Why digital banking is now essential for customer service

Author: Dale Eastham

After a prolonged period of extremely low interest rates, the Bank of England is likely to raise rates soon. But this is not the only significant shift that banks must consider: PSD2 and GDPR are also looming on the horizon. Let’s take a closer look at what these mean, and how digital banking solutions can smooth banks’ transition to the new world.

In July 2007 the UK interest rate hit a six-year high of 5.75%. Just a few months later, the credit crunch started to raise its ugly head. By March 2009 rates had reached an unprecedented 0.5% low, sitting there until August 2016 when they were cut to a record 0.25%.  

A few weeks ago, Bank of England governor Mark Carney hinted that a base rate hike was now a distinct possibility. The Bank of England’s monetary policy committee then did indeed raise interest rates at its November meeting back to 0.5%.

Adopting #digital #banking #solutions is now a must. #GDPR #PSD2 Click To Tweet

Shockwaves on the horizon

For people – particularly Millennials – who are just about managing on the 0.25% base rate, even a small interest rate rise could push them over the edge into debt. After all, this generation has never experienced an interest rate rise. Living on cheap debt and with no savings, they walk a tightrope with their finances but have no safety net to fall back on.

I believe a debt shock could be catastrophic for them.  

As their anxiety and panic sets in, I envision a marked change in their behaviours. Banks should prepare for a massive increase in calls to their contact centres as nervous customers reach out for timely and meaningful conversations.

If you’re not ready to meet this significant increase in demand, you risk becoming overwhelmed in a very short space of time, frustrating your customers with a poor experience.

Other changes afoot

But, as a bank, an interest rate will not be the only change on your mind. The second Payment Services Directive (PSD2), which entered into force in January 2016, requires all EU Member States to incorporate its rules into their national law by 13 January 2018.

This fundamental piece of European payments-related legislation is the driver for a new era of open banking. It requires all payment service providers, including banks, to implement secure APIs for account transactions and make data available to third parties.

Then there’s the EU’s General Data Protection Regulation (GDPR), which will apply in the UK from 25 May 2018. GDPR requires all EU businesses to protect EU citizens’ data and privacy, with costly consequences for non-compliance.

Digital support for customers in need

With substantial changes afoot in the coming months, digital banking solutions will help solve many challenges.

Firstly, by opening up new channels for your customers to contact you, digital can help reduce the number of calls your branches and service centres receive. Customers would be able to contact you 24/7, at a time convenient to them. They might talk to an advisor over web chat, send a private message, or even arrange a video call with an advisor.  

You could also add videos and leaflets to your websites, providing help for customers who do not know where to turn. The advice within them might provide sufficient guidance for some customers, helping them to see a way through – especially when combined with digital affordability calculators that offer clarity on where their money is going each month.

With digital you can also be proactive, identifying customers at risk and guiding them in the right direction before they get into difficulty. Automated analysis by AI tools can pinpoint issues ahead of time and discretely warn you of potential problems so you can step in and help.

This gives the customer a feeling of being recognised, supported, and engaged, reducing anxiety as they get help to get their finances under control.

Digital critical to new regulations

Without digital, you may well struggle to remain compliant with – and take advantage of – opportunities offered by PSD2 and GDPR once they come into force.

PSD2 signifies the era of open banking, which not only requires you to open up your data but also offers new opportunities for generating revenue. Following the lead of today’s digital giants, you should explore the new platform-based business models that PSD2 and digital banking solutions enable. Fail to transform for the era of open banking, and you will put your future at risk.

Meanwhile, GDPR imposes widespread privacy changes across every EU business with regulators empowered to impose hefty fines. It’s also an opportunity to leverage digital banking solutions to harness the value of your increasing volumes of data. Fail to transform for today’s era seeking customer engagement via digital banking, and see your competition charge ahead.

Adopting digital banking solutions is now a must, with interest rate increases, PSD2, and GDPR looming on the horizon. Are you ready for tomorrow?   

29 Nov 2017

Author: Dale Eastham

After a prolonged period of extremely low interest rates, the Bank of England is likely to raise rates soon. But this is not the only significant shift that banks must consider: PSD2 and GDPR are also looming on the horizon. Let’s take a closer look at what these mean, and how digital banking solutions can smooth banks’ transition to the new world.

In July 2007 the UK interest rate hit a six-year high of 5.75%. Just a few months later, the credit crunch started to raise its ugly head. By March 2009 rates had reached an unprecedented 0.5% low, sitting there until August 2016 when they were cut to a record 0.25%.  

A few weeks ago, Bank of England governor Mark Carney hinted that a base rate hike was now a distinct possibility. The Bank of England’s monetary policy committee then did indeed raise interest rates at its November meeting back to 0.5%.

Adopting #digital #banking #solutions is now a must. #GDPR #PSD2 Click To Tweet

Shockwaves on the horizon

For people – particularly Millennials – who are just about managing on the 0.25% base rate, even a small interest rate rise could push them over the edge into debt. After all, this generation has never experienced an interest rate rise. Living on cheap debt and with no savings, they walk a tightrope with their finances but have no safety net to fall back on.

I believe a debt shock could be catastrophic for them.  

As their anxiety and panic sets in, I envision a marked change in their behaviours. Banks should prepare for a massive increase in calls to their contact centres as nervous customers reach out for timely and meaningful conversations.

If you’re not ready to meet this significant increase in demand, you risk becoming overwhelmed in a very short space of time, frustrating your customers with a poor experience.

Other changes afoot

But, as a bank, an interest rate will not be the only change on your mind. The second Payment Services Directive (PSD2), which entered into force in January 2016, requires all EU Member States to incorporate its rules into their national law by 13 January 2018.

This fundamental piece of European payments-related legislation is the driver for a new era of open banking. It requires all payment service providers, including banks, to implement secure APIs for account transactions and make data available to third parties.

Then there’s the EU’s General Data Protection Regulation (GDPR), which will apply in the UK from 25 May 2018. GDPR requires all EU businesses to protect EU citizens’ data and privacy, with costly consequences for non-compliance.

Digital support for customers in need

With substantial changes afoot in the coming months, digital banking solutions will help solve many challenges.

Firstly, by opening up new channels for your customers to contact you, digital can help reduce the number of calls your branches and service centres receive. Customers would be able to contact you 24/7, at a time convenient to them. They might talk to an advisor over web chat, send a private message, or even arrange a video call with an advisor.  

You could also add videos and leaflets to your websites, providing help for customers who do not know where to turn. The advice within them might provide sufficient guidance for some customers, helping them to see a way through – especially when combined with digital affordability calculators that offer clarity on where their money is going each month.

With digital you can also be proactive, identifying customers at risk and guiding them in the right direction before they get into difficulty. Automated analysis by AI tools can pinpoint issues ahead of time and discretely warn you of potential problems so you can step in and help.

This gives the customer a feeling of being recognised, supported, and engaged, reducing anxiety as they get help to get their finances under control.

Digital critical to new regulations

Without digital, you may well struggle to remain compliant with – and take advantage of – opportunities offered by PSD2 and GDPR once they come into force.

PSD2 signifies the era of open banking, which not only requires you to open up your data but also offers new opportunities for generating revenue. Following the lead of today’s digital giants, you should explore the new platform-based business models that PSD2 and digital banking solutions enable. Fail to transform for the era of open banking, and you will put your future at risk.

Meanwhile, GDPR imposes widespread privacy changes across every EU business with regulators empowered to impose hefty fines. It’s also an opportunity to leverage digital banking solutions to harness the value of your increasing volumes of data. Fail to transform for today’s era seeking customer engagement via digital banking, and see your competition charge ahead.

Adopting digital banking solutions is now a must, with interest rate increases, PSD2, and GDPR looming on the horizon. Are you ready for tomorrow?