Digital transformation to enhance the banking customer experience

Digital transformation in the banking sector covers a broad area as fundamental banking activities have shifted to a digital environment over the years.

A Forrester report looking at the state of digital banking shows that financial institutions have not only prioritized digital transformation more, but most have reached a stage of maturity. A reported 53% of banking decision-makers claim to be working on their digital transformation efforts using advanced technology, which is a rise of 20% since 2021.

A reported 53% of banking decision-makers claim to be working on their digital transformation efforts using advanced technology, which is a rise of 20% since 2021.

– Forrester

The main reason for these investments is somewhat self-explanatory – to increase revenue. In fact, 77% of institutions claim that this is their primary reason for the initiatives.

This, however, doesn’t explain what steps are being taken to achieve this aim. When asked, most respondents pointed to cost reduction, increasing operational resilience, strengthening regulatory compliance, and, of course, customer service experience.

Delivering a service experience that meets customer expectations is undoubtedly one of the most pressing challenges for any financial services institution, whether a retail bank, credit union, or more.

Is digital transformation really necessary?

Although we have seen a huge shift in banks’ efforts to embrace digital transformation, there are still those who are holding out. Forrester claims that 1% have no interest in digital transformation, 8% have no immediate plans to begin initiative, and 10% are stuck in the planning stage.

Adding this up, a total of 19% of global financial decision makers are shockingly behind the curve when it comes to digital transformation.

This begs the question: does this matter? There are undoubtedly many financial niches and it could be that the impulse for technological progress is not as pressing among them all.

The benefits of digital transformation

Digital transformation has a marked impact on the customer service experience and beyond. Here are some of the top benefits of undergoing a transformation initiative.

Smoother customer journeys

Customers expect more from their online banking experience than ever before. No matter where they come into contact with your institution, customers now expect a holistic experience that builds on every previous interaction.

With the right digital capabilities, banks can ensure that the entire customer journey from prospecting, sales, and onboarding to the ongoing customer service experience is smooth – helping banks differentiate themselves and grow deposits more quickly.

Higher levels of satisfaction and loyalty

An extension of better customer journeys and service excellence is a reduction in customer churn and improved retention rates. In fact, customer service is a key way to drive customer loyalty in banking.

Much of this has to do with the emotional side. If a customer has a bad enough experience with customer service – such as not answering their requests or taking too long to resolve issues – this can result in strong feelings of dissatisfaction. Inevitably, this will lead to churn.

Thankfully, it works the other way around as well, and by offering a service that exceeds expectations, banks can retain more customers.

More efficient workflows and processes

Banks spend a lot of money on their front and back end processes that haven’t yet been automated. And while a bank’s digital customers cost 1.5 times more to serve than their traditional counterparts, they also generate nearly twice the income.

In customer service, having a more efficient back-end system is essential. Not only does it ensure all incoming messages arrive in one place, but it allows for easy labeling, organization, and internal collaboration, while empowering the agent to escalate to different forms of communication (i.e. voice calls to Co-Browsing).

Stops fraud and meets compliance requirements

Trust and fraud are closely linked. While a security breach can lead to a complete loss of trust, an important driver of trust is a bank’s ability to protect customer data. This begins at the onboarding stage, where automated Know Your Customer (KYC) approaches are both secure and scalable, offering new customers peace of mind and lowering banks’ costs.

On an ongoing basis, any time a customer logs into the banking system or contacts the institution, there is a potential weak point. Digital software is essential to ensure that these access points are fully secure and the customer’s data is safe.

This extends to the issue of compliance, where banks need to offer secure methods of communication and also store recordings of the interactions for certain periods of time. Both of these challenges can be overcome through digital transformation.

The challenges of digital transformation in banking

There are certainly many challenges associated with digital transformation which, although proving difficult for financial institutions over the years, are not out of banks’ control.

In this guide, we are focusing heavily on the customer service aspect of digital transformation. However, it is worth noting that this is a wide-ranging process that includes everything from mobile app development or incorporating AI, IOT, blockchain, cloud computing, and more.

Every institution will be at a different stage of their journey with each aspect of digital transformation, with some having apps to rival fintech companies and neobank competitors, while others excel more at compliance-related digital technology.

What every organization shares, however, is challenges at every turn. Here are some of the most pressing ones.

Underestimating their technical debt

According to McKinsey, one of the main obstacles to digital transformation initiatives in banks and credit unions is the amount of legacy technology at play.

According to McKinsey, one of the main obstacles to digital transformation initiatives in banks and credit unions is the amount of legacy technology at play. This is perhaps the biggest advantage that digital native solutions (such as fintech apps) have over traditional institutions.

They have the luxury of building their experience from the ground up, whereas legacy institutions have to contend with years worth of data, siloed teams, out-of-date processes, and more.

Overcoming this issue in larger institutions takes a huge amount of coordination and time. For most, the answer lies in finding technological solutions that are integration friendly and can be included into the current ecosystem without too much effort.

Effectively navigating security

In 2021, a quarter of executives named security as one of the top obstacles to achieving digital transformation. Today, it remains a key concern in the banking industry, particularly with the advent of Generative AI.

There is real concern that the new advances in artificial intelligence (AI) will mean that cyber attacks become more sophisticated and common. Whenever any new initiative is undertaken in a banking context, the question of security needs to be taken seriously.

This also includes understanding and adhering to the compliance regulations in place – particularly with privacy, data security, etc. – which are even more complicated in the financial services industry.

Changing customer expectations

When modern technologies are introduced, there can often be a period of adjustment from the customer side. However, once people become familiar with a certain level of experience, the reverse suddenly becomes true – it can be difficult for them to return to how it was before.

This is a huge challenge for businesses in general. For example, it was once enough to offer a prompt service for customers to be satisfied with your business. Now, according to Deloitte, this isn’t enough and you must also deliver a personalized experience at every interaction.

Keeping up with digital technologies

Digital transformation is never truly complete. The fact is that the pace of technological change outstrips what’s possible to implement in a timely manner, particularly in a financial services context.

A reported 25% of services decision-makers say that their technology strategy is the biggest challenge for achieving digital transformation implementation. After all, how do you ensure that the technologies you are implementing are still relevant one year, five years, or ten years down the line? Combined with the ongoing problem of dealing with legacy platforms, it is understandable why this is such a point of difficulty for financial institutions.

Identifying innovation drivers with vision

Every organization has a different approach to who should be in charge of the transformation initiative. It could be anyone from the CIO, CTO, CEO, or someone further down the management chain.

And it’s really not clear. One Forrester report found that 48% believed the CIO or CTO should be in charge. However, another 39% stated that the CEO should be the one to actually spearhead the initiative, with the CIO or CTO in charge of executing it.

In reality, the title of the individual should not, in itself, be a determining factor. What is important is that the person in charge isn’t intimidated by the technological skills necessary or are too daunted by the idea of failure, which can stop these initiatives from taking place at all. A leader with confidence and vision is needed to carry the project forward.

Organizing the data

Traditional banks have a huge backlog of customer data that needs to be carefully handled, especially during any kind of technological upgrade. It is true that this data represents a substantial wealth of potential for the organizations; however, there are both regulatory restrictions and ethical limitations on how they use the data.

Perhaps this is why 73% of bank executives stated that turning consumer data into patterns and trends is a challenge. That said, the data can’t simply be ignored. It is essential to use this information to improve financial products and deliver on customer expectations.

Maintaining the integrity of your brand

There is a significant temptation to use third-party apps to gain convenient access to specific functionalities. And there is absolutely no issue with this approach – provided it is done responsibly and doesn’t harm your brand.

For example, many institutions have turned to platforms like Zoom for video conferencing calls or even just used WhatsApp to communicate with customers or clients. The Capgemini report found that 72% of executives were worried that this could impact their organization’s brand integrity.

Digital transformation deep dive:
A look at customer experience

When it comes to customer experience in banking, there are a number of areas where financial institutions looking to move their digital transformation projects forward should focus.

Offering the full array of digital channels

Phone calls have long been the go-to channel for a customer contacting a bank. And yet it is not a perfect solution by any means. While customers are happy to contact their bank by phone when they need support, they are generally suspicious of incoming calls being attempts at a scam.

For contact centers, phone calls represent a slower and more time-consuming method of solving customer problems. Not only must one agent deal with one customer at a time, but the customer often has to provide context on the phone call, which can take time.

Offering a full array of digital channels – and promoting their use – is essential to reduce the AHT and increase efficiency at no extra cost. For example, the Live Chat channel can handle two conversations simultaneously per agent, while also leveraging artificial intelligence to gain context without wasting time.

Transforming your branch network

Brick-and-mortar banks do still serve a purpose in banking contexts. Both customers and institutions prefer having branches in the local community to serve people where they are. When customers have a more important decision to make, such as taking out a mortgage, they generally prefer to speak in person at a branch as it inspires more trust.

Maintaining the option for in-person visits requires a complete transformation of the branch model. This can be achieved by installing a digital reception at the physical location, allowing remote agents to deal with walk-in customers at multiple branches – including ID verification, private meeting rooms, remote-operated printers, and more.

Empowering your agents

For agents to deliver an excellent customer experience that meets expectations, they need to have the right digital tools at their disposal. It is important for banks to listen to the agents and ensure that they have what they need.

Some of this is cultural. Agents need to know they have the power to make informed decisions and concessions based on their discretion to solve customer problems. If they have to escalate to a manager for every small issue, it will quickly create a backlog of tickets and increase customer frustration.

But this alone isn’t enough. In terms of technology solutions, they also need a comprehensive back-end system that allows them to gain context, make labels, quickly find information, safely share documents, and more.

The future of customer service:
Digital banking trends

A number of cutting-edge trends and developments are currently underway in banking customer service, which are proving to unlock next-level service opportunities for financial institutions.

Banking analytics (big data in banking)

The huge amount of data available from customer interactions can be used by banking professionals to predict customer behavior and develop strategies. In general, the financial sector creates huge swathes of data. Traditional banking systems (as opposed to fintech companies) have years of unstructured data that can be used – if they can find a way.

There are substantial analytical opportunities in this area, which are quickly becoming key drivers of banking technology solutions today.

Top mobile banking service capabilities

It’s true that customers should be able to contact you on their preferred channels. However, in many cases, the preferred mode of communication is through their mobile phone – particularly the banking app.

When it comes to customer communication, many banks still fall short within the mobile app itself. To put it another way, do you offer the same breadth of support from mobile as you do desktop?

If there is any doubt there, work needs to be done to improve access to support from mobile devices. For example, a key component of remote desktop support is Co-Browsing, a high-touch collaborative tool that allows users to browse and edit documents, web pages, and more together. This capability, however, is less common in a mobile context.

Embracing Generative AI

Enhanced chatbot capabilities

Generative AI has transformed chatbot potential, taking them from a glorified FAQ system to becoming an accurate source of information to make decisions. Now, customers can self-serve with even more complex problems that don’t specifically require human interaction, drawing on the organization’s own knowledge bank.

Capturing data for efficiency

It is possible to train specialized bots to capture data before meeting with an advisor. Take, for example, the process of applying for a mortgage. There are many general context questions that need to be answered first, such as if the customer has already made a deal, if it’s a house or an apartment, etc.

AI Co-Pilot for agent support

Nowadays, bots are not just for use on the customer side. Agents can also use them to drastically improve their efficiency, drawing on the LLM capabilities to create accurate responses to customer questions. The agent can, of course, edit the response as needed before sending.

Cloud for banking industry

According to Deloitte, cloud banking will be a catalyst for digital banking of the future, further disrupting the traditional banking landscape.

According to Deloitte, cloud banking will be a catalyst for digital banking of the future, further disrupting the traditional banking landscape. Digital banks, investment banks, private banks – any financial institution that offers online services will embrace cloud banking.

To put it simply, the cloud is where banks can store data and applications, while also accessing advanced software applications. Providers offer the institutions products as a service that can be accessed from the cloud, making it easier to implement operating models. It also makes it easier to keep the entire organization synchronized, doing away with organizational silos and improving the user experience as a result.

Digital transformation for banks:
What are institutions doing?

Discover what steps Unblu customers have taken to improve the customer experience through digital transformation.

Enhancing the digital channel experience

What does digital transformation in customer service look like?

PostFinance recognized that they needed to provide better digital channels to serve and advise clients. As with many organizations, they found that the number of requests coming in through traditional channels, particularly phone lines, was overbearing.

On top of this, the organization’s legacy email system was increasingly insecure, requiring replacement or a viable alternative.

Finally, PostFinance wanted to enhance digital journeys on mobile applications and offer greater access to support.

Stage one: Embedded Co-Browsing and chat channels

PostFinance and Unblu’s first goal was to deflect the high number of phone calls, which is a challenge that many contact contact centers face.

They achieved this by implementing a Live Chat channel and embedded Co-Browsing for high-touch support.

An alternative to emails

Next, PostFinance had to look at their legacy email system, which was outdated. Together, Unblu, PostFinance and other key technology providers, worked to deflect all incoming emails to a single inbox with inquiries from other channels. Now, agents have access to Secure Mails, which are powered by Unblu for additional security.

We have been using Unblu for more than 7 years and today we are handling more than 20,000 Unblu conversations every month.

– Mike K., Responsible for Chat and Email at the PostFinance Customer Center

Improving the mobile experience

As many Co-Browsing tools on the market are specifically designed for desktop support, they have limited functionality in a mobile environment. Unblu’s Co-Apping tool, however, has been developed to work in an in-app environment. This was added, alongside Video & Voice capabilities within the app, to ensure customers got access to the best experience possible.

Want to find out more? Read the full PostFinance case study here.

Boosting digital sales through customer experience

Does improved customer service actually make a financial difference?

Raiffeisenbank is the 4th largest bank in the Central and Eastern Europe markets and part of the RBI Group. Offering universal banking services for over 1,400,000, the Prague-based bank prides itself on its digital excellence and high adoption rates.

To continue offering the best service possible, the bank realized they needed to offload the strain on their contact centers, particularly by reducing the number of phone calls.

Like PostFinance, the team chose to implement Live Chat. This had the intended impact in reducing the number of phone calls. However, with a more efficient option available, there was a higher number of inquiries overall.

To complement the use of Live Chat and improve resolution efficiency for agents, the team also implemented Co-Browsing.

Increasing digital conversions

However, customer satisfaction alone wasn’t the only goal the team had in mind. Based on a mixture of next-best offer campaigns and insights from each customer interaction, the agents were instructed to suggest products that may be of interest to the customers.

The personalized service and product offers, combined with overall higher levels of customer satisfaction, individuals were more likely to take these suggestions, leading to a 5% Conversion Rate in August 2022. This number went up to 8% the following September.

Want to find out more? Read the full Raiffeisenbank case study here.

Reimagining the branch network

The trend around the world is of lower branch footfall and forced closures. The Swiss Valiant Bank was facing a similar challenge, with personal assisted banking operations falling by 35% from 2014 to 2017.

By the end of 2016, over half of the bank’s branches were only open for three hours a day. The leadership was faced with the decision to either close branches or adopt a new expansion strategy.

They chose the latter.

The Valiant digital transformation strategy

For the project to work, they needed to reduce costs, increase profitability, and maintain the service experience. The linchpin of this plan was the digital reception, powered by Unblu.

When customers enter, they are greeted on screen by an agent located elsewhere. The agent has full remote control of the branch, allowing them to take ID verification, print documents, direct the customer to a private consultation room, and more.

How did it work out?

The results were positive all round. They managed to:

Embracing digital banking transformation with Unblu

From contactless payments to mobile banking apps and beyond, digital services are the bedrock of the modern financial landscape. However, there is still more that can be achieved, particularly when it comes to digital innovations for customer service.

Your digital platform needs to offer countless digital services that match modern customer behavior, while also adhering to data security and regulatory requirements.

Your digital strategy when embracing transformation in banking must be honed in on this. The financial services sector is a business model based on creating a balance between digital products and digital experience.

To stand out, modern banks must adjust their technology stack to today’s sensitive customer needs.