The tale of the rise of digital banking is a long narrated one and banks have understood the importance of the same. This has led to the challenger banking revolution and their unsurmountable rise is inevitable. This rise is further accelerated by the current pandemic effect. Now the question is – how can any financial institution grow like a challenger bank? The obvious answer is by having the challenger mindset. Here are four pillars we believe will nurture the challenger perspective present in your financial organization.

Four Pillars of Challenger Banks

1.Focal point: Customers

The key aspect behind digitization is catering to customer needs in the best possible way. There are three basic segments to categorize customers: digital natives, the unbanked, and the under banked.

Challenger banks have leveraged the missing aspect of traditional banks and raced their way towards achieving customer satisfaction. This aspect is what the traditional banks have failed to understand along with several sub-divisions under the above three segments.

In order to reach customers in the right way, all the banking products and services should be tailor-made to suit those sub-divisions. Hence, we are witnessing some of the most advanced technical implementations, like AI/ML based risk management, analytical solutions, digital onboarding and origination solutions, etc.

Recommended Read: Customer Segmentation: A Treasure Trove for Marketers in the Banking Dynasty!

2.Frictionless Customer Experience

Here’s a question – How many people in current times are interested to wait in long queues, fill multiple forms, visit banks more than twice to solve a particular issue, etc., for a loan? Very few, right? This is because today’s customers expect everything to happen ‘on the go’ and that applies to the financial industry as well.

The overall digital customer experience in today’s world needs to be easy, seamless, and secure. From onboarding to loan origination, the entire experience has to be completed with minimal taps and duration.

There are a few challenger banks that offer instant loans with minimal friction. How are they even doing it? Thanks to AI/ML based analytics, Real-time credit scoring integrations, etc., that makes the entire process secure and simple.

Another powerful aspect of frictionless customer onboarding is – omnichannel banking. Irrespective of any device, web browsers, mobile application, etc., customers expect consistent banking experience everywhere or as we would like to call ‘Anytime Anywhere Banking.’

Recommended Read: 9 Trends That Define Customer Experience in Banking in 2021

3.Value-additions: Customer well-being

Empathy banking is another interesting aspect that truly reaches customers irrespective of the segments. It is important to understand that banking is not just limited to ‘savings account,’ it goes way beyond and deeper than this presumed thought. Banks have to consider their customer’s financial well-being as one of their core principles and need to go the extra mile for this value-addition.

With the advent of social media and e-commerce, businesses have strong influence on customers and hence, banks are supposed to provide engaging digital solutions. For instance, banks can offer goal-based savings account, where customers can create a goal and save financially to achieve it.

But the million-dollar question is – how to add such value and develop deep connections with the customers?

Answer – Hyper-personalization.

Some challenger banks have incorporated hyper-personalization as a part of their core banking architecture. One situational instance is that if the bank identifies a customer having a low balance account and needs assistance to survive the month, it processes a pre-approved loan and intimates the customer of this shortage and assistance.

Recommended Read: Smart Spending Analytics – Personal Financial Management

4.Resilient operations

In all the above pillars, what is the most common point?

Advanced technologies!

Innovation in the banking sector has given birth to several challenger banks that have leveraged the state-of-the-art technologies to provide customers the best banking experience. While understanding the customers is a mandate, another facet is operational excellence.

Cloud native and cloud agnostic systems have become the saviors of the banking industry with their round-the-clock accessibility, scalability, and security. To complement this, microservices are ensuring modularity, hence, failures are limited to just a microservice and not the whole banking architecture.

You must already know the power of AI/ML based platforms that help in risk management, personalized solutions, security, etc. Another aspect that challenger banks are considering is the loosely coupled frameworks associated with their API architecture to make enhancements/upgrades easy. Also, some of them have exposed their APIs to several fintechs to encourage Marketplace Integrations.

A Takeaway

Challenger banks are growing profoundly and soon they might conquer the banking industry with their superior customer experience. However, to grow like a challenger bank, there is an open-secret-”Digital transformation is not a one-time thing; it is a continuous empowering journey.” The best way to advance in this journey is through collaboration, that helps build a ‘dream ecosystem’ by associating with multiple partners and leveraging the strengths, customer base, and offerings of their platform.