What is the Future of the Human Touch at Digital-First Banks?
By Leor Melamedov
The future's looking brighter every day for neobanks and other fintech. 16% of UK consumers plan to move to a neobank within the next five years, and the top 10 US consumer banks are expected to lose 11% of their clients to branchless competitors. And with more and more VC money being poured into fintech, it would appear that these upstarts are at risk of supplanting traditional banks. But are they really?
Neobanks certainly have their place, and may even be the best choice of primary bank for certain consumers. But the traditional bank isn’t going anywhere anytime soon. While certain banks activities are in urgent need of digitizing, other aspects of the consumer banking experience need the human touch more than ever.
Even on the path to digitization, don’t accidentally throw the baby out with the bathwater. Human interaction most certainly still has a place in the banking world. It just might look different than it did in the past.
What Needs to Go Digital in Banking?
While there is plenty of talk around the need for innovation in the banking sector, it’s important to be clear about what operations needdigitizing. Grasping for the latest tech that comes with trendy buzzwords such as AI and machine-learning will inevitably lead to frustrated staff and unsuccessful implementation.
“You need to ascertain what systems and technology will sync and fit well with what you currently use or have the ability to upgrade,” says Ethan Taub, CEO of fintech Goalry and Loanry. “You also need to look at your target demographic and assess the technology they use and how advanced and forward-thinking they are.”
That kind of thoughtful, measured approach should guide all decisions surrounding tech adoption at banks. Even when banks decide they need a complete digital transformation, it should still emerge from a true understanding of customer needs.
While every banking institution is unique, here are a few areas that are commonly in desperate need of digitization:
The Customer Onboarding Process
Banks rack up millions of dollars in advertising costs to attract new customers. Yet when it comes to the moment of truth –– the moment those potential consumers try to open an account –– things begin to fall apart. Deloitte research has found that 40% of banking customers have abandoned a bank onboarding process, in most cases due to excessive paperwork requirements.
Far too often, customers attempt to apply for an account on a bank’s website, only to be bounced to a physical channel. This kind of broken digital journey is frustrating to customers who expect to complete their application from the same place they started it. Opening a bank account is a routine procedure, and tech-savvy banks will allow their customers to upload and verify ID, documents, and forms to a single digital channel without ever setting foot into a branch.
Many individuals are reluctant to get involved with investing, even if they are curious about it. And understandably so: the uncertain payoff doesn’t seem quite worth the hassle of going to an investment bank’s branch, filling out piles of paperwork, and maintaining a minimum balance.
This is especially true for consumers who aren’t exactly sitting on tons of dough. Customers face regular obstacles that pile on even more complex paperwork for special situations, such as converting a custodial account to a regular account, or changing account types if they relocate abroad.
“Regular people want easier and more accessible investments that they can understand,” says Deepak Shukla, founder of Pearl Lemon. “With the adoption of platforms like Robinhood and Acorns, it's easy to see that consumers are hungry to invest. If banks can integrate this into their apps and platforms intuitively, the market is there.”
Each of these micro-investing apps has a slightly different concept, but they’re all geared towards helping on-the-go Millennials with limited funds and a digital preference get into investing without the usual hassle and fees.
Day-to-Day Frontend Systems
All the backend technology in the world is useless if the bank’s frontend still looks and acts like it’s 1995. There are a host of different tasks banking customers engage in on a regular basis, and digitization can make or break their customer experience. Using checking accounts, putting in a request for a stop payment, and transferring funds are all examples of common banking services that can be elevated by a frictionless digital frontend.
Today, there is no added value to a wet signature. Electronic signatures and in most cases even typed signatures carry the same legal weight, and come with a fully compliant audit trail. There are many advantages to switching to an eSignature solution.
For instance, if there are multiple account holders, it eliminates the complexity of needing to gather them all into one place to sign. Customers can sign on their mobile phones, saving them time and effort, and reducing the burden on bank agents to physically oversee the repetitive task of signing in person.
What Needs to Stay Human in Banking?
For routine tasks, including the ones discussed above, going fully digital has been shown to increase completion rates, decrease user abandonment, and improve both customer and agent satisfaction. If so many crucial tasks can be reduced to digital forms and signatures, why retain agents at branches at all?
First, digital forms are still forms, and customers may have questions about them that require clarity. The most robust client interaction platforms empower agents to guide customers through a phone conversation as they complete their tasks in a mobile environment. This eliminates the possibility of making costly or time-consuming mistakes in forms or applications.
Second, the human-to-human relationship between a banker and a customer is the real value-add and holds a lot of unexplored potentials. When bankers aren’t bogged down dealing with paperwork, faxes, scanners, and other grunt work, they have more time and energy to spend on what really matters: the human being in front of them.
Whether it’s trying to find a creative solution to a customer’s student loan issue, or supporting a homeowner who will be delinquent on this month’s payment, there are plenty of complex situations that require a human touch. This is true for all banks, and particularly community banks and credit unions, where such relationships are particularly prized.
The Bottom Line: Save Human Involvement for Where it Counts
By digitizingdocument uploads, ID verification, forms, and signatures, banks can find a better use for their human capital. Thanks to automation, AI, and other technologies, digitizedprocesses are more efficient, accurate, and secure than physical paperwork. Traditional commercialbanks should take the best technology fintech has to offer not to replace bankers, but to relieve them of grunt work and reroute their talents towards higher-order work that can never be replaced by a machine.
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