The end of the money era – how are the forerunner banks rethinking their businesses?

Banking is getting wild. The key to survive in the banking disruption is connecting with customers.

2017-11-13 – 6 min read

“What are your goals in life?” an officer asks from me. I’m not sitting in a therapy or a life coach meeting. I’m discussing my finances with my bank’s officer. This will soon be the reality. In the core of banking business will be much more than money: the question will be, how can you live the life you dream?


Today we are witnessing a record number of retail chains in bankruptcy - yet banking and other industries have managed to fly under the radar of e-commerce. This is about to change.  

The banking industry is on the list of industries to be disrupted next. Tech giants are pouring money into banking and establishing new partnerships within the industry. Investments have increased six times from 2,5 billion dollars in 2004 to 15 billion dollars in 2016 (CB Insights). At the same time, new products, technologies, services, and applications are introduced continuously by startups.

 So, what must banking companies do next?

”Banking is necessary; banks are not.”

Bill Gates, 1990

Get closer to the customer

Banks need to take action as they soon might end up losing the customer interface to tech giants, fintechs and others offering financial services. The change will be a reality as soon as the PSD2 directive open their doors for 3rd party providers. What makes the threat so powerful is that banks are having a hard time meeting the current customer requirements as customer experience standards are being set by GAFA (Google, Amazon, Facebook, Apple) companies. Furthermore, 73 percent of Millennials would change their banking relationship to tech giants according to Google.

Although 68 percent of bankers fear that PSD2 will cause them to lose control of the client interface, many of them remain unsure how to respond to the new directive. As a result, they are adopting a defensive, wait-and-see strategy based on survey by Strategy&.

To survive banks need to get closer to the customer.

Brands like Apple and Nike are great examples of how to connect with customers by responding to an emotional side of consumer behavior. Nike is extremely good at communicating the certain lifestyle associated with their products by using superstars like Michael Jordan in highly inspirational footage. Whereas Apple has the ability to use the hype created around their products and brand in their pricing strategies. As a result, Apple’s customers are happy to pay the premium price.

”If people believe they share values with a company, they will stay loyal to the brand.”

CEO of Starbucks and owner of NBA team Seattle Supersonics

How do your customers feel?

Currently, Banks fail to make an emotional connection with their clients. Social Scientists have shown that positive emotions related to a brand have a high impact on building a meaningful and loyal relationship. Even the most rational types of customers have shown to make their purchase decision based on irrational thinking.

To connect with customers and enjoy the benefits of loyal customers, banks must include their branding, products, communication and the whole banking experience. In particular - Banks must rethink their position towards the increasingly digitalized world. Why do they exist? And what do they ask from customers in the first place? At least, the question is not how much do you want to save or do you want to talk about money.

To create a competitive edge, banks must consider the following:

Clarify and differentiate value proposition

Banks must differentiate themselves to beat the competition. Banks will become attractive by being relevant, consistent, promoting themselves intelligently and genuinely responding to the customer needs of tomorrow across all touch-points. Today’s environment with a high level of price sensitivity and increased product research - value proposition matters more than ever.

Rethink services and products

Instead of pushing products to their customers, banks need to rethink their product portfolio and focus on a customisable offering. By designing the offering based on customer’s stage in life and delivering value-added banking and non-banking products, banks can increase loyalty and share of wallet.   

Focus on relevancy in communication and content

Every single touchpoint is an opportunity to communicate the brand and its value proposition. As the number of channels increases and customer journeys are becoming more complex banks are forced to broaden their communication, storytelling and content strategies. Furthermore, irrelevant communication has shown to have a negative impact on brands – focusing on content relevancy is utterly essential.

Enhance user experience

Banks need to look at other industries as the customer experience is being set by GAFA companies. Delivering a positive feeling with smart and consistent experiences is critical for every user. Putting passion and authenticity will capture the customer’s emotional side. Delivering a transparent, simple and smart banking experience is the norm of today.

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Written by

Jens Mattsson

Jens is a strategist at Motley.

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