Banks at a crossroads: Navigating changing consumer expectations

May 21, 2024

In the last decade, consumer expectations have evolved at a pace that many industries, particularly banking, have struggled to match. The digital age has redefined what consumers expect from their service providers, placing a significant emphasis on quality, responsiveness, and customization. As we look ahead, it's clear that four major trends in consumer behaviour will only gain momentum, pushing banks to adapt more rapidly or risk being left behind.

1. Trust Through Experience

Traditionally, trust in banking was built on the foundation of financial stability and long-standing relationships. However, today's consumers build trust based on the quality, responsiveness, and consistency of their experience. This shift means that a seamless, efficient, and reliable customer journey is now paramount.

Banks must focus on delivering a consistent experience across all touchpoints, whether online, through mobile apps, or in physical branches. Consumers expect transactions to be smooth and issues to be resolved quickly. Any inconsistency can lead to a loss of trust, driving customers to competitors who can offer a better experience.

2. Expectations Shaped by Tech Giants

The second trend driving change is the consumer expectation for banking services to match the best-in-class experiences provided by tech giants like Amazon, Google, and Netflix. These companies have set high standards with their intuitive interfaces, personalized recommendations, and instant gratification.

Banks are now expected to offer similar levels of service. This includes user-friendly apps, personalized financial advice, and seamless integration across devices. Consumers no longer compare their banking experiences to other financial institutions but to the tech companies that dominate their daily lives.

3. Flexibility and Customization

Consumers today demand more flexibility and the ability to customize financial products to meet their individual needs. This trend is a stark departure from the one-size-fits-all approach traditionally seen in banking. Modern consumers want products that adapt to their life stages, spending habits, and financial goals.

To meet this demand, banks must leverage data analytics and advanced algorithms to offer personalized products. This can include tailored loan packages, customized savings plans, and investment options that align with individual risk appetites. By providing such flexibility, banks can enhance customer satisfaction and loyalty.

4. Speed of Innovation

The fourth trend is the need for speed in innovation. The rapid pace of technological advancements means that consumers expect new products and features to be rolled out quickly. Banks that are slow to innovate risk losing their competitive edge.

Embracing a culture of innovation requires banks to rethink their traditional processes. Implementing agile methodologies, fostering partnerships with fintech companies, and investing in cutting-edge technologies like artificial intelligence and blockchain can accelerate product development and improve service delivery.

As consumer expectations continue to evolve rapidly, banks must adopt innovative solutions to stay competitive. A No-Code Business Rule Engine like DECIDE offers a powerful tool for banks to meet these demands efficiently and effectively. Let's explore how these tools addresses the key trends shaping consumer behaviour in banking.

1. No-Code Rule Engine to Innovate and Launch New Products Faster

In the fast-paced digital era, speed to market is crucial. Traditional product development cycles in banking can be lengthy and cumbersome. A No-Code Business Rule Engine simplifies this process by allowing business users to create and modify rules without the need for extensive coding knowledge.

Rapid Product Development: Banks can quickly design, test, and launch new financial products. For example, a leading Indian housing finance company used our platform to launch 39 new products across three categories in just two months.

Empowered Business Teams: By enabling business users to directly configure rules, banks can bypass lengthy IT development cycles, fostering a culture of agility and innovation.

2. Ability to Offer Personalization Based on Customer Need

Modern consumers demand personalized experiences tailored to their individual needs. NCBRE enables banks to harness the power of data analytics to deliver customized financial products and services.

Data-Driven Personalization: Using existing customer data, banks can offer personalized recommendations and solutions. For instance, analysing customer profiles, transaction history, and preferences can help suggest the most relevant financial products.

Enhanced Customer Engagement: Personalized offers and services lead to higher customer satisfaction and loyalty. According to a report by BCG, personalized banking can increase revenue by 10% and reduce churn by 15%.

3. Instant Offers and Approvals Based on Consumer Demographic, Usage, and Credit Checks

Consumers today expect quick and seamless service. NCBRE facilitates instant decision-making by automating processes based on real-time data.

Real-Time Decision-Making: Automated credit assessments and demographic analysis allow banks to provide instant offers and approvals. For example, ICICI Bank in India offers pre-approved loans to select customers based on their transaction history and credit scores.

Improved Customer Experience: Speedy approvals and instant offers enhance the customer experience, making it more likely for consumers to choose and stick with a bank.

4. Straight-Through Processing for Faster Approvals

Efficiency is a key driver of customer satisfaction in banking. NCBRE supports straight-through processing (STP), which eliminates manual interventions and speeds up approval processes.

Operational Efficiency: Automating routine processes reduces the time and effort required for approvals.

Reduced Errors: Minimizing human intervention decreases the likelihood of errors, ensuring a smoother and more reliable process.

5. Wider and Stricter Compliances for Lower Risk and NPA

Compliance and risk management are critical in banking. NCBRE allows banks to implement strict compliance measures and mitigate risks effectively.

Enhanced Risk Management: Automated rule-based systems ensure compliance with regulatory requirements, reducing the risk of non-performing assets (NPAs). According to the Reserve Bank of India, the gross NPA ratio for Indian banks stood at 6.9% as of September 2021, highlighting the need for robust risk management.

Scalability and Adaptability: As regulations evolve, banks can quickly update their rules and processes to stay compliant, ensuring they can scale their operations without compromising on compliance.

The No-Code Business Rule Engine is a game-changer for banks aiming to meet the rapidly changing expectations of their customers. By enabling faster product innovation, personalized services, instant offers, efficient processing, and strict compliance, these platforms empower banks to stay competitive in an increasingly digital world.

As consumer expectations continue to evolve, the ability to adapt swiftly and effectively will determine the leaders in the banking industry. With a No-Code Business Rule Engine, banks can ensure they are not just meeting but exceeding these expectations, positioning themselves for long-term success.

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