Insights

The global economy is shifting. While banks are not unaccustomed to having to adapt to changing markets, this year is presenting a whole new kind of landscape. Because of the downfall of the economy – and simultaneous energy crisis – 1 in 6 UK households are in serious financial difficulty.

High level customer support is now crucial for these households. If banks weren’t already aware of a growing need to wholeheartedly adopt new banking technologies, this climate is making it clearer than ever. Something needs to change for good, to help recover struggling households and enable banks to reduce risk across the board.

Why do banks need to digitally transform their customer debt resolution journeys?

Consumer banking preferences change rapidly and perpetually

Millennials and Gen Z are demanding digital banking experiences – ones that align with their other consumer experiences. Maybe surprisingly, older generations also prefer digital banking services. According to McKinsey & Co, around 60 – 85% of people prefer to handle everyday transactions digitally, even for customers of 65 years and older.

As previously stated, consumer financial stability is changing. More people are finding themselves in debt, and many for the first time. Adopting a comprehensive digital care system is one of the most effective ways that banks can hope to tackle this crisis.

Making the right decisions, quicker

Making decisions that have an impact on people’s livelihoods is a big part of the banking sector. Despite the importance of these decisions, they haven’t always been handled with the urgency needed to get people out of limbo – a delay which often results in problems getting worse.

However, we’re not blaming banks. There’s long been a lack of resource or the right tools to encourage this to happen. But, as more people get into problem debt, banks cannot afford for their decision-making processes to be as slow as they have been (and still are in many cases). Purpose-built digital solutions will enable you to support your customers, at speed – making decisions that consider customer wellbeing and the wider economy

Lagging digital capabilities

Incumbent banks use a lot of legacy systems, so typically, the systems and processes are slow, and the information reported is outdated. Senior decision makers are usually presented with data that is old, as opposed to real-time information – it’s a flawed system that needs to change. Banks, perhaps more so than other industries, need to adopt digital-first strategies into their core back-office systems, to improve the customer experience. And more importantly, streamline access to debt advice, to reduce problem debt and portfolio risk.

For speed, agility and resilience

Banks know that time is of the essence for their operations. Like many businesses, banking staff can sometimes be limited by repetitive everyday tasks which, although necessary, don’t add much value. Unnecessarily lengthy processes are increasingly problematic and hinder the time to reach a solution. Adopting end-to-end digital solutions that enhance and optimise banks’ processes in the right way will provide the resilience, flexibility and timeliness needed today.

How can banks embrace a digital-first approach?

Most financial firms know that they need to digitally evolve, but knowing how to do this is a different matter. How can firms approach digital to fully benefit their business and their customers?

Make pragmatic technology decisions that fit today’s needs

Banks were built for the industrial revolution. Built around paper, around cheques, around cash, and around ledgers. In a time when online channels dominate, operational processes and customer journeys need to be reconstructed. Because when you run with a legacy business model that focuses on the physical distribution of documents and people processing these, it does not make sense.

Banks need to opt for digital solutions that improve processes, not just speed them up. And that is the essence of digitization. It is about connecting the dots across products, distribution, as well as how customers consume banking products and how they are supported when they fall into arrears and debts they cannot service.

Repetitive interactions based on last century’s business model consume time and resources. They drive up costs, degrade the user experience, drain time and energy, and leave customers and your agents dissatisfied.

Your technology needs to provide valuable data insights. AI technology is leading the way for this, so that banks can better understand customers through consumer behaviour data. When your service is driven by real-time data, better decisions can be made.

Upskill your workforce

Banks aspiring to adopt a new model will need to upskill their workforce. While some may be reluctant to invest, it’s one of the most promising ways to ensure that digital transformation will succeed.

By upskilling existing workforces, organisations can become more dexterous and agile. This kind of investment will give banks the efficiency they need to operate in increasingly volatile markets. It will also allow workforces to be more equipped to provide the right services to their customer bases.

Restructure your organisation

With digital transformation comes the opportunity to restructure your organisation. By no means a quick and easy fix, a restructuring process is necessary for banks if they want to survive in the digital era – amongst the macroeconomic challenges seen today.

A lot of retail banks use systems and processes that run off old and duplicated data. Decision-making processes are long-winded and inefficient. Embarking upon a cultural and structural shift, changing decision making processes, roles and responsibilities, and prioritising customer journeys, banks can better reorientate their entire organisation around digital – fit for the 21st century.

Choose the right fintech

As a part of a digital-first strategy, banks will increasingly have to rely on FinTechs to effectively adopt new digital processes. Partnering with a FinTech will enable banks to continuously innovate and support data-driven customer engagement. Through this kind of third-party collaboration, banks have a better chance at succeeding, able to move into a broader digital ecosystem cost effectively and fast.

It’s important to ensure you partner with the right FinTech too. Going back to the first point above, a FinTech needs to support pragmatic technology decisions and not merely create the illusion of efficiency.

Banks need to choose a digital solution that enriches the customer experience, not just processes. This is important in understanding that your customers are people going through unique journeys, and not just transactions.

A socially conscious fintech, accelerating digitisation for banks

Retail banks now need to make cultural changes to consistently deliver good outcomes – for their institution, their customers, and the wider economy.

Elifinty’s socially conscious debt management platform enables banks to engage with customers and help them in a meaningful way, building and maintaining strong customer relationships and securing the lifelong value of each customer.

TrustConnect gives banks the tools they need to use the terabytes and petabytes of customer data at their disposal to make decisions that are tailored to the customer’s unique circumstances. It works to empower frontline employees and the customer themselves. It brings decision-making to a customer level rather than leaving it exclusively to management. And, there’s self-help options for the digitally-savvy demographics, providing better outcomes for all.

Want to know more about TrustConnect for your firm? Download our use case for retail banks, here:

Download retail banks use case