Digital banking has transformed how people interact and communicate with banks but providing constant and reliable access to new products and services is really only the beginning. Engagement and personal experience have become critical, and satisfaction is often determined by how personalised and human the overall experience is.
Engagement banking is changing how the finance sector connects with people. Engagement banking positions the customers at the centre and focuses on providing the digital services they demand. Traditional banking systems face the challenge of launching innovative services that deliver engagement banking. Legacy-based systems and dated architectures are often the core of these businesses and require an overhaul and prioritising digital.
A well-structured digital model ensures a business can focus specifically on delivering customer value. Finance companies must be capable of innovating and launching new services relatively quickly, but this requires an operating model capable of introducing new services securely while maintaining the overall customer experience.
Many studies show the business value of creating strong relationships with their customers. Customer engagement directly impacts annual revenue, yet too many finance businesses fail to have a structured engagement strategy, which undermines their performance. Customer engagement should be considered a necessity in modern-day finance. Banks have historically felt fairly unthreatened due to low competition, but the rising investment into fintech has changed the financial landscape completely. Accelerated digital innovation has driven customer demand for easy access to digital services. Considering that competition is unlikely to slow down, banks that fail to engage their customers could potentially lose market share to a new wave of fintech businesses.
Despite a rising need to improve customer engagement, many studies suggest that customer confidence in their bank remains relatively low. People have become more demanding in recent years, expecting more from their banks and being more critical of those that fail to deliver.
Customers are seeking more than just support in managing their finance. People want the assurance their bank is providing the best solution, taking control of their finances and enhancing their overall wellbeing. An engaging financial service should offer more than capturing attention. It should motivate people to make healthier financial decisions. This shift involves a significant change in how we approach engagement and more focus on the customer, their behaviour and profile, rather than just the product.
A big reason why finance businesses fail to address engagement is often ignoring how critical behaviour change is in improving financial wellbeing. While knowledge and skills are vital to making better financial decisions, it’s not enough to improve overall financial wellness. Similar to other behavioural changes, like fitness or our diet, establishing good financial habits can positively impact our happiness, productivity and wellbeing.
For example, in the fitness world, the app Strava effectively connects the intention-action gap, keeping people motivated with their goals and creating a healthier lifestyle. This concept of an intention-action gap is a challenge that needs tackling in finance. Many people understand the importance of saving money, yet only a fraction are happy with their savings. When focused on the digital experience, finance companies need to understand what drives this intention-action gap and use this information to create a service that will narrow the gap. Businesses require more insights into human behaviour to improve motivation and generate behavioural change.
People have strong emotional connections to their money and finances. Traditional personal finance systems intended for engaging and personalised services can sometimes fail due to not considering how financial decisions are influenced by people’s emotions. Banks generally have focused on the product first, rather than the people and their requirements, investing in the new technology rather than understanding customer behaviour.
Engagement goes beyond gaining attention and takes the next step in motivating people and encouraging changes in financial habits. By supporting customers by defining positive emotions and their connection with their financial goals, banks can determine customer motivations and generate long-term engagement.
Scientific studies also point to the concept of instant gratification, providing short-term rewards over long-term goals. We as a society are often swayed by instant gratification when making a financial plan. Finance businesses can utilise this insight to make financial activities such as saving more rewarding and enhance the relationship. For example, businesses can visually show customers the progress made with their savings, which instantly converts the saving process into something more rewarding.
Traditionally, an engagement platform was considered a mechanism for driving a website or online app experience through which people can engage with the bank and its services. This idea of engagement fails to empower banks with everything they need to meet the rise customer demands. Before anything, banks must understand that engagement platforms involve far more than just the customer journey. Legacy banks have typically created engagement platforms based on the concept of the customer journey. This idea involves defining a customer and expecting them to behave in a particular way, depending on their requirements and then designing a digital platform to meet this pre-defined journey. Today’s digitally-enabled customer doesn’t necessarily fit these pathways and expects more personalised experiences, products and services.
There’s a range of ways utilising insights from customers’ behaviours can enable finance businesses to create a new level of engagement. There is a critical need for finance companies to expand beyond the conventional personal finance system and for banks to connect with people on an emotional level and support their overall wellbeing in this competitive financial environment. Incorporating a behavioural-science approach to deliver a digital experience that promotes better decision-making is critical for future success.
