Rising Customer Expectations And Diminishing Customer Loyalty – Key Influencer For Innovation Estimated reading time: 4 minutes, 12 seconds
Loyalty Programs in the Banking Industry

Rising Customer Expectations And Diminishing Customer Loyalty – Key Influencer For Innovation

Posted on Thursday, November 19th, 2015 | By Mr. Sumant Kathpalia

Change is a – constant’s and changing dynamics in the banking landscape have brought forth the need for innovation. With new guidelines from RBI, the stage is set for competitive banking. The changing profile of a customer who has high expectations from his bank is keeping the banking industry anxious and eager to find right solutions. Banks need to play by new rules to survive and thrive in the new consumer economy.

Strategic focus – On the customer

Today’s customer is aware and demanding. He is not loyal to brands; he is loyal to the services that are extended to him. He expects more from banks – better and innovative products and services to meet his requirements. Patrons are more vocal today, thanks to the quick access and affinity to social media and therefore, banks have to be at the top of their games. Adaptability to markets, new processes, technology keeping in view the customer needs is of crucial importance.

Banks now need new strategies. They need to have a more educated view of the customer. Banks now need to go the customer-centric way – they need to put themselves in the shoes of the customers, engage more and provide personalized solutions. There is a need to think in the way that encourages innovation.

Understanding the new world economy

With free flow of information about industry, its products, range of services, pricing etc., banks need to think about their operating environment. Banks need to focus on long term goals, value addition and differentiation.

Traditional banking model which was supply driven is under duress because of the changes in society. There is a lot of difference in the way people did their business a decade ago and the way they do business and conduct their transactions today. There are payment apps, crowdfunding and other financial institutions that are ready to provide services to the customers with the ease that was traditionally provided by the banks, less dependence of start-ups and young entrepreneurs on banks. Technology has revamped customer-to-customer, customer-to-business and business-to-business transaction models and the banking sector has also been affected by these changes.

Better engagement is the key

Customer facing employees can give the fillip to customer engagement and drive customer loyalty. In an industry where there is little differentiation between products and services offered, the skills of people the banks employ become the game changer. Banking consumers today use the internet and automated channels, but they still need a personalised contact point when they need advice or reassurance. Along with a relationship-based approach to managing clients, banks need to think innovatively about ensuring that their employees come across as engaging and helpful ambassadors of the brands they represent.

Collect and Analyse Big data

The challenge for bankers today is to anticipate customer’s needs. They would do well if they collect big data and interpret and analyse it purposefully, to make inroads in real time. Customers today want their banks as their advisors and partners. Real time data and information gathered about the customers will help the banks in profiling and segregating the customers. The banks can then study the data and offer customized solutions. Some of these banking transactions now routinely happen out of the banking landscape. Banks need to understand how new technology adds to the convenience of the customers so that they can then incorporate the same new innovative features and services in their offers. They need to understand the demographic traits of the customers and understand their expectations.

Be where they are, and listen to them

Banks should be where their customers are. The banks that have a good web and mobile presence are more in tune with the sentiments of their customers. Banks also need to think about their content strategies. Right promotional tools like emailers, apps, and social media can help connect with customers who can then be provided with the right banking solutions.

Personal touches like reaching out on social media, calling customers when they are not sure about policies, suggesting better options if there is a lack of information about them – connecting with customers across touch points, in addition to everyday automated transactions, cement the relationship with the client. IndusInd Bank took the lead and in the year 2014 it launched a unique customer-centric service called the Video Branch. This innovative offering enables customers to do a video conference with the bank staff from their devices at their convenience.

A gap in our ATM offering was identified whereby customers were unable to get denominations of their choice. The Choice Money ATM service was launched to allow them to choose from a mix of 100, 500 & 1000 rupee denominations at our ATMs. Similarly, we gave people the freedom to choose the number of their choice for the account they open with us.

These are exciting times for banks and other financial institutions. Traditional models are giving way to newer and more efficient models and banks are finding smarter and newer ways of doing business. Innovative ideas are finding acceptance and with continued experimentation, the future looks exciting.