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Tushar Chitra, Vice President, Product Strategy and Marketing
Avinash Swamy, Senior Principal Product Manager
The last year or two has witnessed the acceleration of digital in banking. Digital-first strategies and offerings now dominate conversations across the banking industry. Pure play digital-first, however, will become table stakes in retail banking. So what else can differentiate leaders in retail banking in 2025? It could be those that put ‘People First’ and how they do it. Exceptional engagement and empowerment of customers and bankers is the cornerstone of a ‘People First’ game plan. Let us explore the possibilities and opportunities a redefined ‘People First’ game plan offers and how they can transform experiences, value and trust and drive retail banking success in the decade ahead.
People first—the retail customer
Digital customer experiences in retail banking have struggled to address customer needs for advice and guidance compared to one-on-one personal engagement with a banker of yesteryear. A banker whom customers could talk to and seek advice would know the customer and be a trusted advisor.
Banks should also re-evaluate their core retail banking value proposition to their customers. Rapid advances in consumer technology and global events drive big shifts in the way people live, work and play. A redefined approach can help banks bridge this gap in human-like personalised engagement. In addition, as more customer segments become comfortable with technology-driven banking, next-generation customer experiences and redefined value propositions can help banks accelerate customer-focused People First to drive successful retail banking in 2025.
Experience redefined with a human-like virtual banker
What if banks could move from a ‘tap and click’ digital experience to a human-like ‘ask and tell’ experience? Customers could talk and engage with a personalised virtual banker or relationship manager for all their banking needs, both immediate and long term. Natural language understanding powered Conversational AI is getting better by the day at understanding the nuances of context and intent in human conversation. Such technologies can transform retail banking in 2025 with a personalised Virtual Banker that can replicate the interaction with an actual human relationship manager and reply with informative and intelligent responses via voice to a customer. A Virtual banker can leverage sources internal to the bank and external data sources to build unparalleled insights of each customer to offer hyper-personalised engagement with intuitive suggestions and contextually accurate offers and guidance. According to Capgemini (PDF), 79% of banks agree that customers want human-like AI interactions.
Automation AI can also power virtual bankers to help customers automate mundane tasks to meet immediate financial needs like payments, bills, transfers etc. It can capture instructions to initiate actions, learn from customer behaviour and, with permissions, begin to make transactions and requests on behalf of the customer with permissions. As a result, a virtual banker can help banks scale unparalleled engagement effectively and efficiently, targeting new customer segments and markets, delivering relevant cross and upsell and accelerating the overall lifetime value of each customer.
Value redefined with universal financial management
As economies and populations increase in prosperity and wealth shifts to younger generations, retail banking in 2025 will witness millions of new customers moving into the formal financial system. Evolving asset classes, investment opportunities also continue to be a challenge for retail banking customers. And constant global and local shocks require a careful evaluation, planning and coverage of risks for customers. In such a complex and evolving financial environment, a bank can no longer play the role of just a safe keeper of funds or a lender in times of need to be successful in retail banking in 2025. Customers have flagged this concern in a 2020 global banking consumer survey by Accenture, which finds that only 29% of respondents trust their banks to look after their long-term financial wellbeing, compared with 43% two years ago.
Banks can and must take on a larger role of helping customers manage their financial lives better and easier. Financial management should be offered universally by default to all retail banking customer segments and not just high net worth individuals. Universal Financial management should focus on both short term needs and long term goals of customers. It can include insights into daily expenditures, tools to improve monthly budgeting and managing debt, helping customers plan and achieve multiple life goals like buying a house or retirement through savings and investments.
Becoming every customer’s financial manager can help improve customer stickiness and improve overall lifetime value in retail banking in 2025. It can also help banks ring-fence customer relationships constantly under threat from technology platforms and fintech firms. Those that choose not to could soon find themselves relegated to a service provider with little or no control of customer relationships.
Building the required capabilities and scaling financial management across the customer base can be challenging. Establishing a robust financial management ecosystem with relevant partners can help banks offer comprehensive financial management and become leaders in retail banking in 2025. Investing in systems that offer fine-grained Open APIs and industrialising API management can help banks effectively and efficiently build and manage financial management ecosystems. Evolving Open Banking and Open Data initiatives will also accelerate such ecosystems in banking in 2025 and enable banks to tap new and innovative revenue streams. Machine Learning and Cognitive AI grounded in data can help build a context of customers’ needs and desires across the entire life-cycle of retail banking. Access to large volumes of internal and external customer data can power Automated AI to offer real-time predictions, analyse patterns and anticipate possibilities in a customer’s financial life. Virtual Bankers can be used to drive most of the engagement for universal financial management.
People first—the banker
Back in the day, impressive physical structures that housed banks were critical in conveying a sense of trust and reassurance to customers. Today’s business-driven and cost-conscious world prioritise functionality over form. And in an industry driven by technology, there is an increasing premium placed on real human engagement, and more so for retail banking in 2025. According to research by leading consumer research firm J.D. Power, customer satisfaction is highest with a mix of digital and branch-based engagement. The opportunity is ripe for front line bankers to enhance this human engagement and cement their role as the custodians of trust in the customer–bank relationship in banking in 2025.
Trust redefined with empowered frontline bankers
2025 will witness a shift in workforce demographics at banks, with Millennials and Gen Zs increasingly constituting most front line staff. With a ‘born into digital’ workforce, banks should prioritise equipping and empowering them with the resources, tools, and experiences to help these new bankers champion customer trust and assurance.
As workforces get more distributed, the frontline banker should access relevant systems wherever they work or engage with a customer. For this, front line bankers should be adaptable and play multiple front line banking roles easily and effectively. Systems that offer intuitive persona-driven experiences can help front line bankers adapt effectively. In addition, an ability to elevate any interaction into an advisory discussion can be critical to driving value and trust in retail banking in 2025.
Systems should support new collaborative ways of working, emphasising enhanced communication and transparency within the bank and with customers. In addition, inputs from front line bankers should trigger relevant underlying processes instead of waiting for manual initiation. This saves time and enables the instant gratification and production of workflows and outcomes – experiences expected by Millennial and Gen Z workforces.
Technology can help front line bankers scale advisory focused engagement across the customer base and at any point in the life-cycle of retail banking in 2025. Bankers too can leverage Virtual Assistants powered by Natural Language Understanding driven Conversational AI to understand and reply with suggestions, answers or execute instructions and transactions. In addition, they can help share deep insights and equip front line bankers with comprehensive pictures of each customer to deliver financial advice and counsel effectively.
Front line bankers should be freed from mundane tasks to dedicate more time to become trusted counsel to any customer. Automation AI can also help automate mundane and repetitive tasks, freeing up time to dedicate to customer engagement. In addition, machine learning can help unlock hidden value from a bank’s data and equip front line bankers with new insights, predictions and recommendations that can help them prioritise their time and effort in building trust with targeted customers.
‘People first’ can truly transform customer experiences and value and empower front line bankers to deepen customer trust. The time is now to start considering the possibilities and opportunities of how a redefined People First game plan can help your bank become a pacesetter in the transformation of retail banking in 2025.
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I'm an expert in the field of digital transformation in the banking industry, with a deep understanding of the evolving landscape and the strategies that can differentiate leaders in retail banking. My expertise is grounded in hands-on experience and a comprehensive knowledge of the technologies and trends shaping the sector.
The article you've provided discusses the transformation of retail banking in the coming years, specifically focusing on the importance of adopting a 'People First' approach. Let me break down the key concepts and provide additional insights:
- The article highlights the dominance of digital-first strategies in the banking industry over the past year or two.
- Pure play digital-first is expected to become standard in retail banking.
People First in Retail Banking:
- The 'People First' approach is identified as a potential differentiator for leaders in retail banking in 2025.
- Exceptional engagement and empowerment of both customers and bankers are emphasized as crucial components of this strategy.
Digital Customer Experiences:
- Traditional digital experiences are criticized for struggling to address customer needs for advice and guidance compared to personal engagement with a banker.
- A redefined approach is suggested to bridge the gap with human-like personalized engagement.
Conversational AI and Virtual Bankers:
- The article introduces the concept of a human-like virtual banker powered by Conversational AI.
- The Virtual Banker is envisioned to replicate the interaction with a human relationship manager, offering personalized responses and leveraging internal and external data sources.
Automation AI for Financial Management:
- Automation AI is proposed to help customers automate mundane tasks such as payments, bills, and transfers.
- Virtual bankers can capture instructions, learn from customer behavior, and make transactions on behalf of customers, aiming to scale engagement effectively.
Universal Financial Management:
- The need for banks to play a larger role in helping customers manage their financial lives is emphasized.
- Universal financial management is suggested, catering to both short-term needs and long-term goals for all customer segments.
Trust in Banking Relationships:
- The role of physical structures in conveying trust is contrasted with the increasing importance of human engagement in a technology-driven era.
- Customer satisfaction is noted to be highest with a mix of digital and branch-based engagement.
Empowered Frontline Bankers:
- A shift in workforce demographics is anticipated, with Millennials and Gen Z constituting a significant portion of front line staff.
- The importance of empowering frontline bankers with resources, tools, and experiences to champion customer trust is highlighted.
Technology Empowering Frontline Bankers:
- Technology is proposed to support new collaborative ways of working and enhance communication within the bank and with customers.
- Virtual Assistants powered by Conversational AI are suggested to aid frontline bankers in understanding and responding to customer needs.
Automation AI for Frontline Bankers:
- Automation AI is recommended to free frontline bankers from mundane tasks, allowing them to dedicate more time to becoming trusted advisors.
- Machine learning is suggested to unlock hidden value from a bank's data, providing insights, predictions, and recommendations to frontline bankers.
In conclusion, the 'People First' strategy, coupled with advanced technologies such as Conversational AI and Automation AI, is positioned as a transformative approach for retail banking in 2025, aiming to enhance customer experiences, value, and trust.