Home » What can your bank do for you? Why financial institutions are paying more attention to their customer’s demands
By Ion Fratiloiu, Head of Commercial, Yobota
Historically, banks and financial institutions have been slow to take up new trends and hesitant to adapt to the shifting demands of their customer base. The steady proliferation of fintechs and financial service (FS) providers has changed expectations, as new challengers emerge to meet and exceed the demands of individuals in terms of payments, accounts and credit options.
Another factor in this attitude shift is the greater prevalence of embedded financial products that consumers were exposed to during the eCommerce boom brought about by the pandemic. Seeing agile fintechs, challenger banks and even retailers themselves offering FS products as part of a seamless journey led customers to ask more of their banks.
For a bank or financial services company to stay at the forefront of the sector today, they must be more aware of their clients’ needs and be able to accommodate them at speed. The days of monolithic, slow-moving financial entities being deaf to their consumers’ demands are long over, which our recent survey of more than 250 senior decision-makers at UK-based banks and FS firms has proven.
Open ears, open minds
The survey revealed an overwhelming trend of FS companies and banks updating their offering to better serve their clients, with 77% of respondents stating that their company had begun to engage new customer segments over the past 12 months.
This shift in attitudes seems to have been influenced by greater attention being paid to existing clients’ demands, with 80% regularly seeking feedback from customers on how to improve their offering and 71% working on developing new products as a direct result of customer feedback.
That the vast majority of UK banks and financial institutions share the same attitude towards prioritising customers reveals a fundamental shift within the FS space – having access to greater variety and more appealing options has forced banks to become more competitive and diversify their offerings.
If a customer was in need of a credit product, their first port of call would be to browse their bank’s limited selection of options before having to seek out an alternative. But today, with diverse credit products like buy now, pay later (BNPL) and branded credit cards being offered by retailers and specialised fintechs, the onus lies with longstanding banks and FS companies to present a more appealing offering if they want to keep up.
Staying one step ahead
While our survey revealed that the majority of banks and financial institutions are already developing new products to maintain their relationship with existing customers, the transformative rate of change within FS means that they must also be prepared for the next sea change, no matter what form it may take. It is not enough to respond to today’s customer demands if they are not ready to respond to tomorrow’s as well.
The key to this new fast-paced way of things is adaptability – having the systems and protocols in place that make keeping up with the times possible. Resting on one’s laurels by clinging to legacy tech will not do – whatever the next development within the open banking or embedded finance space is, whatever the next hot product or service is, the most successful players in the market will be the ones that are versatile enough to stay on top.
A model for success
A major contributor to this rate of change in recent years has been banking-as-a-service (BaaS), which has offered scalable solutions to brands, and enables players outside of the inner circle of financial institutions to offer their own products tailored to their customers’ needs.
BaaS providers represent a useful framework for adaptable financial service models – their modular, API-powered platforms can adapt to the unique requirements of different segments and are future-proofed by their versatility. The rise of BaaS-powered financial services has caught the attention of progressive banks and FS companies deliberating their future: 64% of respondents to the aforementioned survey have seen more unregulated businesses starting to offer financial products and services over the past year.
The underlying tech of banks and FS companies will be instrumental to their success in the coming years and enable them to compete with their smaller, and often nimbler, counterparts. Implementing a modular, flexible core banking platform that enables them to transform their business model and focussing on delighting customers will ensure that no one gets left behind.
Positively, most appear to be hedging their bets and delivering on promises to put their customers first: 83% of decision-makers are confident in their organisation’s ability to meet the evolving needs of their customer base.
From launching his financial career at Deutsche Bank, Ion spent a number of years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.