BigTech companies like Amazon, Google, Facebook, and others have changed customer expectations forever. With the customer experience now at the forefront, consumers everywhere are looking for simplicity and personalization. Financial institutions are no exception. They have a difficult path to adapt to modern needs. Below I described exactly how BigTech is changing communication with the client, what technologies they use, and also described the path of technological growth for banks.
BigTech companies have set high standards for online interactions and are experts in using data to improve customer experience. As companies grow, they often strive to expand into new verticals. Revolut, for example, started as a money transfer service and is now a full-fledged bank and is still exploring additional financial services to add to its toolbox.
BigTech companies approach financial services from different angles, which cannot be said about traditional retail banks. Tech giants are leveraging the perspective of technology and BigData to create a human-centered approach to their services. This ensures smooth customer service and allows them to better manage risk by leveraging a deeper understanding of customer needs. Based on the data, they create new monetization opportunities.
Digital banking, for example, is becoming more popular and the pandemic has prompted more people to check their finances online while their local branch is unavailable. It is difficult to determine the exact number of users, but Statista estimates that around 1.9 billion people worldwide use digital banking services. Unsurprisingly, traditional banks today prioritize digitalization and see digital banking and customer experience as their top priorities. Improving customer service can increase revenue from 5% to 15%. This can be achieved through personalized recommendations and fast and digitized processes. By personalized services, I mean the provision of certain products at certain stages of life, such as a mortgage or saving for a child’s education. This requires ongoing communication with customers and the use of data, whether proprietary or third-party.
Traditional financial institutions are aware of this, and many are building partnerships to meet changing conditions. Danish investment bank Saxo Bank has partnered with Thoughtworks. Strategic partnership help Saxo build a data management platform to gain customer trust. These types of partnerships are becoming more common and customer service is becoming the next battleground for retail banks. Such a partnership can be traced in the Ukrainian market as well. For example, Kyivstar generates huge amounts of data — about the time of calls, movements, location, use of various services on the Internet, and so on. The company already has 70 partners in the BigData field, including banks.
To create a data-driven solution, retail banks can partner with FinTech or BigTech companies, or they can build one themselves. There is no right answer to which route to take. If technology is one of the competencies of the bank, then this is the reason to build a client-centered approach on its own. Perhaps traditional banks will become physically invisible and connected to ecosystems at the request of an individual client. Then financial institutions will be able to create a diverse and sustainable world.