Enhancing Customer Experience for Digital Banking’s Growth

How a seamless digital banking experience can attract and retain customers

Lance Homer

The Asia-Pacific region is balancing on the edge of a neobanking revolution. Singapore is expected to award the nation’s first digital banking licenses later this year, which means we could be looking at the inception of digital banking into Singapore’s landscape by 2021. Standard Chartered Bank and NTUC Enterprise have also recently announced plans to open a digital-only bank in Singapore[1], following the Monetary Authority of Singapore’s recent announcement to revise rules governing foreign lenders and their set-up of digital-only banking subsidiaries.

With 40% of adults in Singapore either underbanked or unbanked[2], digital banks seem set to serve niche segments of the market that are underserved by traditional banks. This includes a growing mobile-savvy millennial population, where neobanks offer them increased convenience and increasingly personalized service.

In the first piece of this two-part blog series, we’ve explored why an ecosystem approach is integral to the success of Singapore’s digital banks, and now we’ll delve into why digital banks in Singapore should focus on customers as the priority in order to succeed.

With 40% of adults in Singapore either underbanked or unbanked, digital banks seem set to serve niche segments of the market that are underserved by traditional banks. Lance Homer

Building a Customer-Centric Digital Banking Ecosystem in Singapore

According to Kapronasia, being in an ecosystem can further enhance neobanks’ digital agility by allowing them to select best-of-breed solutions and integrate them quickly.

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Onboarding in a digital age

In the face-off between traditional and digital banks, where digital banks have stood out is the seamlessness in which customers can be onboarded onto their platforms. Nearly all traditional banks with a presence here at least offer reasonable online banking platforms and apps, where day-to-day tasks such as bill payment or cross-account transfers can be easily done. However, other processes such as opening an account are much more tedious, requiring paper-based documents, a lengthy phone call or even heading down to a branch in-person.

With 37% of consumers (and more than 50% of millennials) preferring to open a new account via a digital channel or mobile app[3], neobanks can comparatively offer a frictionless onboarding experience that take a fraction of the time for their traditional counterparts. In fact, UK-based tech blog Built for Mars found that challenger banks not only required the fewest clicks for account set-up, but significantly outperformed even the best-scoring traditional banks.[4]

With up to 70% of consumers abandoning account application due to the time or information required to set up an account[5], neobanks are determined to maximize customer traction by a fast, easy and seamless onboarding processes even while meeting strict Know Your Customer (KYC) processes.

Making it personal with customer data

Onboarding customers is of course, just the beginning of their customer journey. Customers stay with their financial institution for 16 years on average[6] – a large deciding factor of which is the customer experience they receive.  According to NGData, 41.4% of consumers cited bad customer service as the main reason they would switch to a new bank in 2017.[7] It is hence essential for banks to ensure that the customer’s experience is top-notch when it comes to speed, simplicity and their customer-centric offerings.

With the wide array of customer data that digital banks stand to have at their fingertips, a real possibility to embrace is personalization. When over 60% of consumers currently feel like the offers they receive from their bank are directed as part of a campaign aimed at a broader market and not based on individual needs[8], the population is ripe for data-driven personalization in digital banking that can increase customer engagement, reduce support costs and drive revenue.

Digital banks should leverage customer data to develop far more customer-centric and personalized services – building a stronger understanding of what the data can tell them about customer needs, expectations and desires to tailor their services accordingly. When done with transparency and with the appropriate precautions to meet data compliance, this data-driven approach will demonstrate a deep understanding of each customer to tailor a unique customer experiences that will grow engagement and loyalty towards neobanks.

An open approach to banking

As digital banks begin to make headway here, the next frontier is already being explored. In a recent discussion between Equinix and Mr. Sopnendu Mohanty, Chief FinTech Officer at the Monetary Authority of Singapore (MAS), Mr. Mohanty spoke on how open banking in Singapore will revolutionize the digital payments landscape. Data sharing between different institutions – from neobanks to digital banks to fintech startups – breaks down the traditional monolithic approach, with the main goal being a common infrastructure where financial institutions will be able to provide API services and allow access to customer data at an individual level.

This seamless access of data would be a game changer for the customer experience. By breaking down the monopoly of customer data and opening up from siloed, customers will be able to make unfettered choices within a financial ecosystem instead – letting them seek out easier, more seamless and intuitively value-adding banking experiences.

These ecosystems foster collaboration between financial ecosystems, and are hence spurring demand for interconnection, the direct and private exchange of traffic between key business partners. This spike in demand is reflected in the Global Interconnection Index (GXI) Volume 4, a study published by Equinix, with interconnection bandwidth for Financial Services & Payment Providers projected to grow at 33% compound annual growth rate (CAGR) between 2019 and 2023 in Asia-Pacific.

With open banking likely to support innovation in markets with populations of unbanked or underserved people, the envisioned goal is the development of a beneficial ecosystem – one that exposes customers to better, more affordable and more convenient services from their provider of choice to elevate their overall digital banking experience.

To learn more about how Equinix can help businesses enhance customer experience in the future of banking, check out our latest read our whitepaper “Building a Customer-Centric Digital Banking Ecosystem in Singapore.”

[1]https://www.straitstimes.com/business/banking/stanchart-ntuc-enterprise-said-to-be-planning-virtual-bank-here

[2]https://www.bain.com/insights/fufilling-its-promise/

[3]Account Opening: Run It Like You Own It – Aite Group, 2019

[4] https://builtformars.co.uk/banks/opening/

[5] Account Opening: Run It Like You Own It – Aite Group, 2019

[6] https://www.bankrate.com/banking/best-banks-consumer-survey/

[7] 2017 Consumer Banking Survey – NGData, 2017

[8] 2017 Consumer Banking Survey – NGData, 2017

 

 

Lance Homer
Lance Homer Global Head of Strategy for Electronic Payments