Report finds banks have a unique opportunity to monetize digital capabilities while delivering personalized banking experiences to customers

The ability to personalize banking experiences is a key expectation among bank customers today, according to a new Capco research report, “Insights for Investments to Modernize Digital Banking.”

Customers also desire digitally-driven features that save time when dealing with routine, commoditized tasks, and also want highly personalized banking relationships. They value text alerts, want to be notified of opportunities to transact more efficiently, and also want to be able to track multiple accounts using a single dashboard.

“The arrival of digital banking introduces an operating paradox for the financial services industry,” says Lane Martin, Partner, US Banking & Payments Practice at Capco. “How does a bank balance the seemingly contradictory desire to digitize the banking experience while also maintaining a personalized relationship with each individual customer?”

To understand customers’ expectations for financial institutions (FI) in the digital era, Capco surveyed 1,008 U.S. consumers via an online questionnaire asking them about personalization, bank switching, customer engagement, and sought-after digital features.

Key findings include:

• Digital features bank customers want and will pay for:
  • 86% of respondents are most interested in cashback offers based on preferred card perks, followed by 82% for cashback offers based on bank loyalty.
  • 26% are willing to pay for reward features of interest. Gen Z and millennials tend to be more inclined to pay for reward features than Gen X and the baby boomer generation.
  • 88% of survey respondents would like to receive alerts before recurring charges, and 31% of customers are willing to pay for that feature.

• The human touch remains vital for customer engagement: Consumers will be loyal to a bank’s brand if they find it easy to engage online or via mobile – but they still want to talk with a person when needed.
  • A majority of survey respondents (63%) indicated a desire for one-on-one personal conversations with bank representatives, with only 37% favoring chatbot or text message (SMS) communications.
  • Willingness to engage with a chatbot decreased as age increased, with 18% of Gen Z favoring chatbots compared to only 8% in the baby boomer generation.
  • The baby boomer generation favors face-to-face interactions. They are more likely to speak with a branch representative (36%) than Gen Z (23%).
  • Engagement preferences varied slightly by type and size of the bank. Community (34%) and regional (41%) bank customers preferred to speak with a branch representative, while super regional (38%) and large institutional (36%) patrons preferred to speak with a customer representative over the phone.

• Personalization – here comes the bank of CRM: The desire for customers to personalize their banking relationship is the strongest message emerging from survey respondents.
  • 72% of respondents rated personalization as “highly important,” while just 8% said it was not. 20% of respondents were neutral on the topic.
  • Millennials place the highest value on personalization (79%), followed by 75% of Gen Z, 74% of Gen X, and 58% of boomers.
  • 86% of people who felt personalization is important to their experience are willing to provide feedback on their experiences at least annually. Customers who are older and have higher income levels are more willing to provide regular feedback.

• Fraud remains a concern: 75% of survey takers cited a fraud issue as a key reason to switch banks.
  • Gen Z is most concerned about fraud incidents (81%), compared to 76% of the baby boomer generation, 75% of millennials, and 72% of Gen X.

“People still desire the ability to pick up a phone or walk into a branch to get questions answered,” notes Martin. “No matter how sophisticated they have become, chatbots, FAQ pages, self-guided digital platforms, and other forms of non-personalized service have yet to establish the right level of personalization and enhanced customer experience.”

The survey results reinforce the idea that continued investments by financial institutions in improving digital interaction channels may cause customers to reconsider a potential change in their bank.

Download and read the full research report, which offers a clear perspective on market trends, detailed analysis of the consumer survey results, and tailored recommendations for banking leaders on how to achieve the optimal balance between digital innovation and personalization, while identifying ways to monetize new customer engagement models.

Capco is a global management and technology consultancy dedicated to the financial services industry. Our professionals combine innovative thinking with unrivalled industry knowledge to offer our clients consulting expertise, complex technology and package integration, transformation delivery and managed services to move their organizations forward. Through our collaborative and efficient approach, we help our clients successfully innovate, increase revenue, manage risk and regulatory change, reduce costs, and enhance controls. We specialize in banking, capital markets, wealth and asset management and insurance. We serve our clients from offices in leading financial centers across Europe, the Americas and Asia Pacific. To learn more, visit our web site at www.capco.com or follow us on Twitter, Facebook, YouTube, LinkedIn Instagram, and Xing.

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