According to the 2014 World Retail Banking Report from Capgemini and Efma, less than 40% (a decrease from 41.6% in 2013 to 39.5% in 2014) of customers globally reported having positive customer experiences with their bank. The main reason for this dissatisfaction is the bank’s failure to develop a comprehensive digital and brick-and-mortar strategy around servicing channels.
The use of Apple Pay and the addition of wearables with increased social-media integration are major trends that global retail banks will adopt in the coming year. These trends have had preliminary success in 2014, and the further banks can expand on these initiatives in 2015, the more successful they will be at increasing customer satisfaction.
First, Apple Pay. This initiative proves the evolution of adaptive payments on an age-old technology (near-field communication) can strengthen security with no additional cost. Apple Pay’s 2014 success is a true testimony to the fact that NFC can provide alternatives to the point of sale enabled by the Europay-MasterCard-Visa (EMV) standard, without disturbing the customers’ deep bond with credit cards.
Apple Pay has skyrocketed in adoption, which makes us believe that 2015 will be a strategic year for Apple Inc. and retail banking. The continued adoption of Apple Pay by retail banks will be important in improving customer satisfaction. It’s easy for the banks, as nothing much changes. They just pay a small fee (about $1 for every $700 in payment volume) to Apple.
The benefits, however, are great, including the potential to cut down on fraud. In 2013, credit card fraud cost the world $14 billion, with half of that in the U.S. It goes without saying that a bank’s balance sheet looks better with reduced fraud, which helps build customer confidence. How deeply Apple Pay will cut into this number in 2015 is unknown, but the breadth and warmth of Apple Pay adoption by financial institutions speaks to their expectations.
Next, wearables. Wearable technologies, such as smart watches and Google Glass, have the ability to deliver customer support for banks. By offering hands-free and voice-activated control options, wearable technologies can offer many solutions for increasing customer satisfaction. For example, banks should use Google Glass and smart watches to better connect with their customers by delivering financial alerts. The central idea is to give consumers greater digital control over their finances.
Global banks such as Barclays, U.S. Bank, and Wells Fargo are already investing in wearable technologies, thus pegging themselves as innovators in the retail-banking space. By the end of 2015, we can hope, all banks will make financial alerts available on Google Glass and smart watches.
Finally, integration with social media. This will empower customers and enable banks to get to know them better. Retail banks need to develop a long-term, secure, and robust platform to connect heavily leveraged social-media channels like Facebook, Twitter, and WhatsApp to the transactions their customers are making. At the very least, banks should empower their Facebook customers to access their bank accounts from their Facebook page.
Banks abroad are already doing it. Turkey’s DenziBank, for example, allows its customers to access their accounts via Facebook, send money, and apply for credit cards and loans. Commonwealth Bank of Australia extended its Kaching payments app to Facebook, letting users make payments to Facebook friends and events. By setting up and monitoring custom Twitter groups, banks can hear their customers’ needs and transform their product offerings to better suit them.
It is clear that we are at an unavoidable turning point as digitalization, in both customer service and in the financial-transaction space, becomes increasingly prominent in the retail-banking industry. Banks need to embrace this transformation through decisive actions. It’s time for banks to focus not only on driving revenue, but also on aligning current business and operating models with providing the ultimate customer experience.