The Future of Customer Experience in Banking in 2023

By now, the importance of delivering a superb customer experience in banking is crystal clear. It’s estimated that financial brands that deliver a better customer experience (CX) receive twice as many recommendations. Plus, their customers are also two times more likely to try new products or services. 

That said, there are a huge number of factors that influence the customer experience or CX of your financial institutions. This includes an ever-changing landscape, increasing competition, and new technologies, among many other variables. 

Keeping up with the latest trends can help you understand the impact that these tendencies have on your banking customer experience. This, in turn, allows you to build better products and features designed to meet your customers’ biggest needs, all while making timely adjustments that produce better results. 

Let’s take a look at the trends that will shape the customer journey in banking in 2023 and beyond.

The Current State of Banking CX

Before going over the biggest banking customer experience trends, let’s take a moment to analyze today’s landscape.

There is no doubt that the COVID-19 health crisis has heavily influenced the current state of customer experience in banking. From a business perspective, banks and other institutions were left scrambling to adapt to their customer’s needs, which changed practically overnight. 

This new set of requirements included better digital features, the ability to handle a higher number of user inquiries, and new financial products. 

Let’s take a closer look at the impact, which we can still see today. 

Balancing Digitalization for Better Financial Relationships

Consumers have wholeheartedly embraced the transition to digital banks. But, this doesn’t mean they’re ready to go fully digital. 

It’s estimated that 61% of bank customers interact with their institution’s digital channels on a weekly basis. On the other hand, 32% of customers actually prefer to avoid branches altogether.

With the above in mind, there’s a significant number of users who want access to branches in order to solve certain problems. According to Samsung, 77% of customers still seek in-person assistance when facing an unusual or complex account issue. 

Having a hybrid synched system is the only way to ensure a great experience across all customer demographics. In turn, this will lead to customers migrating to financial institutions that offer such experiences.

The fact that consumers have a wider range of alternatives (and are willing to exercise them) means that the relationship between banks and their customers has become more vulnerable than ever before. This means that banks need to pay close attention to their customers’ behavioral patterns and make improvements to keep clients happy. After all, consumers are now looking beyond the elements that banks have traditionally focused on for decades, like a large number of branches. The paradigm shift in consumer expectations necessitates a strategic approach to banking customer relationship management, ensuring that every interaction is meaningful and aligned with the evolving needs and preferences of the modern consumer.

Real-Time Everything

Consumers rely on real-time support for everything from assistance to financial transactions.

As a matter of fact, 79% of consumers prefer live chat support because it means that they receive assistance right away. Likewise, consumers react extremely well to short holding times when calling customer service and prompt email replies. 

Now, banks are not only expected to provide immediate assistance but also to adopt real-time payment technologies. Real-time payments have well-documented advantages for both banks and customers, plus this type of technology is already a standard in many financial institutions. 

Direct Banks and Non-Bank Financial Institutions

Modern consumers are in the process of drastically changing their banking habits, including the institutions they work with. 

According to PwC’s data, direct or digital banks now hold 20% of the market share, doubling since 2019. Large traditional banks hold around 42% of the market share, but community banks and other small institutions have suffered.

This is especially true if you consider the rise of non-banks, which are companies that don’t traditionally compete with financial institutions, yet have started to offer similar services.  

Personalized Offers and Self-Serve Alternatives

Self-serve options and personalized offers that are tailored to every customer’s unique circumstances are already essential. 

A whopping 72% consider personalization in financial services as very important, according to data from Capco. This represents great news for banks as consumers are also more willing to use apps from (and share personal data with) their financial service providers.

Modern consumers are also extremely self-sufficient. So much so, that 4 out of 5 customers expect to see more self-service options from financial institutions. Thus, having functional self-service channels that provide value to customers is also critical for a positive experience. 

Future Trends for Customer Experience in Banking in 2023

Now that we’ve covered its current state, let’s take a look at the customer experience banking trends that will shape 2023 and beyond. 

Personalizing Digital Interactions, Including Chatbot, and Human Interactions 

According to Gartner, 86% of financial organizations already look to compete on a customer experience basis. Additionally, customers are more likely to spend around 140% more on companies that provide a great experience.

Digital personalization can help financial institutions improve their CX while meeting the growing demand for a great experience. When asked if they would like to receive personalized alerts with important advice, 37% of customers expressed interest in receiving such alerts. 

Banking chatbots are a superb way to deliver more personalized alerts and support. A great chatbot interaction can actually improve the way your customers see your brand 72% of the time. 

But, even though the use of chatbots in the financial sector has increased by 200% since 2020, the key to delivering a great experience is to balance both chatbots and human interactions. 

For example, one in three customers wants more personal interactions with their banks after the pandemic. Meanwhile, 82% of customers still rank the ability to visit a branch as a high priority when choosing banks.

Improving Products and Services Through Big Data

Big data, which is the vast amount of information collected from different customer touchpoints, has already fueled the growth of the financial industry.  

In the past, the biggest challenge wasn’t the collection, but the analysis and interpretation of this data. Today, technologies like Artificial Intelligence or AI (more on this later) have allowed banks to digest huge amounts of data and detect user behavior patterns. 

Building a great experience is already the main focus of big data research for 65% of bank executives. This is in large part because banks are up to 70% more likely to sell services to existing clients and big data can be the key to unlocking its potential. 

Adapting Customer Service in Real-Time

Four out of five industry leaders believe that non-traditional providers are a legitimate threat to conventional banks, a huge spike compared to the 55% registered in 2019. 

One of the biggest issues with traditional financial institutions is their lack of real-time support. More than 65% of customers see real-time interactions as a must when it comes to financial institutions. Yet, fewer than half of all major banks provide immediate assistance.

The adoption of real-time technologies is projected to be a superb way to boost customer experience in financial services. While chatbots and other similar features can be helpful, remember that the quality of support is important across all channels.

Having a tool that allows you to measure consumer sentiment and other markers you use to track customer satisfaction can be a great way to stay on track. 

Engaging Customers Proactively About Financial Management/Advising

The global financial outlook has become a source of stress for many consumers, especially the most recent post-pandemic projections. In some areas, 77% of consumers feel anxious about their current financial situation. 

Not only this, but only 7% of CEOs expect financial conditions to improve significantly, which only adds to the relatively bleed outlook.

One way that banks can help relieve this pressure and improve their CX is to proactively engage customers about financial management. More than 60% of millennial customers affirmed that they would like to receive more financial advice. Banks can help users shape their experience early on by offering financial management tips proactively.

Widening the Role of Artificial Intelligence in Banking CX

The revenue of the banking AI industry will exceed 64 billion US dollars by 2030. 

There is no denying that Artificial Intelligence already has a strong presence in banks and financial institutions. But, since the AI industry is constantly evolving, financial institutions also have to unveil better ways to leverage this technology.

Improving the customer journey is a great use case for AI. This technology allows seamless integration with non-banking apps, aids during frictionless payments, and helps provide personalized offers. What’s more, AI can already help identify the need for personalized financial advice and offer savings recommendations, as well as deep customer experience analytics all of which result in a better experience. 

With that said, it’s important to note that many functionalities are still in the development or live testing phases. This includes the ability to handle more complex processes, the incorporation of ethical concepts in AI, and better connectivity to customer feedback analytics tools. 

Maintaining the Best Possible Technical Performance 

Cornerstone data suggests that 70% of banks focus primarily on delivering great customer service, a 14% uptick since 2019. 

Yet, technical problems like poor mobile adaptations and a slow onboarding process are still among the biggest obstacles for financial organizations.

For example, European financial institutions lose around 6 billion US dollars during the customer onboarding process. In some countries, abandonment rates during the onboarding process are as high as 63%, even when performed through a digital platform. Although that’s the case, some banks have already adopted 2-minute onboarding that’s yielded great feedback, especially from younger audiences. This brings good news for more than three-quarters of consumers who use their primary bank’s mobile app at least once every 12 months. Undeniably, banks that improve their mobile app functionality and offer regular updates and new features exceed customer expectations and are able to create a positive experience on a more consistent basis.

Becoming a (More) Transparent and Responsible Organization

Environmental, economic, and social factors have all contributed to a significant boost in consumer awareness levels.

More than half of consumers in certain regions evaluate social and environmental commitment when deciding whether to remain with a bank. 

In addition to green initiatives, banks are now expected to contribute to their immediate societies in more ways. This is the reason why 41% of millennial investors focus on understanding a company’s corporate social responsibility practices before making an investment. So, it’s reasonable to believe they will apply the same logic to their main banks. 

The Biggest Hurdles with Digitalization and Personalization

Providing online alternatives to common services and personalizing offers can help you build a stronger bond with current and future customers. But, banks and other financial institutions have to overcome a variety of hurdles to master both of these practices. These include:

Changing Regulations

Banks have to abide by local laws and regulations, but this in itself can become a challenge for implementing digital solutions. 

In many regions, banks have to follow strict protocols that are necessary to ensure consumer safety. But, these same protocols often require network overhauls, external certifications, and other investments that can act as barriers. 

Low Customer Engagement Levels

The implementation of personalized offers and content is relatively straightforward. Yet, it’s common to run into issues once the plan is in motion. 

Low engagement levels can sabotage your personalized content, regardless of how good it is. In most cases, low engagement signifies a poor understanding of the customer’s needs. Improving your feedback collection system can be a great way to learn more about your customers and subsequently boost the success of your tailored offers.  

Lack of Internal Perspective and Rigid Internal Structures

Logistical issues like undefined roles and lack of ownership can greatly hinder the financial CX. Moreover, banks and other institutions that have enough data to combat this are usually hindered by a rigid structure that lacks the flexibility to react immediately. 

These two are among the biggest challenges because, to improve, banks need to make organizational changes. However, institutions that take the time to listen to customers and create processes that allow for the creation of a better experience tend to see better results in the long run. 

In Conclusion…

The financial services industry is in a state of flux, so CX and CI managers need to keep a close eye on the latest tendencies and adapt accordingly. It’s important for banks to build better services and products that meet their customers’ biggest needs, while at the same time ensuring that every change will benefit the business. We hope the above trends help you build a better strategy and prepare for the upcoming changes that will shape the industry. 

To learn more about the latest customer journey banking trends stay tuned to our blog. Want to build a better customer feedback and sentiment analysis mechanism? Contact our team and find out how Lumoa can help.