Competition with Banks Sets the Industry Standards for Digital
As digital technology has continued to become more powerful in people’s lives over the years, there has been a significant shift in various industries toward fulfilling customer expectations through all external touchpoints – and continuing to fulfill those expectations as they evolve.
In financial services, this trend is clearly illustrated by the well-known digital banking push currently consuming headlines. As banks keep reaching for the next level of customer satisfaction through new services that push previous digital boundaries, new standards of expectation are slowly being set.
What is one of the main drivers behind these new tentative industry standards and solidifying expectations surrounding digital banking? Industry competition.
As banks vie for more of your business, each progressively raises the bar — and soon what may have been perceived as a luxury service five years ago is now a basic assumption. This trend of competition setting the industry standards for digital in the financial realm has proved pivotal to the industry’s focus on customer engagement and which platforms they choose to invest in moving forward.
According to a recent report by Greenwich Associates, “By 2025, leading banks will be operating as digital financial superstores that blur the line between technology companies and banks.” The study reveals that as consumer perceptions and expectations regarding e-commerce have shifted over the years — increasingly easy, fast and transparent — so will their expectations around banking services.
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This knowledge of consumer desires and current perceptions that banking is still slow, cumbersome and costly is leading banks to roll out new platforms and, in effect, tell customers what they can expect as the new “norm.” And these offerings don’t just benefit the customers; they also help to make banks more marketable.
With the rise in fintechs and mobile-only startups, banks are looking for new ways to stay competitive — another reason behind the major shift in what digital banking platforms provide to customers.
ICICI Bank, the largest private sector bank in India, for example, recently launched updates to its iMobile app, which now allow consumers to perform new tasks, such as paying taxes or booking railway tickets. By adding these features, ICICI took a stance on what mobile banking should look like and provided its customers with a service previously completely outside of the typical banking process — and it is not alone.
This industry-standard setting action spurred by competition among banks, as well as between them and fintech startups, is a global phenomenon. In the U.S., for example, Bank of America (BofA) recently partnered with Facebook Messenger to reach its customers with real-time banking alerts, including daily account summaries and low balance alerts, as a way to meet their customers where they are.
Examples such as ICICI and BofA illustrate how banks’ competition and efforts to not only satisfy customer expectations, but also gain a competitive edge by offering something completely new to the digital banking experience are, in turn, setting the industry standards for what a digital banking service should look like — and carrying customer expectations with it.
This is why it’s important for banks to keep an eye on industry announcements and not only the desires and expectations of their customers, but their competitors’ customers as well; since what begins as a unique and differentiating offering today, could become the industry norm tomorrow.
