The financial services industry is going through an almost unprecedented period of change. Whether political, regulatory, societal and technological, a range of forces have been at work to shift the landscape for good.
Politically, it’s fair to say that the world has been dealt its fair share of turbulence in recent months, with Brexit, as well as the US, French and UK elections leading to feelings of mass uncertainty. With the implementation of new regulations such as
PSD2 and GDPR on the horizon, as well technology influencing customers’ habits and priorities at a rapid pace, multiple challenges are being felt by banks across the globe.
In the midst of turbulent times, it becomes not only more important, but increasingly difficult for banks to manage customer relations. As the world around them chops and changes, there’s a concern that consumers might also become uncertain, anxious and
therefore, less loyal to their current providers. In the past this has certainly been the case. According to a report in 2009 by Infosys, following the 2008 global financial crisis, 36% of customers across the globe changed their main bank. In a world that’s
already struggling with consumer loyalty, never has it been more key that financial services recognise the vitality of gaining and nurturing loyal customers.
Consumer habits are changing
With the emergence of a technologically advanced digital era, consumers have learnt to both expect and demand more from their banks. This is just one of the many challenges that financial services are facing.
Consumers want things now – not later, a flexibility and immediacy unheard of twenty years ago, as well as nothing short of a seamless experience delivered across multiple channels. In a
study conducted by Fujitsu last year, results found more than a third of European consumers would move from their current bank if it didn’t offer up-to-date technology to improve interaction. Meanwhile, nearly a third claimed they were using mobile payments.
It’s clear that as a result of increased technological expectations, and changing social habits, today’s consumers are far from loyal, and more likely to switch providers. Reinforcing this further,
Webloyalty’s Unfaithful Consumer report found that 56% of modern consumers were open to changing their bank, and 37% thought doing so was either “easy” or “very easy”.
Alongside these technological and social changes, global political events are compounding the atmosphere of unease. For example, although London has long been the home to a number of the largest global banks, the UK’s departure from the EU’s single market
has presented a big challenge, with many announcing plans to move operations elsewhere in Europe.
Lloyd’s recently named Brussels as its new European base, meanwhile
Deutsche Bank plans to move 4,000 jobs to the continent.
When a bank sets up base elsewhere in Europe, or expands other offices, they need to consider the hiring of new employees, transferring existing talent as well as taking the time to reconsider company processes, to abide by new and applicable laws. This
can all suck up energy and resources, leaving some ‘business as usual’ activities to suffer.
A shifting regulatory environment
In addition to the political climate, the upcoming implementations of regulations PSD2 and GDPR present challenges and mean retail banking is set for further, colossal change in 2018. PDS2 will enable customers to use a third-party provider to manage their
finances, meaning banks will have even more companies to compete with in the financial services industry.
Meanwhile GDPR, which comes into effect in May 2018 and will replace the Data Protection Act of 1998, will restrict how businesses including financial services manage, process, store and share personal customer data.
Both sets of legislation have resulted in banks having to invest huge sums of time and money to in order to meet regulatory deadlines. In particular,
IT costs are expected to increase due to new security requirements and the opening of APIs.
Consequently, as banks channel their efforts into meeting new regulations there’s a risk they might become distracted and customer experience might fall to the bottom of their priorities. In a volatile environment in which change becomes the norm, this can
Keeping existing customers loyal
It is no secret that during turbulent times, there should be a focus on winning over and engaging with the existing customer base. It’s these customers that are more likely to play the advocate to friends and family in the long term, and this can help during
periods of economic flux.
Customer engagement can trigger a domino effect, something that could greatly help banks and other financial services providers, considering their focus will inevitably shift to react to the challenges of change. Whilst having advocates to support one’s
brand has long been deemed a great asset for any given company, this applies even more so in today’s uncertain and chaotic global horizon.
By prioritising customer engagement, financial services across the globe can strike a balance; one that keeps their customers loyal whilst reacting to turbulence of recent times.