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Differentiation in the digital era: How banks can create digital experiences that stand out from the competition
In the era of digital banking, financial services institutions face heightened competition to attract and retain customers. And with numerous digital products and services on the market, it’s harder than ever for banks to set themselves apart from the pack.
It’s a challenge I hear often from our customers. In fact, our research shows that nearly 80% of digital banking functions are virtually the same — leaving just 20% for banks to differentiate their brand. This may not appear to leave much room for distinction, but it’s actually an opportunity hiding in plain sight.
Banks that recognize key areas for innovation can better tailor digital transformation and focus on building truly unique, engaging experiences for their customers. Are you ready for digital differentiation that actually makes a difference?
Digital competition is heating up
The vast majority of people now prefer digital banking, with two-thirds of customers interacting with their bank via digital channels on a weekly basis.
Banks must not only meet customer needs in the moment but sustain engagement and cultivate strong relationships over time. And they’re not just competing with others in the financial services sector on the product level, they are competing on the experience level too with the entire market of digital brands as pioneers like Google, Netflix, and Spotify set a new bar for engaging digital experiences.
However, many banks struggle to maintain consistent, cohesive experiences across user channels. That’s a major problem given that 70% of consumers consider consistent cross-channel experiences to be very important when choosing their primary bank.
The explosion of digital touchpoints hasn’t made this any easier. Today banks face a series of intertwined (and sometimes conflicting) priorities. Consider the challenges of building a strong digital presence.
To start, every interaction needs to be optimized and tailored for each channel. For instance, the way customers use social media versus a mobile app is vastly different. A website may provide engaging content, resources, and FAQs for customers, while a mobile app can provide quick and convenient access to account information and transactions on the go.
Each channel also needs to offer consistent digital experiences For example, if a bank’s website allows users to transfer funds between accounts, pay bills, and check account balances, then their mobile app or online banking portal should provide these same features.
Banks must also ensure digital experiences are cohesive and integrated with the overall customer experience. Given that customers often blend digital banking with in-person experiences, banks need to provide seamless interactions no matter where they occur. For example, if a customer initiates a transaction online, they should be able to complete it in person, at a branch, or over the phone with a customer service representative.
Although 80% of customers are satisfied with their digital banking experiences, more than two-thirds are more likely to switch banks today than in the past. Of that group, four in 10 say that better digital features would be the motivator. With increased pressure to keep customers coming back — and greater competition to attract new ones — every digital interaction is now a make-or-break moment.
Getting more bang for your buck on innovation
With tight IT budgets and a long list of priorities, banks need a digital transformation strategy that differentiates them from competitors without breaking the bank (pun intended).
As you consider where to invest and innovate, here are five questions to help clarify the focus of your digital initiatives.
1. Who are your customers?
A robust digital strategy involves a solid understanding of your customer base, their unique needs, and how your brand can serve them better than any of your competitors. For example, if you’re a family-focused bank, your digital products and services will look far different from a neo-bank focusing on tech-savvy millennials.
Learn more about your customers through surveys, focus groups, and customer behavior data. Then, use these insights to design your digital strategy, make necessary adjustments, and continuously refine your products and services. By putting customer insights front and center, you can ensure digital experiences match your target customers’ needs, remain relevant over time, and provide lasting value.
2. Where do you want to go?
It makes little sense to innovate for the sake of innovation alone. Every digital initiative should help you achieve a clear business goal by delivering tangible value and contributing to your organization’s overall vision. A strong product roadmap will ensure you stay on track.
Consider the technology you already have on hand and whether it can bring your desired features and functions to fruition. How does that match up with your budget constraints, customer needs, and overarching business goals? These considerations are key to creating a roadmap that strikes the right balance between viability, feasibility, and profitability.
3. How can third-party experts help?
It takes a lot of resources to develop digital products yourself — and most organizations simply don’t have the budget (or the time) to build every new feature or function in-house. Fortunately, banks can create most offerings using third-party software vendors and out-of-the-box capabilities.
Relying on a third party for basic functions — such as mobile deposit systems, chatbots and virtual assistants, and digital wallets — enables long-term cost benefits, greater efficiency, and crucial expertise. By letting others handle the fundamentals, you ease the burden on your internal development team and free up more of your digital transformation budget.
4. What technology is most important?
With a clear understanding of your customers, a roadmap for product development, and fundamental digital features in place, now you can focus on refining your digital products and differentiating customer experiences.
Start by scanning the market to identify must-have functions, such as automatic account alerts, peer-to-peer payments, and e-statements. Next, identify the areas where your competitors are excelling and consider how you might match them. Finally, identify the capabilities that will set you apart from others — and what tools and solutions are most relevant For example, you might embed conversational AI to help onboard new customers or create gamified programs that encourage customers to save money.
5. Why is innovation a continual process?
There’s no silver bullet to digital transformation — and no single feature will fully differentiate you from every competitor. Think about digital experience from a holistic perspective and consider how every digital touchpoint plays an important part in the overall customer journey.
True differentiation is the result of continuous improvement, ongoing adjustment, and constant innovation — as well as a workplace and culture that values these efforts. Every company has its own digital transformation journey, but whether you’re a FinTech startup, behemoth retail bank, or local credit union, you need to invest in unique, personalized digital experiences that keep customers coming back from more.
At the end of the day, customers opt for smooth, seamless, and highly personalized digital banking services — and if you can’t meet them there, they will find a bank that can. The question is whether you’ll be the bank that delivers these experiences or if one of your competitors will get there first. The choice is up to you.
About Auhtor:
Peter-Jan Van De Venn, VP of Global Digital Banking, Mobiquity