Given today's levels of uncertainty, member-owned banks find themselves at a critical crossroad. Failing to adapt swiftly to the rapidly changing landscape may result in unwelcome repercussions. The need to take fast action and harness the right technology to elevate customer experiences has become less of a choice and more of a requirement.

Background

As the year swiftly unfolds, consumer spending tightens, exacerbating the already dire situation with a 30% year-on-year growth in small business insolvencies since the onset of COVID. This challenging environment puts member-owned banks, which rely on public funding, in a progressively vulnerable position. Research substantiates the notion that smaller financial institutions face substantial losses during economic downturns, with only a few able to recover at pace if at all. This impending crisis demands immediate attention and necessitates a rapid response to safeguard the future of those organisations and the communities they serve.

The Imperative of Technology and Customer Experience

Technology has brought about a revolution in the banking industry, completely transforming the way customers perceive and expect services. In today's digital era, consumers desire seamless and personalised experiences across all digital channels. They have seen and experienced such remarkable transformations in other sectors like healthcare, education, and retail, and now they expect nothing less than exceptional, 'best in moment' experiences. These expectations transcend industries, and not meeting them not only means falling short of your direct competitors, but also risks losing customers to new more innovative players, diminishing market share in their current market, or even leading to the consolidation of institutions themselves. Embracing digital transformation and delivering top-notch customer experiences is no longer a luxury but an absolute imperative.

Challenges and the Path to Survival

Technology is not the only challenge mutual banks face. The emergence of smaller, technologically advanced institutions poses an imminent threat to their market share. A diminishing customer base and eroding trust in the banking sector in general further compound their complexities.

To navigate these challenges effectively, member-owned banks must adopt a proactive approach. Strategies such as forging strategic partnerships that can drive growth, harnessing technology to offer innovative solutions, and building trust through transparency and community involvement are paramount. By doing so, they can carve out a distinct identity, retain their loyal customer base, and chart a positive path toward success.

Actionable Insights and Recommendations

Technology in Service of Holistic Customer Experience

Thriving in the digital era necessitates member-owned banks to invest in technology that not only enhances employee capabilities but most importantly elevates the customer experience. Technology for the sake of technology is no longer good enough. Technology needs to be in service of a great customer experience. This entails listening, designing, and building technology for and by the people that will be using it. Deep customer research and co-designed products result in better experiences and engagement every time.

Qualitative Data trumps Quantitative

A profound understanding of customers can be obtained through the power of data and analytics. Member-owned banks must invest in robust data infrastructure, deploy advanced analytics tools, and hire skilled professionals to derive meaningful insights – that’s a given. What is not always understood is that some of the best data can come from the most unlikely places. We’ve found through deep qualitative research, that as few as a dozen quality one-on-one interviews with the right customers can expose some of the deepest insights that would simply be overlooked through traditional quantitative methods. Leveraging this data's power allows for informed decision-making, improved customer engagement, and the design of customised solutions that truly cater to customers' unique needs.

Get ready for Generative Artificial Intelligence

Getting your business ready to unlock AI (Artificial Intelligence) advantage can be done quickly and cost-effectively by understanding the use cases that will deliver value in the near and long term.

How you can then test and learn, especially in the generative AI space could lead to previously unseen benefits, relatively quickly. Helping drive efficiencies during the assessment process, detecting fraud, and speeding up customer interactions at call centres are all good examples. The use cases are mounting, and few mutual banks are taking advantage early. There is an opportunity to lead the way.

Urgency to Act

In conclusion, the challenges that member-owned banks face amidst the impending downturn demand immediate action. By using technology, enhancing customer experiences, and harnessing data insights, these banks can not only survive but also thrive. It’s time to embrace an agile and proactive mindset, safeguarding the survival and prosperity of member-owned banks as they navigate these tough times.

To read more on shaping digital products for the financial services sector