With rising interest rates, demand for new loans is cooling – and banks need to find ways to attract, retain and engage their customers. The key to this lies in the customer experience: a recent report found that over a quarter of Australian banks are prioritising improving customer experience to drive their digital business transformation.

When it comes to customer experience, neobanks are well ahead of the game in this respect. They have an acute understanding of what their target audience is looking for – a robust customer experience – and they delivered. This in turn raised the bar with customer expectations, and traditional banks are playing catch-up.

Rise of the super apps
The banking needs of Australian customers have evolved. Cash use is diminishing at a rapid rate among Australians and customers prefer going cashless and transacting online. Naturally, traditional financial institutions that fail to transform quickly will be left behind and risk losing customers to their digital-savvy competitors.

In addition, the emergence of “super apps” offers customers new and integrated financial services options. Leading the charge are social messaging payment apps such as WeChat, AliPay and Revolut. Facebook also introduced its payments system, enabling users to pay merchants and send money to friends.

With lower regulatory barriers to entry, digital players can navigate regulations and compliance more efficiently. Many of these players are also relatively new – 20 per cent of the competitors globally are less than 15 years old. These players are not riddled by legacy infrastructure and systems – and are nimble and attuned to the pulse of consumer needs today.

Banking on a human-centric approach
It’s not an understatement to say consumer behaviour and expectations have changed significantly in the last couple of years. Customers now expect personalised access to the right experts and special recognition of the moments that matter in their daily lives. It’s clear: while all customer groups have become increasingly digital over the last two years, customers still value the human touch.

According to Forrester’s 2022 Australia Customer Experience (CX) Index, customer experiences delivered through a mix of digital and physical channels outperform in terms of quality and brand loyalty. Similarly, a study by Gartner found that customers who use a hybrid of digital and human channels show higher revenue potential compared to customers who use only digital channels.

While technology can enable more banking employees to engage with customers, many of the fundamentals of today’s digital experience are commonplace. If not properly implemented and used, technology can unintentionally depersonalize experience, erode trust and widen the disconnect between customers and their bank.

Experience-driven digital banking
Legacy infrastructure continues to hamper traditional banks and stop them short of where their customers expect them to be. With the recent shift to digital payments, this outdated infrastructure has been subjected to even more pressure. This has impacted the overall resilience of banks and makes them more vulnerable to cyber security threats. Disruptors, on the other hand, can offer services and platforms that enable faster and more convenient payments, security, and visibility into personal finances.

Even though digital solutions like the cloud are not new, many traditional financial institutions still struggle to maximise their technologies to drive higher efficiencies, improve agility and transform how they operate. An integrated and cohesive cloud platform can be a critical foundation in building an ecosystem of tech solutions and partners, which in turn creates a multiplier effect to deliver enhanced experiences and new products for customers.

There’s no doubt that super apps and social networking platforms will continue to disrupt what banks have established. In 2023 and beyond, it will be critical for Australia’s largest banks to uncover these opportunities and play by the rules of the digital era. By continuing to understand evolving customer segments and expectations, and rapidly delivering capabilities, banks can continue to lead with trust, offerings and experiences.

Find out how banks can evolve to be digital by design and yet truly human.