Traditional banks must move away from a one-size-fits nobody digital approach

If traditional banks want to continue to be a vital element in their customers’ lives, they must refocus efforts. At present, they are prioritising a one-size-fits-nobody digital approach, that costs the bank less, but doesn’t meet customer needs. By continuing on this path, banks risk being reduced to nothing but money storage vaults by the time we reach 2030.

The past year has seen countless bank branches close, and a surge in banks adopting digital-only approaches despite consumers’ low appetite for digital-only services. In fact, only 5.5% want to use online/mobile banking more post-COVID-19. Banks must embrace a human-centric approach, offering a wider range of services that meet customer needs – or risk losing those relationships to challengers. Striking a balance between hyper-personalised digital-first services, online chat functions with human advisors, and the option to bank in-branch is critical.

This omnichannel approach is already being embraced by challenger banks. Starling Bank, which started as an app-only service, has partnered with the Post Office so customers can bank ‘in branch’ and also recently launched their new online banking service – ensuring no-one is left behind and that every type of customer is catered to.

It’s not too late to catch up

However, the good news is there is still time for traditional banks to catch up. The pandemic slowed challenger banks’ innovation, as they shifted priorities to deal with the immediate challenges and took a particularly hard financial hit when it comes to investment; Monzo’s funding round in June 2020 drew a 40% lower investment than a year earlier. While these issues do give traditional banks some leeway, as challengers’ abilities to innovate new products or deliver alternative banking options to customers is impacted, they will very quickly spring back into action. As they offer increasingly comprehensive ranges of products and services, traditional banks will find themselves at greater risk.

It is imperative that traditional banks properly personalise their offering, provide customers with more than one experience and ultimately treat them as valued individuals instead of revenue sources. In an ideal world, by 2025, banks will offer personalised digital banking landing pages based on customers’ financial priorities, with levels of support, advice and product recommendations also varying depending on each customer’s digital maturity and individual needs. For instance, customers who always have money left over after their monthly outgoings could be proactively signposted to saving or investment options, or newlyweds could automatically be offered joint accounts.

At the end of the day, banks are the financial experts here, not customers, and they shouldn’t wait to be asked for these additional services. Instead, they need to show they know how to manage customers’ money best. As consumer support for sharing more data with their bank for a personalised service decreases, this proactivity will go a long way to rebuilding trust. They need to create a two-way connection with customers that shows the value banks bring to the relationship. If they don’t do this, banks risk losing customers to someone who will.