In 2023, as digital transformation reaches its height with the emergence of generative AI, the landscape is marked by evolving customer expectations, rapid technological advancements, and intensified competition. These factors highlight the urgency for thorough digitization of areas that were previously only partially digital, such as customer onboarding and the utilization of paper documents.
With this, decades-old notions, like the belief that wealth management is exclusive for the wealthy or that switching banks is too much hassle, are out the window. Therefore, new banks entering the market offering superior digital experience stand an equal opportunity to onboard new customers as top-tier banks.
Customer Onboarding
According to BAI’s research, 70% of millennials are ready to switch their banks if their digital banking expectations are not met. Avoiding friction during customer onboarding by removing the need for ‘wet’ signatures and long-drawn documentation verification is no longer a complimentary feature but a necessity to survive in today’s industry. Banks can now provide well-organized onboarding process flows to customers through smart forms for data capture that can repurpose information when needed and generate e-signature-ready documents for the ease of both user and employee. Supported by solutions such as OCR (Optical Character Recognition) and AI, employees can easily capture and verify documents, cutting down manual processing time by half.
As part of the front-end revolution, the rising application of automation in banking backfired when customers lost the human connection. Customers expect to have an immersive and interactive experience during banking where the customer feels valued as an individual. Involving AI-powered chatbots with Natural Language Processing capabilities (NLP), gamification, and other interactive steps in the customer onboarding process can help banks in becoming the customer’s primary financial institution.
Insight-led Decisions & Engagement
With investments in data analytics predicted to multiply by five times by the year 2031, banks that believe in their power to transform customer’s lives are maximizing the potential using their massive and siloed data. Supported by Artificial Intelligence (AI) and Machine Learning (ML) capabilities, banks are gaining deeper insights into their daily demand, supply, and risk management processes. By retrieving hidden data spread across multiple systems, banks can make informed decisions while handing out loans, calculating credit scores, and inspecting for money laundering and other fraudulent activities. Taking customer experience to the next level, AI is also able to analyze complex and fragmented data to produce personalized experiences every time a customer uses a banking interface.
Taking one step closer to achieving hyper-personalization, banks led by data-driven insights can easily channel targeted messaging, build customized products, and meet the needs of the user at the right time with the right product or service. Using advanced data analytics, banks can also support their customers by reaching those struggling with higher interest rates, and unpaid loans with personalized solutions suitable to their budget. By inspecting previous transaction behavior banks can guide customers in their personal wealth management, guaranteeing financial health and thereby building trust.
Losing Security in Banking
As fears of the impending recession hit the news, banks started to lock away huge amounts as a precaution and reduced funding in many major areas like cybersecurity. This sudden lack of attention to security resulted in a rapid increase in the cases of account takeover fraud, social engineering scams, and phishing at the beginning of 2023.
Bringing back the urgent focus to security, banks are now fully equipped against every possible leak of customer data and blind spots. With support from fintech, banks are offering a multifaceted approach towards data privacy through front-line encryption and tokenization technology by inscribing private information into complex, unreadable codes. This way customer data, card details, and transaction details remain untraceable during transfer and at rest. Similarly, replacing the long tests to authenticate the identity of the customer as a human, the introduction of biometric verification cut down the verification time by 90% while strengthening security. This way manual, error-prone areas of risk management get digitized for the employee’s convenience.
Being the industry integrator of the decade, AI and ML technologies also assist banks in proactively detecting anomalies, suspicious patterns, and disparities in compliance across transactions, credit decisions, and customer onboarding. By adopting a zero-trust strategy, banks today approach every situation and individual, both inside and outside the organization, with suspicion. Therefore, placing additional layers of security using blockchain and Distributed Ledger Technology (DLT) parallel to sharing cyber security intelligence and keeping open blacklists can bring back up the walls of banking safety.
In Conclusion
Earlier in the year, top-tier banks across the US welcomed abandoned customers from the recently fallen Silicon Valley Bank and Signature Bank only to discover the enormous friction and long-drawn process involved in their customer onboarding process. The complaints and fall in the onboarding number made the banks rethink their digital strategy and their position in the latest technological innovation adoption. Therefore, in an era even where top-tier banks fall behind, banks should prioritize customer experience and continuous improvement to remain competitive in the retail banking industry.
Constant innovations alone assist banks in providing convenient banking and passing control over the money back to the user, through features like remote onboarding, convenient money management, and quick loan origination processes. The future of banking is set to begin with smart banking and is expected to lead to invisible banking within the next two decades. Therefore, in the case of both digitally transformed and digitally transforming banks, sustaining an open-to-innovation strategy alone guarantees a future.
