Today, financial institutions are no longer just brick-and-mortar institutions where customers go to deposit or withdraw money. From online banking to mobile payments, customers now expect a seamless and convenient experience across all digital channels. Instead, they are now delivering an increasingly personalized and seamless customer experience, enabled by digital touchpoints that span across multiple devices and channels.
Digital touchpoints are any point of contact between a customer and a financial services provider that takes place via a digital medium. This could include online banking platforms, mobile apps, social media channels, chatbots, email communications, or even QR codes embedded in printed marketing collateral. By leveraging these touchpoints, financial institutions can create a more efficient, convenient, and personalized customer experience that improves customer satisfaction and loyalty.
In this article, we will explore the ways in which digital touchpoints are acting as the tip of the spear and changing customer experience in the financial services space.
Personalization & Targeted Marketing
Digital touchpoints enable financial services providers to personalize their offerings based on customer preferences, behavior, and past interactions. By leveraging data analytics and artificial intelligence, providers can offer tailored products and services to customers, which leads to higher customer satisfaction and loyalty.
For example, banks can use transaction data to offer personalized investment options to customers or use machine learning algorithms to personalize the pricing of loans and credit cards. Additionally, digital touchpoints such as chatbots can offer personalized customer service by responding to customer queries in real-time.
Digital touchpoints also provide financial institutions with the ability to personalize the customer experience and offer targeted marketing. By collecting data on customer behavior and preferences, financial institutions can tailor their marketing messages and offers to individual customers. This can lead to higher engagement, loyalty, and increased customer lifetime value (CLV). According to a report by EY, "Personalized experiences create a competitive edge by engaging customers, building loyalty, and driving revenue growth."
Convenience & Accessibility
Digital touchpoints have made financial services more convenient for customers. With mobile banking apps, customers can access their accounts and perform transactions from anywhere, at any time, and on almost any device. This has eliminated the need for customers to visit a physical branch or call a customer service center, which saves time, effort, and costs.
Today, online banking allows customers to access their accounts 24/7, make payments, transfer funds, and check their account balance from anywhere with an internet connection. Mobile banking takes convenience to the next level by allowing customers to do all these things from their mobile device. According to a study by Bain & Company, "mobile banking has already become the primary channel for many consumers, particularly younger ones, with 59% of Millennials using mobile banking regularly."
Moreover, digital touchpoints such as voice assistants have made it even easier for customers to access financial services. For instance, customers can ask Alexa or Google Assistant to check their account balance, transfer funds, or pay bills.
Seamless Experience Across Channels
Digital touchpoints have enabled leading financial services providers to create a seamless experience across all channels. Customers expect to have the same experience across all touchpoints, including mobile apps, websites, and physical branches. By leveraging digital technology, financial services providers can provide a consistent experience across all channels, which leads to higher customer satisfaction and loyalty.
For instance, customers can start an application on a website and complete it on a mobile app without having to provide the same information twice. Additionally, customers can start a chat with a customer service representative on a website and continue the conversation on a mobile app without losing context.
Faster & Lower Friction Transactions
Digital touchpoints have made financial transactions faster and more efficient. With the use of mobile apps, customers can transfer funds, pay bills, and even apply for loans without having to wait in line at a physical branch or wait for customer service representatives to respond. Digital touchpoints enable faster transactions by eliminating the need for manual processes and paperwork. For example, digital payments can be processed instantly, and online loan applications can be completed in minutes rather than days. According to a report by McKinsey, "Digital payments are typically processed in seconds or minutes, compared to the several days it takes for a traditional payment to be processed."
Digital touchpoints also provide greater convenience by allowing customers to conduct transactions from anywhere with an internet connection. Mobile banking apps enable customers to make transactions on the go, and online banking allows customers to access their accounts 24/7. This eliminates the need for customers to visit a physical branch or make a phone call to conduct transactions. According to a report by PwC, "Customers are increasingly using digital channels as they seek greater convenience and speed."
Moreover, digital touchpoints such as contactless payments have made transactions even faster. Customers can pay for goods and services using their mobile devices or contactless cards, which reduces the time it takes to complete a transaction. Digital touchpoints also lower the friction associated with traditional transactions. For example, digital payments eliminate the need for customers to carry cash or write checks, while online loan applications eliminate the need for customers to fill out paperwork and visit a physical branch. This makes transactions quicker and easier for customers, while also reducing the administrative burden for financial institutions. According to a report by Deloitte, "Digital channels reduce friction in the payment experience, providing convenience and ease for customers."
Digital touchpoints have also enhanced the security of financial services. With the use of biometric authentication, such as fingerprint or facial recognition, customers can securely access their accounts and perform transactions seamlessly. This eliminates the need for passwords, which can be easily compromised, as well as lost, stolen, or forgotten. This provides an added layer of security to protect customers' accounts and personal information. According to a report by Juniper Research, "Biometric authentication will be used by 1.5 billion banking customers by 2023, up from 800 million in 2019."
Additionally, financial services providers can use machine learning algorithms to detect and prevent fraud in real-time. This ensures that customers are protected from fraudulent activities and enhances their trust in the provider, while decreasing risks and costs for both the customer and the instituations.
Increased Access to Financial Services
Digital touchpoints have also increased access to financial services, particularly for underbanked and unbanked populations. With mobile banking apps, customers can open bank accounts, apply for loans, and perform transactions without having to visit a physical branch. Removing a pain point for some communities that lack the means and funds to travel to and from a bank branch.
Moreover, digital touchpoints such as person to person payments, and digital payments (e.g., mobile money) have enabled customers to access financial services without the need for a bank account. Mobile money allows customers to send and receive money, pay bills, and even save money all through their mobile devices. Doing so at a lower transaction cost to both the customer and financial institutions.
Improved Customer Service
Digital touchpoints also enable financial institutions to provide improved customer service. For example, chatbots and virtual assistants can provide instant support to customers, answering common questions and resolving simple issues without the need for human interaction. This frees up customer service agents to focus on more complex issues. According to a report by Accenture, "Chatbots have the potential to save banks up to 70% in customer service costs." Additionally, social media channels can be used to engage with customers in real-time and provide timely updates and information, meeting customers where they are and want to be.
Additionally, digital touchpoints can provide financial institutions with the opportunity to reduce costs by automating many routine tasks and processes. By leveraging digital technologies, financial institutions can streamline their operations, reduce manual labor, and improve efficiency, resulting in cost savings.
One good example of this is in servicing. With the advent of chatbots and automated messaging systems, financial institutions can handle routine customer inquiries and support requests without the need for a human representative. This not only provides customers with a quicker response time but also reduces the cost of customer service for financial institutions.
Another area where digital touchpoints can reduce costs is in the processing of financial transactions. Digital payments, for instance, can be processed automatically, reducing the need for manual intervention and associated costs. Automated loan processing systems can also reduce the need for manual underwriting and processing, leading to faster turnaround times and cost savings.
Digital touchpoints can also enable financial institutions to automate many routine back-office tasks such as accounting, reconciliation, and reporting. This automation reduces the risk of errors, improves efficiency, and frees up staff to focus on higher-value activities.
Finally, by leveraging digital touchpoints, financial institutions can also reduce the costs associated with physical infrastructure. For example, online banking services eliminate the need for physical branches, reducing rent, utility, and staffing costs associated with maintaining a physical presence.
Challenges and Opportunities
While digital touchpoints have many benefits, they also present challenges for financial institutions. One of the biggest challenges is the need to keep up with rapidly evolving technology. Financial institutions must continually invest in new, stratagegies, technology, and digital capabilities to adapt to changing customer preferences to remain competitive. Additionally, as digital touchpoints become prolific, there is a risk of losing the personal touch that comes with face-to-face interactions. Financial institutions must find ways to balance the convenience of digital touchpoints with the need for personalized service, augmented by digital capabilities.
In conclusion, digital touchpoints are transforming customer experience in the financial services space by providing increased convenience, personalization, seamless experience across channels, improved customer service, enhanced security, and lower costs. As digital transformation continues to accelerate, financial institutions must continue to invest in digital touchpoints to remain competitive and meet the evolving needs of their customers.
However, financial institutions must also be mindful of the challenges posed by digital touchpoints, such as the need to keep up with evolving technology and balance the convenience of digital touchpoints with personalized service. Overall, the adoption of digital touchpoints has created new opportunities for financial institutions to better serve their customers and remain competitive in an increasingly digital world.
- Bain & Company. (2019). Banking in Africa: Rising to the Digital Challenge. Retrieved from https://www.bain.com/insights/banking-in-africa-rising-to-the-digital-challenge/
- EY. (2018). How Digital Banking is Transforming Customer Experience. Retrieved from https://www.ey.com/Publication/vwLUAssets/ey-how-digital-banking-is-transforming-customer-experience/$File/ey-how-digital-banking-is-transforming-customer-ex
- McKinsey & Company. (2018). Payments Pulse Survey: The Future of Payments. Retrieved from https://www.mckinsey.com/industries/financial-services/our-insights/payments-pulse-survey-the-future-of-payments
- PwC. (2018). Digital Banking Consumer Survey. Retrieved from https://www.pwc.com/gx/en/industries/financial-services/publications/digital-banking-consumer-survey.html
- Deloitte. (2019). Payments Trends 2020. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-payments-trends-2020.pdf