How-to Guide: Building a Modern Customer Loyalty Engine
Oct 07, 2021 • 20 min read
Oct 07, 2021 • 20 min read
The banking industry is in the middle of a significant transformation. Fintech startups and other non-traditional companies are gaining market share at the cost of traditional banks, and customer attrition is at an all time high.
According to Boston Consulting Group, corporate banks lose between 10–15% of gross revenues due to attrition annually — there was a 15% attrition rate amongst retail financial institutions per year (Source: Boston Consulting Group).
So why is the attrition rate so high with traditional banks? The main reason is that customers are dissatisfied with their experience at their bank. Fintech companies are stepping into this gap left by retail banks with a heavy focus on a flawless customer experience and an emphasis on an efficient and personalized user experience. According to CNBC, mobile banking traffic has increased by a whopping 85% since the beginning of April 2020, with many experts predicting that this growth is likely to stick. Mobile banking offers customers many advantages, the most important being ease of access. Instead of having to wait in line at a physical branch, customers are able to access and manage their money from virtually anywhere.
However, many users find mobile banking interfaces complex, cluttered, and frustrating to use, a massive contributing factor to the high attrition rate. Users have complained about difficulties in setting up and using basic features such as fraud alerts and payment reminders, lack of customer service availability, and cumbersome identity verification processes. In order to retain their existing customers and to capture new ones, banks have already realized that they need to prioritize improving their digital experience to meet and exceed the expectations of their users.
Banking apps themselves have not changed significantly since their creation - users want a new experience, not one that has already been played out. Banks need to find a way to deliver a fresh, new and personalized experience to customers.
Research and consumer studies have shown that mobile banking users are looking for:
There is an opportunity for banks to create a differentiated customer experience by leveraging a technological innovation that is gaining fast adoption in the industry - digital assistants. Bank of America is at the forefront of this trend with their assistant “Erica”. Erica is proof that digital banking assistants are what customers want - it has accumulated over 15 million users since its launch in 2018. Users have flocked to Erica because it’s a fresh new way to interact with their mobile banking app. Digital banking assistants are an absolute game-changer for traditional banks; they provide greater convenience, speed and accessibility for customers while also reducing the cost of operations.
So why doesn’t every bank have a digital banking assistant? That’s because building these products in-house is both time consuming and expensive - for reference, Bank Of America spent 2 years and $30 million dollars to build “Erica”. A majority of banks simply do not have the time or resources to create something similar. Additionally, many banks do not have personnel with the necessary skill set required to undertake such an initiative.
Grid Dynamics has designed and built mobile apps for many of the Tier-1 retailers in the US and has used this experience to launch an accelerator for creating a modern Digital Banking Assistant. This accelerator provides the framework, architecture, design and prototype needed to create a cutting edge, customized digital assistant for banks. This allows for a greatly improved digital experience for their mobile banking users through streamlining common procedures and increasing accessibility and ease of use.
Key Features of Digital Banking Assistant are:
The use of Flutter in the tech stack allows it to run on one code base for both iOS and Android applications, decreasing the overall operations cost. The digital banking assistant can also be customized to add and extend functionality for certain account types, as the modular design allows for its technology components to be easily replaced with equivalent ones.
Banking is becoming more digital as time goes on and consumers expect the same high level of functionality and convenience from their banking app as they do from any other app that they use on a daily basis. Banks need to deliver an improved digital experience to their customers and digital banking assistants are a necessary step in the journey towards customer satisfaction. As time goes on digital banking assistants will be seen as a necessity rather than a luxury.