Banks, It’s Time to Meet Evolving Customer Expectations with a Modern MarTech Stack

Insights

• Customers was seamless and highly personalized digital banking experiences. But often, that is not the case.
• Traditional banks struggle to connect with their customers, something which new age challenger banks do well.
• Today's tech stack, which includes AI, APIs, and microservices, can help banks deliver what younger customers expect to strengthen customer engagement through more efficient and optimized marketing.
• Adopting AI-driven customer engagement platforms requires senior stakeholder buy-in, developing a strategy for managing transformation, regular communication, and significant investments in training.

The demand for digital and personalized banking

Banking customers expect nothing short of frictionless, extremely individualistic, and omnichannel experiences. Modern banking must integrate seamlessly into customers’ daily lives — accessible through mobile apps, websites, in-branch interactions, and social media, anytime and anywhere.

Forbes reports that nearly seven in 10 American adults prefer digital banking over traditional methods. Another study found that 72% of banking customers believe customized experiences are critical when interacting with their bank. Yet, many customers still face a fragmented and inconsistent experience across banking touchpoints. This disconnect is particularly pronounced among younger generations, such as Gen Z and millennials, who are digitally native and expect fluidity between online and offline channels.

For example, a customer might apply for a credit card on a mobile app but encounter difficulties completing the process on a desktop or, worse, in a physical branch. This lack of integration and inconsistency can lead to frustration, dissatisfaction, and customers switching to banks that meet their expectations.

Banks struggle to engage with their future customers

Banks don't have the tools to help them meet customer expectations. In particular, attracting and retaining Gen Z and millennials — their future customers — is becoming an uphill battle. These cohorts, comprising 23% of the global populace, are shaping the future of financial services with their digital-first preferences and loyalty to tech-savvy brands. Enhancing customer experience in digital banking is crucial for customer loyalty and engagement. In fact, over half of Gen Z and millennial customers consider switching accounts from larger banks, dissatisfied with the impersonal services they experienced.

Traditional banks risk losing market share to challenger banks that don’t carry technology debt and have an infrastructure that supports superior digital experiences. These fintechs focus on delivering frictionless, intuitive customer journeys while offering extremely individualistic services. The growth of digital-only banks, such as Nubank, Revolut, and N26, underscores this trend, with these institutions seeing exponential growth in their customers yearly.

Banks, with exceptions, are generally not a good example of using customer data to provide targeted and optimized customer engagement across channels. Data silos, legacy systems, and inertia limit their ability to leverage customer data and deliver targeted services. Customer data across mobile apps, branch visits, and social media often goes unanalyzed cohesively, leading to a disconnected customer experience. A lack of an integrated strategy risks alienating their younger, tech-savvy customers, who expect nothing less than an omnichannel, personalized banking experience.

Tech platforms enable extremely personalized and omnichannel engagement

Today's tech stack, which includes AI, APIs, and microservices, can help banks deliver what younger customers expect to strengthen customer engagement through more efficient and optimized marketing. McKinsey, for example, estimates that generative AI could drive the marketing function's productivity up by 5-15% of total marketing spend, realizing $463 billion annually across industries. Gartner expects the technology to automate 60% of the work that goes into designing new websites and mobile apps by 2026.

1. Dissecting the customer pie: AI and ML allow banks to move beyond traditional demographic-based segmentation and tap into behavioral, transactional, and psychographic data in real time. For example, AI can help banks target groups most likely to engage with a particular offer, such as promoting investment products to young professionals or savings plans to new parents.
2. Individualistic experiences: A Salesforce report found that two-thirds of banking customers expect personalized offers from their banks, emphasizing the necessity for AI-driven personalization. Banks are sitting on petabytes of customer data. AI and generative AI can gather data, help banks anticipate customer needs, and offer tailored financial products and services. For instance, generative AI can create client-centric ad layouts or product recommendations that improve click-through rates. The tech also helps analyze campaign performance to generate insights that can again feed into the campaign data for better personalization. UAE’s Mashreq Bank, for example, faced high dropout rates from its new mobile app and low adoption of its debit card and loyalty program. Using MoEngage’s AI-driven customer engagement platform, Mashreq Bank built omnichannel workflows and plugged key dropout points, resulting in a 16% rise in debit card activations. The platform enabled customized offers, improving click-through rates by 50%, leading to better cross-selling and upselling.
3. Anywhere engagement: AI-driven platforms enable banks to engage with customers seamlessly across all channels. Tech helps integrate customer data from various touchpoints and ensures that customer interactions are consistent and personalized, regardless of the platform. Commonwealth Bank of Australia (CBA) wanted to deepen its relationship with its millions of customers and stave off competition. The bank adopted Pega’s platform to create a customer engagement engine that personalizes and prompts the next best conversation for customer representatives to have with each customer.
4. Customer lifecycle management: AI-powered tools automate entire customer journeys from acquisition to onboarding and retention, ensuring the process is smooth, fast, and compliant with regulatory requirements. The tech can help detect early customer dissatisfaction, enabling proactive retention strategies.
5. Automating campaigns: Real-time customer actions can trigger marketing campaigns when equipped with the right tech stack. This increases conversions and enhances customer satisfaction. For example, AI can trigger a individualistic campaign promoting forex services or international credit cards for frequent travelers. For instance, HSBC wanted to make customer interactions proactive, client-centric, and adaptable to changing needs. However, disjoined channels made these tasks difficult to execute. The bank implemented Pega’s centralized real-time decision engine, allowing it to automate and localize campaigns. Click-through rates rose 3.5x across the web and 200% for email campaigns.

APIs and microservices connect these technologies. APIs integrate AI-driven platforms within the existing banking infrastructure for seamless data flow and communication between systems, making platforms more responsive and adaptable to customer requirements.

Data is crucial for tech platforms. These platforms are only as good as the underlying data. Data that is inaccurate, missing, irrelevant, or biased can defeat the purpose of platforms, which is to generate meaningful insights or individualistic experiences. Banks must choose a tech platform that consolidates customer data from offline and online channels, de-duplicates it, and builds a 360° complete customer profile. This data will help generate granular insights and predictions dictating the customer experience.

Adopting AI-driven customer engagement platforms such as MoEngage requires significant changes. It starts with senior stakeholder buy-in, developing a strategy for managing transformation, regular communication, and significant investments in training. Banks that proactively consider solving their future customers' needs with better experiences will not only stay competitive but also gain more loyal customers and accelerate growth.