With 84% of customers now opting for online banking and 72% relying on mobile apps to connect with their primary bank, the financial sector has witnessed a significant shift in customer preferences towards digital channels. 

As digital interactions become the norm, understanding and improving the customer journey is critical. Today, customers seek something more than just convenience. They want their banks to provide a seamless blend of digital efficiency and personalized service—an experience that’s not only secure and reliable, but also truly exceptional.

So, what exactly do customers expect from their banking experience? How can the financial sector level up its customer experience, and what benefits will it derive?

What is customer experience (CX) in banking?

Banking customer experience sums up how customers feel about interacting with a bank’s products and services. And it’s not just about stepping into a branch or using an ATM anymore. With the rise of digital banking, customer experience now extends to cover an even wider range of touchpoints. These include online banking systems, mobile apps, customer service calls, online advertising, emails, and social media.

The main goal here? Making the customer journey in banking as smooth, convenient, and downright pleasant as possible. After all, positive interactions foster trust, keep customers loyal, and make them want to come back for more. Negative ones, on the other hand, may result in customer churn and harm a bank’s reputation. 

That’s why the ability to deliver enhanced banking customer experience has become more important than ever. To stay ahead of the game and rake in profits, banks and financial institutions need to treat CX as a non-negotiable element in their modern business strategies.

Reasons why CX is important for the banking industry

So, for those wanting to stay relevant and successful, getting their CX strategy right is critical. Here are key benefits that such a move can bring:

Building competitive advantage

According to Statista, 44.5% of organizations worldwide view customer experience as a primary factor in standing out. An additional 48.5% consider it as a partial differentiator. 

Given these circumstances, in a market full of similar financial products, an exceptional customer experience becomes a powerful distinguishing factor, positioning banks favorably in this highly competitive landscape.

Boosting growth

Retail banks that regularly focus on improving customer experience grow 3.2 times faster than competitors who neglect it. The key lies in crafting a well-defined CX strategy and effectively implementing it.

In today’s world, where personalized and on-demand services are the norm, businesses that fail to refine their CX strategy quickly fall behind. On the flip side, companies that leverage the right tools and technologies for optimization undergo substantial and rapid growth.

Driving customer retention and loyalty

The top reason customers leave banks is poor service, and a significant 56% of those who leave would consider staying if the bank reached out to keep them. While it might be tempting to let these customers go and find new ones, doing so comes with both time and cost implications.

Acquiring new customers and keeping them is costly. In contrast, holding onto and expanding your existing customer base is simpler and more profitable. In fact, just a small 5% boost in customer retention can lead to a 25% increase in profit.

Enhancing brand reputation and market position

Forrester found that 87% of banking customers who feel valued express an intention to remain loyal. Satisfied customers become advocates, generating positive word-of-mouth referrals and recommendations. This helps banks create a favorable narrative around their brand and attract new customers.

Leveraging data for strategic insights

Banks that employ CX strategies collect vital data about customer behaviors, preferences, and pain points. This data guides strategic decisions, helping banks offer services more effectively and stay ahead of market trends.

Customer expectations for banking experience in the digital age

As technology evolves, so do customers’ expectations, as they now desire more specific and sophisticated experiences. This applies to various aspects of life, and banking is no exception.

To stay competitive, financial institutions must understand and meet these changing needs. So, what exactly do customers seek in their banking experience? Let’s take a look.

Tailor-made services: Personalization is no longer a luxury; it’s become a necessity. Customers expect banking services and products to be tailored to their unique needs—72% of them rate personalization as highly important. 

This goes beyond mere personal greetings in emails or messages. Banks need to deliver personalized recommendations for products, financial guidance, and banking solutions based on customers’ spending habits, lifestyles, and financial objectives.

High level of security and privacy: Without a doubt, sharing personal information and sensitive data is a significant decision. When choosing to entrust the bank with such details, individuals must have confidence that their information will be kept safe and secure. Especially if 75% of customers consider a fraud issue as a key reason to switch banks.

Effortless accessibility across devices: Google’s report shows that 60% of smartphone users prefer managing their finances through mobile apps. Thus, creating easy-to-use digital platforms accessible across multiple devices, especially on mobiles, turns out to be crucial. Today, people no longer settle for basic features. Whether swiping through a tablet or clicking away on a desktop, the experience should feel seamless and effortless.

Immediate problem resolution: 72% of customers want immediate service, with surveys showing that fast support is a critical factor in building loyalty.

Innovative solutions: Banks that innovate to meet evolving customer preferences are more likely to retain their customers. Whether it’s introducing digital wallets, robo-advisors, or customized loans, innovation showcases a commitment to staying relevant and adaptive.

Recognition for loyalty: Personalized offers, exclusive benefits, or acknowledgment of their long-term relationship with the bank is what customers hope for. Those being recognized for their loyalty are more likely to stick with a bank and view such a relationship as more personal and meaningful.

Functionality: Applications and systems that operate smoothly, facilitating effective money management.

Community initiatives: Banks actively involved in community initiatives and demonstrating corporate social responsibility often gain customer respect and loyalty. Customers value institutions that contribute to society, aligning with their values.

How can banks create a better digital customer experience?

Deloitte discovered that a whopping 84% of customers use online banking, with 72% using mobile apps to connect with their primary bank. Interestingly, this trend spans all generations and countries, with digital channels surpassing the popularity of traditional branches and ATMs.

However, there’s a bit of a downer in the 2023 BAI Banking Outlook survey. Despite the widespread use of digital channels, 44% of financial services leaders feel their delivered digital customer experience is merely average. The most significant gaps emerge in onboarding, digital interaction, and account opening—aspects crucial for the industry’s success. This is something that cannot be ignored, particularly if over 55% of respondents stated they would switch institutions for a better mobile banking app or enhanced digital capabilities.

Considering these findings, it’s clear that banks need to take proactive steps to improve their digital customer experience. So, what to start with?

Establish a dedicated CX team

Only 19% of companies have a dedicated team of CX specialists or customer experience consultants to bridge the gap between customer expectations and business practices. To transform into a financial brand that truly meets customer desires, the first step is to build a strong team of digital CX specialists. These experts can either be part of the company or brought in from outside. What they need to do is to advocate for users within the organization. They make sure that the company’s values and the way things work match well with what customers need. 

The CX team plays an important role in deeply integrating the design thinking approach into both the operational and strategic aspects of the company, ensuring that digital CX solutions perfectly match user needs and expectations.

Get top executives on board

Having a dedicated CX team is key, yet without backing from senior leaders, its potential remains untapped. To boost the brand’s value through user-friendly strategies and products, getting C-level executives actively involved becomes imperative.

After all, making improvements to the customer experience within your financial institution will likely bring about great changes to your existing systems, products, and processes. Without support from senior leaders, achieving tangible changes might be challenging or even impossible.

That’s why banks must ensure that leadership is deeply engaged right from the start. When your executives not only join in but also set an example, emphasizing its importance, the rest of your organization will gradually get on board and welcome the upcoming changes.

Understand your customers

Look at the experience you deliver from your customer’s point of view. While it might sound obvious, many companies fail to do so. Often, the improvements companies believe are necessary for customer experience don’t quite match what their customers actually want. 

Rob Vanasco, VP of User Research at Regions Bank, highlights, “The best and only way to improve the customer experience is to understand your customers. The more you talk to them, learn their habits, and observe their actions, the better you can provide experiences that meet their needs.”

So, rather than looking internally to enhance CX, dig into your customers’ opinions. How? There are various ways to do this:

• Consider setting up a customer advisory board for ongoing external insights.
• Conduct customer surveys to understand how seamless each transaction or service is.
• Map your customer journeys—walking in your customers’ footsteps is the only way to grasp their pain points.

This will help you get a clear understanding of why users have chosen your product and the ‘job’ it does for them. By pinpointing the problems they seek solutions for and identifying their dissatisfaction with existing market products, banks can truly optimize their CX. 

With this insight, your team can develop a digital financial solution that caters to pivotal user scenarios. This becomes even more essential considering that 86% of customers are willing to pay more for a better CX, making it the most effective strategy for companies to ensure long-term profitability.

Balance digital and in-person service

Although AI and automation bring efficiency, the human touch still remains indispensable. 63% of customers still express a desire for one-on-one personal conversations with bank representatives, and only 37% favor a chatbot or a text messaging service. Why?

The challenge lies in the fact that apps often aren’t making things easier. And as many as 64% of consumers are frustrated because they can’t resolve their problems in a timely manner, or at all, using mobile banking apps. 

While chatbots and virtual assistants may help, their effectiveness varies, and even the best ones have limitations. For example, 39% of customers say poorly integrated chatbots are the main cause of digital friction. Despite the preference for digital issue resolution, people often end up calling a financial institution’s customer service when they can’t find solutions on the app. That’s why striking the right balance between the two is key.

Provide customers with a constant omnichannel experience

Ensuring a consistent omnichannel experience for banking customers is something that cannot be overlooked. In fact, 40% of customers won’t engage with a company that doesn’t support their preferred channels.

Today, customers expect to interact with businesses through various platforms like websites, mobile apps, call centers, bank branches, and more. The banking industry needs to go beyond determining the right channel mix; it must tailor the experience to each individual customer.

But what does a seamless omnichannel banking experience mean? It’s about providing the same set of services across all channels, whether online or offline. A truly effective omnichannel platform allows real-time data synchronization across multiple channels. This means that customers should be able to start doing a given task in one channel and easily complete it via another without losing data or history.

Personalize digital interactions

As it has been already mentioned before, personalization does matter. A report by Deloitte highlights that customers now want banks to provide interactions with the same sophistication and personalization as seen in other industries. Many are also willing to share their data for more personalized services. However, despite the buzz around personalization in banking, a significant 94% of banks struggle to deliver the hyper-personalization customers are looking for.

How to move towards a more personalized banking experience? 

By genuinely getting to know your customer, understanding and analyzing customer data, and, most importantly, acting based on the insights. As a result, banks can differentiate themselves in a crowded market, attract new customers as well as retain the current ones, and stay ahead of the competition.

Simplify the onboarding and account opening process

One of the critical aspects of enhancing CX is enabling a quick and straightforward onboarding process. When it’s too long or too much personal information is required, customers are likely to abandon it. As a matter of fact, abandonment rates during onboarding processes can get as high as 68%. How much does this cost financial institutions? Well, they lose over €5.7 billion each year due to onboarding drop-offs.

To level up customer experience, focus on a simple and rather short onboarding process. Make it possible to open an account through the mobile app, reduce the number of clicks, and minimize data collection.

Emphasize the product design

A well-designed product, such as a mobile banking app or online platform, improves usability, functionality, and overall satisfaction for customers interacting with banking services. It creates a seamless experience, making it easy to navigate, perform transactions, and access information. 

As banks continue adding features, they should pay more attention to user-friendly and feature-rich designs to avoid confusion. This confusion with an app interface might lead to frustrations, and has, in fact, prompted 34% of customers to change their financial service providers. 

Cluttered product design might be partly responsible for poor user experience. However, there are a few things you can do to steer clear of it. To make your banking app better, streamline the registration steps and ensure clear transaction history for tasks like checking balances. You can also use familiar patterns based on the app’s operating system (iOS or Android) for a smoother experience.

Examples of banks with outstanding customer experience 

No doubt, banks aim for a flawless customer experience, but turning that goal into reality? It’s not as easy as it sounds. Yet, a handful of banks are nailing it, showing how it’s done with innovative and customer-friendly moves. Let’s take a look.

Barclays UK

81% of customers would recommend Barclays to friends and family for its online and mobile banking services. It has emerged as a leader in CX through innovative features on its app, especially during the COVID-19 pandemic when branches were largely inaccessible. 

The introduction of tools like Letter Drop, Retry, and Standalone KYC has streamlined the account opening process. 

• Letter Drop uses GPS to verify the customer’s address which is particularly beneficial for newcomers and students with limited credit records. 
• The Retry feature allows users a second attempt at Identity Verification, addressing issues like blurred images or poor lighting. 
• Standalone KYC eliminates the need for branch appointments. As a result, it enables customers to complete the identification process before visiting the branch.

These customer-centric enhancements have resulted in 322k opened accounts, showcasing Barclays’ commitment to a smooth and efficient digital banking experience.

Citibank

Gaining industry acclaim, Citibank stands out for its user-friendly business banking app, CitiDirect, featuring intuitive workflows. The app’s standout feature lies in its seamless operation on both mobile and tablet devices, offering users flexible workflows without compromising the security of financial data. 

Citibank’s dedicated focus on intelligent customer experience choices has not only earned recognition but also solidified trust and loyalty among its corporate banking customers.

Santander

In 2022, Santander went all-in on creating a positive customer experience in their banks. 

• • The Compass (Kompas) ensures that products and services are designed with customers in mind, putting their needs at the forefront of the development process.
  • The Clear Thing standard keeps communication with customers simple and caring.
  • Emphatic Customer Service combines digital solutions with in-branch service for a seamless and top-notch customer experience.

PKO Bank Polski

PKO Bank Polski has proudly secured the top spot in the 2023 Finnoscore ranking, making it the leading digital bank in Europe. Out of 230 banks evaluated in Europe and North America, PKO Bank Polski stood out for its excellence in online banking, mobile apps, customer appeal, and remote onboarding.

PKO Bank Polski’s top ranking reflects its commitment to an innovation and technology-driven strategy. Over the years, the bank has effectively utilized data science, machine learning, and artificial intelligence to transform internal processes and develop customer-centric offerings. With a goal to make all services accessible through remote channels by 2025, PKO Bank Polski continues to leverage modern solutions for an enhanced banking experience.