The COVID-19 pandemic has caused a sustained and permanent shift in customer behavior. On the one hand, financial constraints are visible; on the other, there’s a clear desire to use digital technologies while also expecting the same comfort and convenience in banking. An entirely new breed of consumers is fast emerging, and the only way banks can meet the demands of this new breed is by resetting some tried and tested business strategies. Here are 5 big changes in consumer behavior that banks must fold into their operational strategy:

1. Consumer Appetite for Risk has Reduced

With salary cuts and job loss fears looming large, the consumer appetite for risk has reduced considerably. Although many consumers have been open to taking risks, often investing in high-risk, high-return financial instruments, post-pandemic, the risk of missed payments on mortgage, loans, credit cards, and overdrafts is turning that tide.

To curb defaults on payments and establish long-term trust and confidence, banks need to constantly analyze consumer data and consolidate and visualize this data via portfolio monitoring reports and dashboards to arrive at the best decisions in real time. Other technology-driven measures such as using social media and online monitoring of public behavior to monitor borrowers (at least the reputation risk of commercial borrowers) are also relevant. As is expending more resources to reduce the risk of outages, investing in cyber security, etc. Such measures can strengthen the ability of banks to counter the risks.

2. They Seek Intuitive and Innovative Digital Banking

Digital banking has operated for several years, with consumers gradually moving away from physical branches onto digital channels. But the pandemic has made this shift from physical to digital a sustained and deep-rooted phenomenon. As lockdowns were imposed, banks had to close their branches’ doors and move all their customers to digital channels.

Moving face-to-face, process-driven interactions to digital channels while protecting personal relationships with customers requires banks to rely on technologies like AI and RPA to automate back-end operations. Banks also need to leverage technologies like big data analytics better to get transparent and real-time insights into consumer preferences, so they can provide the intuitive and innovative digital experiences they seek from their banks.

3. There is a High Demand for Consistent Omnichannel Experiences

Another major change in consumer behavior that banks must consider in the post-pandemic era concerns omnichannel banking. Today’s customers are open to conducting the same transaction from multiple channels. They may research a loan product on the desktop browser, check for the impact on their savings in the mobile app, and proceed to avail of the loan through their web banking. Since customers today want to access their bank accounts anytime they want to, and even use multiple devices to access and store valuable information, banks need to be able to deliver reliable and unswerving experiences across channels. Using technologies like big data, banks can unearth critical insights from consumer behavior by using clickstream web analytics, including past transactions and future preferences. This information can help them wow customers with consistent omnichannel experiences irrespective of whether they are visiting the branch, using their smartphone, a personal computer, or visiting the website.

4. They want Online Interactions to be as Seamless as face-to-face

As more and more consumers move to digital banking, they expect online interactions to be as seamless as face-to-face transactions. But for banks that use traditional, human-run service desks, delivering such interactions is not easy across channels. Depending on humans to provide physical branch-like experiences is not only time-consuming but also prone to error – which can negatively impact consumers’ overall experience with the bank.

To provide face-to-face-like online interactions, banks need to embrace technologies like conversational AI and deliver intelligent conversational capabilities and experiences for their audience. Conversational AI can help in scaling the business while consistently increasing customer satisfaction. Built using AI, ML, and NLP, conversational AI can be used to address several banking problems, including preliminary questions, resolving complaints, aiding search requests, offering site guidance, and more – helping reduce delays in customer response time while also forging strong customer connections, building trust, driving growth, and decreasing customer churn.

5. They Expect a quick Response to changing Needs

Pandemic-struck banking consumers also want their banks to quickly respond to changing trends and preferences and cater to new expectations with increased agility. But banks that continue to depend on legacy infrastructure to run their business often struggle to match the pace of change, as these systems are extremely sluggish to respond to modern business needs while being too complex and costly to maintain and engineer.

As the variety, velocity, and volume of data surges, banks need to modernize their legacy systems that were built in an era that lacked the complexities of the modern world. Such modernization efforts can not only address contemporary challenges; they can also help banks to cope up with growing data volumes and support newer data in the form of weblogs, audio, and video files and make them available for continuous analysis.

Consumer behavior and preferences constantly shift, making it difficult for banks to keep pace. The shift has particularly been massive since the pandemic struck, forcing banks to consider these changes and build and embed new and innovative digitalization efforts into their operational strategies. Banks operating in today’s digital era can make digital interactions more human by embracing modern technologies to reimagine banking while ensuring consumer experiences are not deprived of the traditional human touch.

Emergys Blog

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