase digital literacy and tech adoption in the firm. It has also actively invested in up-and-coming fintechs. Alongside Santander InnoVentures, the venture capital arm of Spanish bank Santander, Barclays invested £26 million in the London-based fintech MarketInvoice. In doing so, it can benefit from the fintech’s specialist knowledge in invoice finance and innovative culture.

Many other incumbents have followed similar tactics — like Goldman Sachs recently partnering with Apple on a new credit card in the US, or RBS creating the online-only banking service, Bo. For good reason. Many challenger banks and other non-traditional competitors are now targeting the incumbents’ transactional accounts by offering low and no-cost banking to consumers. Estimates place around 40 percent of an incumbent’s core business at risk because of this — putting pressure on all financial institutions to improve quickly. 

A long term approach will see all organisations embrace different ways of delivering value to consumers, prioritising customer service and upgrading their infrastructure using digital tools. Those that fail to invest in the right technology are expected to take a 30 percent hit in revenue according to research by Citibank. The report also highlights the increased expectation for digital-first customer experience, as well as data that isn’t stuck in multiple silos and can be analysed to improve the customer experience further.

Additionally, the research finds that investing in technology like artificial intelligence (AI) and automation can reduce costs by 30 to 50 percent, as manual and time-consuming tasks are taken over by automation.

Meeting digital-first customer expectations

The rise of digital-only fintechs like Monzo has shown customers a new way of managing their finances. The entire industry has had to step-up to this expectation, by offering digital tools like apps to allow consumers to manage their bank accounts, apply for loans and communicate with support. At the same time, incumbent banks must fulfill the needs of many generations, some that aren’t digitally-savvy or online. There is a fine balancing act for incumbents to strike between embracing the future and not forgetting existing customer bases.

This has made for a dynamic industry landscape, with new players competing for market share against incumbents who are quickly re-inventing themselves — all prioritising the customer experience and trying to create a distinctive experience that can differentiate them in an increasingly crowded market. 

Beyond this, customers are demanding more from finance brands. EY recommends that all finance brands focus on the following:

• Building customer trust.
• Enhancing customer understanding of finance products.
• Rethinking customer engagement and distribution.
• Innovating the customer experience.

The emphasis must shift towards a value-driven relationship between brands and customers instead of a purely transactional one. The banking leaders of tomorrow will do so much more for customers than just securing their money.

Moving to a value-driven and more holistic relationship reduces the likelihood of a customer moving to a competitor. One clear way to achieve this is through improving customer service by reducing the steps customers must go through to get support, placing support in their preferred channels, and ensuring a quick resolution. Offering a more personalised service on a channel that suits each customer — including in-app support, online messaging, email and phone calls — is particularly important because three in four customers now interact with their bank predominantly online.

Addressing concerns about privacy

Moving operations online, however, also requires brands to ensure their cybersecurity is watertight. Consumer concerns about privacy and security are running high. However, despite a fall in consumer trust post-financial-crisis, it is now on the rise, with a third of consumers stating that they trust financial brands most in protecting their personal data compared to other business verticals. 52 percent trust their banks specifically to protect their data. This is in stark contrast to fintechs, where nine in ten consumers feel concerned about data sharing and security. 

The key to addressing these concerns is engaging in transparent dialogues with consumers. Providing a customer support function that can respond immediately to concerns and requests will do a lot to build trust. Likewise, any touchpoints must be optimised to build trust, reassure customers and strengthen the brand-customer relationship. People must trust their bank to safely manage their money as well as their data.

Improving the use of data 

That said, the effective use of data that offers customers value in return for its collection is paramount to building trust around data. 60 percent of consumers are happy to share their data with a finance brand in exchange for more relevant offers.

The finance sector is one of the most data-intensive industries, with ATM withdrawals, purchases, online payments and more, all collected during business-as-usual. Consumers now interact with their bank or insurer on more digital channels, so it’s possible to collect much more data about them compared to an in-branch visit. 

Brands would do well to use this data to improve the customer experience. Leveraging these data sets will improve consumer understanding and can inform a brand’s market offering, especially when combined with feedback data from the customer support team and social media data. 

Navigating regulations that hinder CX improvements

The entire sector has had to embrace digital forms of communication, alongside big data and emerging technology. However, regulations can hinder innovation and the finance sector is more heavily regulated than other industries. This limits the technology and trends that incumbents and fintechs can invest in. For example, in moving towards using digital currencies instead of remaining rooted in physical assets.

That said, fintechs have a headstart on their competition by being early adopters of technology like chatbots and automation. This is due, in part, to the fact that they don’t have legacy architecture or processes to contend with, providing a further competitive edge over incumbents.

Because of regulations, the banking sector has typically lagged behind others in transforming from legacy to digital systems. Now, it must rapidly catch-up to meet consumer expectations and to compete with challengers.

Paradoxically, digital solutions can also help with compliance. Containing communications to a single, secure messaging channel reduces the risk of personal information being leaked.  Many vendors of digital solutions also bake compliance directly into their products to complement the compliance solutions of their customers. 

Ultimately, a focus on building customer-facing digital solutions like mobile apps, mobile banking and chatbots will pay dividends in the long term — both in terms of consumer trust and in building a strong customer-centric reputation.

Optimising the full customer journey

The sum of these challenges points to a need for consumer banks to improve the customer experience. From customer onboarding to customer support, upselling and marketing, consumers are looking for better banking experiences which brands can offer through smart use of digital support technology.