The Importance of Modern CRM for Digital-Only Banks

Published by Cubic Author

Posted on 24/07/2024

Introduction to Digital-Only Banks and CRM

Being present only in the digital world means having the client interact with the bank through a smartphone app, a bank’s webpage, social networks, or chatbots. The robot user interface is the most challenging to implement. We need to understand customer needs and triggers, which, to a significant degree, are detected by the human brain or are impossible to detect without communication. What CRM provides is a profound insight into necessary customer information, individual customer’s personality, and previous product experience. This channel is fundamentally different from traditional analog ones. The abundance of semistructured data with a very broad context makes the bank think and act in a more scalable way. Moreover, when most customer communication is automated, the enormous cost of the human branch network disappears. In summary, a modern CRM system is critical for the digital-only bank to grow and become a traditional one.

In the world of digital-only banks, also known as neobanks, the primary interface between the customer and the bank is a smartphone app or a web interface. These banks lack branches and rely heavily on CRM to understand what each customer wants and how they can fulfill these needs most effectively. Modern CRM software can provide human-like customer support 24/7. These systems gather, process, and share customer-related data, and provide operators with as much information as possible about the client during a call. The digital channel multiplies opportunities to gather data, often containing more information than traditional channels. The digital-only bank usually has many advantages – lower prices, better user experience, stronger learning focus, and the ability to develop in a more agile and scalable way.

Benefits of Implementing Modern CRM in Digital-Only Banks

The suggested guidelines may pave the way for making the best use of CRM software and technologies in digital-only banks. Software vendors and financial institutions will benefit from having insight into the good practices recommended through the conducted research studies. Analyzed customer requirements and aforementioned guidelines may be employed by complex digital-only banking companies in the preparation of a full-featured digital strategy with stress on the quality of customer relationships. I hope the knowledge contained in this study will help academics and industry professionals face the challenges of enhancing digital-only bank CRM towards providing benefits to the customer, and at the same time, increase customer value.

Although new customer acquisition is important for digital banks, the primary focus should be on retaining existing customers by providing the best relationship and transaction-based services available. For this purpose, digital-only banks need to have not only the business know-how but also access to the modern tools for state-of-the-art customer relationship development. The essential tool for modern CRM is customer relationship management software deployed internally and used to understand better, attract, retain, and maintain an individual customer. Business processes are often present in CRM tools represented as workflows, and their general idea posits that the execution of the business process is triggered by particular events. In addition, Original Equipment Manufacturer (OEM) partnerships with CRM platform vendors offer special access to additional features that allow for an increase in the development efficiency of digital functionalities in the CRM software product. This results in a high-quality implementation of their digital strategies achieved through modern CRM and advanced back-office software.

Challenges and Solutions in CRM for Digital-Only Banks

The key shortcoming of digital-only banks is the fact that they may fail to adequately tap into human touch points that are still very important elements of CRM. However, as innovations come further and we see the introduction of chatbots and voice interfaces, these features will not be that much of a problem for digital-only banks. As market saturation occurs, traditional banks will start to buy and implement new technologies. One such successful implementation can be seen with Humaniq, a simple and cost-effective mobile-only bank which brings quick and easy access to the low-income unbanked and underbanked populations and has recently launched its chatbot.

Customer relationship management (CRM) is at the heart of any business functioning. The specific needs of digital-only banks require unique approaches to CRM. Digital-only banks, as opposed to their traditional brick-and-mortar counterparts, do not offer traditional banking services and products. They do not operate through a network of physical locations, and their clients have access to their account and financial transactions only through the bank’s apps and websites. The main challenge for digital-only banks in delivering good CRM services is accessibility of big data analytics and ensuring maximum customer satisfaction during an (extremely) short interaction. Digital-only banks’ CRM analytics are largely based on big data and customer insights services that enable the transformation of raw data into useful information for business improvement.

Best Practices and Strategies for Effective CRM in Digital-Only Banks

  • Use a customer lifecycle oriented (CLO) approach.
  • Manage customer experiences that effectively meet the needs of millennials.
  • Understand how a CRM application fits into the bigger picture of growth and competitiveness.
  • Make the process of applying for loans and mortgages simple and straightforward and provide other banking services desired by millennials and members of all the generations that use the banks. This could include ensuring that secure, user-friendly mobile banking apps are available for smartphones targeted at all the customers using the bank.
  • Use a CRM application to build relationships with the customers in all the segments that it wants to do business with and provide personalized alerts rather than having all of these customers treat the bank as a transactional vendor.

There are certain best practices and strategies that digital-only banks can execute in order to ensure that they adopt an effective Customer Relationship Management (CRM) tool. The purpose of these best practices is to grow and strengthen their customer base while automating their back-office operations. These may include:

  1. Implementing a comprehensive CRM system that centralizes customer data and provides insights for personalized marketing campaigns, customer support, and sales forecasting.
  2. Utilizing data analytics to identify customer behavior patterns, preferences, and needs, allowing banks to offer tailored products and services that meet their customers’ individual requirements.
  3. Engaging customers through multiple digital channels such as mobile apps, social media, and emails, providing them with convenient and accessible ways to interact with the bank and receive personalized updates and recommendations.
  4. Offering seamless onboarding experiences that simplify the account setup process and allow customers to easily access their banking services anytime and anywhere.
  5. Providing real-time customer support through chatbots, virtual assistants, and support ticket systems, ensuring prompt response and resolution of customer queries and issues.
  6. Continuously monitoring and enhancing the security measures of the CRM tool to protect customer data and uphold privacy standards, instilling trust and confidence in customers.
  7. Integrating the CRM tool with other essential banking systems like payment processors, loan origination systems, and fraud detection tools, enabling seamless data flow and improving operational efficiency.
  8. Conducting regular analysis of CRM data to measure customer satisfaction, identify areas for improvement, and track the success of marketing campaigns and customer retention efforts.
  9. Promoting collaboration and knowledge sharing among different departments within the bank, fostering a customer-centric culture and enabling cross-functional teams to work together towards delivering exceptional customer experiences.
  10. Staying updated with emerging technologies and industry trends to continuously enhance the capabilities of the CRM tool and stay ahead of competition in the digital banking landscape. These best practices empower digital-only banks to leverage the full potential of their CRM tool, enabling them to build strong relationships with their customers, drive business growth, and maintain a competitive edge in the market.

By adopting these strategies, digital-only banks can revolutionize their customer engagement and elevate their overall banking experience to new heights.