The way a user interacts with a company plays a key role in how they perceive the entire purchase journey. While this is true in all sectors, it’s even more evident in banking. Among the innovations that are radically changing the ways that banks contact and engage with their customers (and consequently the customer experience), self-service options are absolutely prominent.
In this post, we will explain why self-service banking is one of the major innovation trends, not only technological, to invest in, and we will do so by focusing on three elements that distinguish the customer journey enabled by the new modes of interaction: frictionless experience, customer experience management (CXM), and customer communication management (CCM).
First, however, we will try to provide some coordinates to better understand what self-service means in banking and how it has developed over time.
What is self-service banking?
Self-service banking is the set of services by which customers are able to carry out financial transactions and activities using devices and channels without having to physically go to a branch. Thanks to self-service modes, customers can be up-to-date with their financial situation at any time of the day, they do not waste time waiting in traffic to get to the branch or waiting in line for their turn at the counter. Instead, they are able to carry out transactions even if the branch is closed, and they don’t have to deal with the often disappointing experience of call centers. These are just some of the real-world situations that drive 69% of customers to choose to use self-service options before going to an in-person location.
When was self-service banking born?
While the idea of self-service in banking goes back a long way, we can pinpoint a precise moment when that idea first materialized into a truly revolutionary technological tool: it was June 27, 1967, and in Enfield, UK, Barclays introduced the first ATM (Automated Teller Machine) that allowed customers to withdraw cash using a personal magnetic card. From London, ATM technology quickly spread to the rest of the world: the first ATMs appeared in the United States a little over two years later, in early September 1969, in China in 1985, and in Italy in 1976 (after Cassa di Risparmio di Ferrara, the first to install one, other banking institutions would follow, launching similar services that, in the spring of 1983, would merge into a single circuit: the Bancomat system).
The ATM is now used not only for withdrawals but also to carry out various transactions: there are evolved ATMs that offer additional services, such as depositing nontransferable checks and cash or paying bills.
On the one hand, it is undeniable that the introduction of the ATM laid the foundation for a completely new approach to banking. On the other hand, we could say that it answered a need that had existed for years, that of consumers who wanted to independently manage their finances. With the spread of the internet, customer expectations have expanded to include comprehensive and increasingly personalized self-service experiences. It’s in being able to meet these changing expectations where banks should invest in self-service interaction modes today.
Why should banks invest in self-service?
The reasons why self-banking is now an established reality are diverse and numerous and tend to vary according to context, but in general they all share two common elements: the need for companies to offer a customer-centric experience and the desire of customers to access simple, flexible and effective services. We have tried to collect these reasons into three macro groups.
The ability to offer customers the possibility of constant monitoring
During 2020 and 2021, we have witnessed the closure of many physical branches and, in the case of some services, the permanent transition to digital environments. On the other hand, the period of high uncertainty we are currently experiencing—with the rising cost of living and unstable market conditions—has led to a search for tools that can guarantee us constant monitoring of the state of our finances. This is why all those apps that allow us to check our account balance on the way home by train in the evening or that allow us to pay a bill we had forgotten about even after bank has closed are increasingly successful.
Increasing the efficiency of services
It might seem that self-service banking has become indispensable because it has replaced the direct relationship with advisors or people working behind the counter, but this isn’t the case. On the contrary, rather than shrinking the space for communication, self-service banking has multiplied the opportunities for contact with the bank, freeing human workers from more repetitive or lower-value activities and allowing them to focus on solving complex problems. In this sense, a robust self-service strategy achieves greater efficiency and increased productivity: teams, which can deflect redundant and low-value queries, receive great support in performing daily tasks while simultaneously helping to generate more revenue. By having more time, they can in fact expand their skills, putting them at the service of higher, more dynamic business goals.
Personalizing experiences
Digital self-service improves CX and, at the same time, saves considerable time and budget (e.g., minimizes call volume to customer service centers). Directing more traffic to online touch points not only helps reduce the cost of service but also allows consumers to personalize their experiences. Indeed, thanks to artificial intelligence and machine learning applications, every customer interaction increases the knowledge base available to bank employees and customers (the knowledge base can be linked to chatbots and search tools). By updating the self-service modes with data that comes from different business sources, users more easily find content that is useful to their specific needs (such as articles, infographics, and explanatory videos) and gain more confidence as they navigate through the proposals and services offered. Data-driven communication built on customer profiles is highly effective from the very beginning of the journey, including during those crucial onboarding stages where the premises of the future relationship with the bank are established.
What are self-service banking services? Some examples
A customer experience that is simplified and constantly updated to meet new expectations is a customer experience that expresses an idea of change in which the customer dictates the direction and pace of the relationship. This particular concept of customer experience, where more and more space is given to developing self-service tools for customer empowerment, is also gaining ground in a sector traditionally tied to in-person communications such as finance.
Today, banks and other industry players must respond promptly to urgent questions, explain complex processes clearly and concisely, and help customers deal with potentially stressful situations affecting their financial situation. Self-service services are born and developed to prevent the activities necessary to manage our finances from being experienced with anxiety and worry because of unreliable, frustrating, time-consuming customer services. We point out the main solutions below.
- Interactive Automated Teller Machines (ITMs): ITMs represent the evolution of ATMs, which, as we have seen since the late 1960s, have enabled customers to withdraw cash, deposit checks, and transfer funds without having to enter a branch. One feature that differentiates ITMs from ATMs is the video chat feature through which customers are able to interact directly with tellers. In the case of ITMs, customers can perform a wider variety of transactions than with their automated version.
- Interactive kiosks: these are similar to ATMs but have even more functions. They are useful in cases where tellers are unavailable. Customers can avoid long lines or branch closures by using them for cash and check transactions, credit card applications, and loan activities.
- Contactless Transactions, such as Cardless Readers: while credit and debit cards must be inserted or “swiped,” contactless chip cards allow consumers to access an ATM or make a purchase by simply placing their card next to the reader.
- Biometric identification: also known as face or fingerprint scanning, is the form of identification technology that allows consumers to access their accounts through facial scanning or fingerprint recognition.
- Online banking: with simple access to the internet we have the ability to bank on a mobile device or desktop.
- Digital wallets: options such as Apple Pay, Samsung Pay, PayPal, Venmo, or Satispay allow you to pay in a store or make a financial transfer to another person (a friend, family member, etc.) in seconds and with complete security.
The self-service channels we have listed are part of an innovative digital ecosystem that has developed in response to the spread of a very powerful trend: the one that has led to the design of frictionless experiences. Two technology platforms, corresponding to as many business models and methodologies, can be used to achieve this type of CX, as we shall see: customer experience management and customer communication management.
Frictionless experience
Eighty-four percent of customers say the experience a company provides is as important as the products and services themselves. According to the CMO Council’s report, Critical Channels of Choice: Meeting the Customer Expectation for Omnichannel Relationships, the vast majority of consumers (91%) consider omnichannel experiences important or even critical, and a 29% wish companies were ready to communicate “in the place I want, at the time I want.” The report also states that 87% of Millennials and Gen Z overwhelmingly prefer omnichannel communication. For younger audiences, a system of consistently connected omnichannel touchpoints—access to email, phone, web, in-person engagements, video, social media, printed documents—is not a “premium” option but a minimal expectation.
This data, among many available, capture a radically transformed customer journey in banking. From mobile banking to internet banking, from ATMs to contact centers to branches: customers are using multiple channels to conduct transactions. It’s no longer necessary to go to a branch to open an account, request and obtain information about products or services, and make transactions.
In fact, it’s possible to manage the process completely online; start online and complete the activity in a branch and vice versa, start at the counter and complete online. Managing a financial transaction within a physical bank is no longer the only alternative but one option among others, which is chosen depending on one’s personal schedule and time available.
Equally important to keep in mind is that consumers expect all of these activities to be seamlessly connected, to each other and to in-branch interactions. The basic standard for positively evaluating the banking experience is becoming frictionless: a frictionless experience, one that is fluid and entirely omnichannel. This is a key consideration for financial institutions to think about, as positive customer experiences create loyalty and increase return on investment (ROI).
Banks will then need to have the best self-service support capabilities to make transactions fast and efficient, with high levels of security and without excessive costs. Not only that, for digital experiences to proceed as planned and seamlessly, across all channels, banks will need to identify possible obstacles in the user’s path and act promptly to remove them, while simultaneously providing full access to information across all touchpoints.
Customer experience management and customer communication management platforms are two formidable tools for creating and managing frictionless experiences.
Customer experience management (CXM)
Customer experience management was created to design, organize, and guide the customer experience. In a competitive industry like banking where most banks offer very similar products and services, CXM is concerned with managing and meeting customer expectations on every touchpoint provided by the bank, for example:
- mobile-first features, systems, and apps that can be used to conduct transactions quickly and easily, on whatever device users prefer;
- open lines of communication, accessible and managed by properly trained operators;
- personalized financial product content and offerings, e.g., credit cards made according to customers’ profiles (student credit or debit cards, cash-back credit cards, travel credit cards, corporate credit cards).
Having a CXM strategy is vital for deepening the knowledge of customers and developing the self-service capabilities needed to help them solve their problems on their own.
Customer Communication Management (CCM)
Customer communication management for financial services enables banks, insurance companies, and others to create a wide variety of communications that are useful for interacting with their customers: service emails, updates on company policies, account statements, complaints and renewal notices, and communications about new products and services.
CCM offers financial services companies a unified means of communicating in a compliant manner with their customers through the most appropriate channels, including printed documents, e-mail, phone calls, cell phones, SMS, social media and Web interfaces. CCM platforms:
- generate and distribute personalized communications to customers in real time;
- identify new potential customers, personalize offers, and increase upselling and cross-selling opportunities;
- reduce operational costs by automating the digital generation and distribution of large volumes of complex correspondence;
- offer customers more options to interact and communicate with the bank through their preferred channels. For example, the self-service capabilities of CCM tools allow customers to access documents anywhere, anytime;
- help the bank ensure readiness for periodic audits and compliance with regulations;
- lighten the manual workload of teams, relieving employee stress and improving internal collaboration and communication.
An organization’s reputation is based on the customer’s experience of an organization through all its touch points and the decisive game is played to win and maintain customer trust over time.
Trust, as we know well, is the main resource that banks must manage if they hope to achieve their business goals. From the ability to offer customers constant monitoring of their financial situation to increasing the efficiency of services, to personalization and frictionless management of experiences: in this post, we have tried to explain why self-service modalities contribute to the loyalty process and we have described how they can be employed effectively to create a better customer experience.
