Retail Banking Trends and Priorities 2023 Jan 2023

Retail Banking
Trends and Priorities
2023

RETAIL
THE
FUTURE
BANKING
OF DIGITAL
TRENDSLENDING
AND PRIORITIES 2023

January 2023

© 2021
2023 Digital Banking Report. All rights reserved.

PAGE 1


RETAIL BANKING TRENDS AND PRIORITIES 2023

As financial institutions deal with economic uncertainties, they will
increasingly need to use data and analytics to anticipate customer
needs, creating engagement opportunities that will improve financial
well-being and optimize revenue potential.

— Jim Marous
Owner and CEO
Digital Banking Report

Copyright 2023: DIGITAL BANKING REPORT (ISSN 2375-3455)
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Issue 299
Publisher: Jim Marous,
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© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

Contents
Letter from Jim Marous | 4 |
Executive Summary | 10 |
Moving from Customer Experience to Customer Engagement | 19 |
Building a Data and Analytics Foundation | 27 |
Continued Transition from Physical to Digital | 33 |
Collaboration for Innovation at Speed and Scale | 38 |
Leadership, People and Culture | 45 |
Final Thoughts: An Interview with ChatGPT | 51 |
About the Research | 56 |
About the Author | 59 |

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

Letter from the Author

Just as the banking industry recovered from the impact
of the pandemic, more than two-thirds of economists at
23 major financial institutions stated a belief that the
U.S. economy will experience a downturn in 2023.

DIGITAL BANKING REPORT
Jim Marous, Owner & CEO

8803 Brecksville Rd.,
STE 7-223, Brecksville, OH 44141
(216) 218-4257

This economic uncertainty has put an increasingly bright
spotlight on the ability for traditional financial institutions
to rethink existing business models from the inside
out, to support an increasingly digital consumer. From
delivering new digital solutions at speed and scale, to
personalizing experiences with predictive engagement,
banking leaders must make significant paradigm shifts.

Issue 299

Jim Marous

The digitization of banking has also triggered a new wave
of competition between traditional and non-traditional
financial service providers. The pressure is on to quickly
become ‘digital-first’ organizations from the top down.

In 2023, the lack of venture funding will result in many fintech firms collaborating with
(or being purchased by) incumbent banks, greatly improving the speed of innovation.
Some of this innovation will enable smaller banks and credit unions to serve narrow
segments or increase market share with banking-as-a-service (BaaS), embedded
banking, or open banking solutions. Collaboration with third-party providers will
also assist financial institutions as they try to cut costs and increase efficiencies to
become more future-ready.
After years of talking about the potential of using artificial intelligence to improve
customer experiences, 2023 will see AI helping financial services firms automate
processes, increase efficiency, reduce costs, and improve predictive customer
engagement. There will also be enhancement of current uses in fraud and risk
detection, regulatory compliance, and account opening and loan decisioning
processes.
In the past, the banking industry has taken a defensive posture when preparing for an
economic downturn, including a decrease in back-office upgrades, reduced spending
on new technologies, a lower emphasis on innovation, and layoffs.
© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

Letter from the Author (continued)

While some of these strategies may still make sense for some institutions, the
banks and credit unions that combine these defensive tactics with offensive digital
banking transformation investments in customer experience, innovation, human skill
upgrades, and modern technologies can create substantial differentiation.
The 2023 Retail Banking Trends and Priorities report is sponsored by Q2. The insights
are the result of a comprehensive global research initiative that included more than
600 financial services executives from small and large organizations. It is hoped
that the learnings from this report will become instrumental in building more futureready financial institutions that will create better experiences for both customers and
employees.
Jim Marous
Owner and CEO
Digital Banking Report

© 2023 Digital Banking Report. All rights reserved.

PAGE 5


RETAIL BANKING TRENDS AND PRIORITIES 2023

Navigating Uncertain Times

Article by: Kirk Coleman
Chief Banking Officer, Q2

Banks and credit unions are faced with many
challenges triggered by the looming threat of

recession along with geopolitical conflict and
uncertainty. To navigate these uncharted waters,
it is critical for executives and board members to
focus on a few key priorities to help their financial
institutions thrive during economic uncertainty
and emerge from this turbulent period stronger
and more resilient.
Align on Clear Strategies
Banks and credit unions are grappling with the paradox of choice as they evaluate the
huge number of options available to them today while also deciding which businesses
to reduce or exit. Being crystal clear on your strategies will enable your institution
to make measured decisions that will impact the future success of your business,
especially with limited resources and shifting investment priorities.
It’s in the banker’s nature to want to be helpful to everyone in the community they
serve, but that also means they’re trying to fulfill a very diverse mix of needs (small
businesses, medium businesses, individuals, wealthy individuals, etc.). That was
once the foundation of a community bank, but now it’s a much more competitive
marketplace. Executive teams need to lean in on what they know best, decide where
they have significant competitive gaps, and be determined to invest for the long term
by hiring the right people, reallocating talent from less important businesses, and
reshaping their balance sheet to make room for the healthiest growth possible.

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023
It’s also important to be clear with your organization about what you are, and are not,
going to focus on and what is expected. Most of the time executive teams make smart

decisions about where to drive growth but the results are watered down because
of strategic drift or because floundering businesses are allowed to slide sideways
for far too long. This wastes valuable time and resources and undermines the most
important objectives.

Innovate and Simplify
Financial institutions seem to love complexity. When new ideas or processes are
introduced, many teams are reluctant to completely eliminate the old. Maybe there’s
one team of bankers who insist that they need their own special procedures or a
small number of customers dictates an ongoing investment in a frail and unsupported
technology. Most commonly, innovation is piled on top of existing technical or process
debt and it becomes difficult to realize all of the promised efficiencies and gains.
Pairing the goals of innovative progress and simplification of ongoing operations will
help financial institutions become healthier and set a pattern for internal teams to
follow when thinking about new ideas and projects. Every CEO should ask their teams,
“How will this idea also help simplify our business?” This is hard to get right all of the
time but getting better at this has a big pay-off.
When it comes to digital transformation and driving client engagement, delivering
unique and personalized experiences means listening carefully to what customers
need, balancing steady and incremental improvement versus bigger, and maybe less
frequent, innovative leaps, and helping teams through the natural reluctance to try
new things. Keep in mind the smart investments you make in innovation should also
pay dividends in simplifying your business and operations.

Invest In Your Talent
The success of a financial institution still mostly hinges on people. In addition to
experienced banking talent, leaders must seek non-traditional or often overlooked
skill sets. Successful talent strategies have an out-sized impact on future
performance and strategic options, and having the right talent is crucial to thriving.
Until recently, it was challenging for a financial institution to compete for talent who

prefers to work for a hot startup or major tech brand. But with the recent trend of
layoffs by large and small technology companies, the market is now teeming with
brilliant individuals that can help you turn your innovative ideas into reality, while
enabling you to anticipate future business needs. Leverage your purpose or mission
to attract new talent that may not have previously considered working for a bank or
credit union. When they join the team, you can pair them with a veteran to help them
learn the industry and find ways to make new and unique contributions. Instead of
having very narrow experience or expertise requirements, be open to considering
candidates with great skills in an adjacent industry. And be clear with your existing
teams about why you are doing this. Infusing new talent and perspectives can have a
healthy and transformative impact on the organization.
Traversing through uncertain times can be a challenge for bank executives and board
members. At the same time, it can also present unique opportunities for financial
institutions that have clear, long-term growth strategies and continue to invest in
innovation while building their talent capacity. As seen throughout history, turbulent
times have been the catalyst for positive change.

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

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PAGE 8


RETAIL BANKING TRENDS AND PRIORITIES 2023

© 2023 Digital Banking Report. All rights reserved.

PAGE 9


Executive

Summary

PAGE 10


RETAIL BANKING TRENDS AND PRIORITIES 2023

Becoming Digital-Ready at a Time
of Economic Uncertainty
As we enter 2023, the banking industry is
focused on delivering an improved digital banking
experience with new technologies, products
and partnerships. While new research shows an
urgency for change, the question becomes whether
banks and credit unions will make the investment
needed during a time of economic uncertainty.
The banking industry is at the crossroads of digital transformation opportunities
and the challenges of an uncertain economic reality. While the industry seems to
understand what is required to compete with alternative digital banking providers and
meet the needs of an increasingly demanding consumer, a hesitation to fully embrace
the change needed to move forward at speed and scale remains.
In many instances, legacy culture becomes a barrier to the required change needed
to become digital banking organizations. In several banks and credit unions,
the fear of risk or a focus on cutting costs limits the potential of digital banking
transformation.
This year’s research into retail banking trends and priorities, sponsored by Q2, found
that the pandemic increased the understanding of what was needed to compete in
the future. The progress made to date, however, varies widely based on the asset size
of institutions, the commitment to change, and the level of resources committed to
become digital financial technology organizations.

© 2023 Digital Banking Report. All rights reserved.

PAGE 11


RETAIL BANKING TRENDS AND PRIORITIES 2023
This is the tenth year for this highly anticipated report. The team at the Digital Banking Report
surveyed a panel of global financial services leaders from Asia, Africa, North America, South and
Central America, Europe, the Middle East and Australia for their thoughts on retail banking and
credit union trends and strategic priorities.

2022 in Review
To get a foundation for 2023, Digital Banking Report asked financial institution executives to
provide the top three trends they considered most important in 2022. Below are the top 10
trends for 2022 as compiled from the responses. Looking back, respondents saw four trends
being of more significance than all others: Simplifying the customer journey (47%), increasing
focus on digital transformation (48%), expanding digital product and payment capabilities (38%),
and improving data and analytic capabilities (37%).
When compared to the top four trends, financial executives did not consider innovation (16%),
upgrading talent (11%), responding to financial wellness needs (10%), or exploring advanced
technologies (8%) to be trends that were significant in 2022. While we would not disagree that
these four trends were not a top emphasis last year, each must increase in significance in the
future for financial institutions to become more future-ready.

CHART 1:
REFLECTION OF TOP RETAIL BANKING TRENDS FOR 2022
What do you think were the three (3) most important retail banking trends in the past year (2022)?

47%

Simplifying the customer journey

46%

Increasing focus on digital transformation

38%

Expanding digital product & payment capabilities
Improving data and analytics capabilities &
use of insights

37%
27%

Improving integration of delivery channels

20%

Adjusting to remote work environment
Building partnerships between banking &
fintech firms

19%

The impact of new competitors
(fintech firms, large tech firms etc.)

19%

16%

Increasing commitment to innovation
Updating internal talent & sourcing for digital needs
Responding to financial wellness-related needs
Exploring advance technologies (IoT, Voice,
Blockchain, Web 3, Metaverse, etc.)

11%
10%
8%

Source: Digital Banking Report Research © January 2023 Digital Banking Report

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RETAIL BANKING TRENDS AND PRIORITIES 2023
Top 12 Retail Banking Trends for 2023
To determine the ranking of the top ten trends and priorities for 2023, we provided
a list of trends identified by a panel of leading industry influencers and asked banks,
credit unions and the supplier community globally to provide their top three choices.
The trends and priorities reflect significant changes in the level of prominence
compared to previous years. Unlike previous periods, where most organizations
simply modified previous strategies, the industry seems to be significantly increasing
the focus on some key trends that will have lasting benefits and help organizations
become increasingly future-ready. Other trends, such as removing friction from the
customer journey and improving the multichannel delivery, while still important, may
have less prominence due to already being addressed in the period immediately
following the outbreak of Covid.

While the overarching theme for the top trends focused on digital banking
transformation, the top priority for 2023 was the improvement of digital banking
experiences through the elimination of friction. As mentioned, while being the most
mentioned trend, removing friction during the customer journey was mentioned at a
far lower rate than in our last report (50% in 2023 vs. 61% in 2021).

Other major shifts from 2021 included:
• Expansion of digital products and payments capabilities
(Decrease from 53% to 41% in 2023)
• Use of big data, AI and advanced analytics
(Increase from 34% to 36% in 2023)
• Improvement of integrated multichannel delivery
(Decrease from 39% to 25% in 2023)
• Finding and training new talent
(Increase from 11% to 22% in 2023)
• Investment in innovation initiatives
(Increase from 13% to 17% in 2023)

© 2023 Digital Banking Report. All rights reserved.

PAGE 13


RETAIL BANKING TRENDS AND PRIORITIES 2023

CHART 2: TOP TRENDS IN RETAIL BANKING
PROJECTED IN 2023 VS. 2021
What do you think will be the three (3) most important trends for the retail banking
industry this coming year (2023)?

50%

Remove friction from
the customer journey

61%
41%

Expansion of digital product
and payment capabilities

53%
36%

Use of Big Data, AI, Advance
Analytics and Cognitive Computing

34%
36%

Use of APIs and Open Banking

27%
25%

Improvements in Integrated
Multichannel Delivery

39%
24%

Building partnerships between
banking and fintech firms

Finding and/or training new talent

19%
22%
11%
17%

Investment in innovation initiatives

13%
15%

Responding to regulatory changes

Exploring advanced technologies
(IoT, Voice, Web 3, Metaverse)

12%
13%
6%

■  2023  ■  2021
Source: Digital Banking Report Research
© January 2023 Digital Banking Report

Disruptive digital banking transformation within the banking industry will require a

continued commitment to developing partnerships or expanding collaboration with
third-party organizations. It will also require modernization of outdated technologies
and the rethinking of legacy processes and organizational structures. The timing and
speed of this transformation will differ from one organization to another, but the need
for future-forward thinking is non-negotiable.
© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023
Top 10 Strategic Priorities for 2023
When we asked financial services organizations worldwide about their top three strategic priorities for
2023, the order of priorities remained relatively consistent from 2021 to 2023, with three significant
exceptions in the level of emphasis. Interestingly, despite an uncertain economy in the near future,
the number of organizations stating a strategic priority of reducing costs dropped from 35% in 2021
to 29% in 2023. This can be explained by the uncertainty during the Covid crisis.
The other two major changes in the emphasis of strategies in 2023 occurred around the recruitment
and retention of talent, resulting in an increase in strategic importance from 22% in 2021 to 29%
in 2023. In addition, there was a massive increase in the mentioning of partnering with third party
providers, with 20% of organizations placing this strategy in their top 3 compared to only 11% in 2021.

CHART 3:
TOP STRATEGIC PRIORITIES FOR FINANCIAL INSTITUTIONS
(2023 VS. 2021)
77%

Improve digital experience
for consumers

88%
45%

Enhance data and
analytics capabilities

53%
29%

Reduce operating costs

35%
29%

Recruit or retrain talent
to meet changing needs

22%
27%
30%

Digitize back-office
operations

22%
23%

Improve innovation culture

Invest in and/or partner with

alternative fintech providers

20%
11%
18%
15%

Update legacy
operating systems
Meet regulatory and
compliance specifications
Improve components
of security

17%
11%
8%
7%

■  2023
■  2021
Source: Digital Banking Report Research
© January 2023 Digital Banking Report

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

Digital Transformation Maturity Improving
The fact that most organizations are putting significant emphasis in their digital
transformation efforts is beginning to generate results according to global banking
executives. According to the research conducted, 43% of organizations indicated that
they were in the early stages of digital transformation compared to 50% in 2021. The
good news is that organizations that considered themselves in the mid-stages or say
they have fully achieved their digital transformation objectives reached 47% this year,
compared to 43% two years ago.

CHART 4: MATURITY OF DIGITAL BANKING
TRANSFORMATION PROCESS
Which of the following best describes the current status of your company’s
digital transformation initiative? Please choose the ONE closest to your status.
• We have some active projects
but it is hard to say where we
are as we do not have clearly
defined goals or measures of
success in place.

10%
7%

• We are in the early stages of our
digital transformation initiative. We
have some active projects but have
not yet made substantial progress
towards our goals.

43%
50%

• We are mid stage in our digital
transformation initiative. We have
achieved at least 50% of our
goals.
• We have fully achieved the
goals we set ourselves. Digital is
just part of how we do business
now.

41%
38%
6%
5%

■  2023 ■  2021
Source: Digital Banking Report Research
© January 2023 Digital Banking Report

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023
As seen below, the vast majority of financial institutions are working diligently on
digital banking transformation initiatives. It also can be seen that the duration of this
commitment has increased significantly over the past two years.

CHART 5:

STATUS OF DIGITAL BANKING TRANSFORMATION
Does your company have an active initiative or strategy designed to digitally transform
the way that you work as a business or the way that you deliver experiences to your
customers?

59%

■ 2023
■ 2021

56%

26%

Source:
Digital Banking Report Research
© January 2023
Digital Banking Report

27%

5%
Yes, and it is already
being implemented.

Yes, but it is not
yet implemented.

10%

11%

3%

We started and
halted the process.

No

CHART 6:
DURATION OF EMPHASIS ON DIGITAL BANKING
TRANSFORMATION
How long has your company been working on your digital transformation strategies
initiatives?

41%
35%
■ 2023
■ 2021

37%
25%

20%
13%

5%

10% 9%

5%

Less than 6
months

6 months to
one year

1-2 years

2-5 years

More than 5
years

Source: Digital Banking Report Research © January 2023 Digital Banking Report

© 2023 Digital Banking Report. All rights reserved.

PAGE 17


RETAIL BANKING TRENDS AND PRIORITIES 2023
Banking Industry Challenges Continue
While it is good news that earnings continue to be positive for virtually the entire
banking industry, this dynamic works against the sense of urgency needed as the
entire financial services industry focuses on improving the customer experience
amid greater competition. These earnings could be at risk because markets are more
vulnerable than at any time since the economic crisis of 2008-2009.
Competition continues to be strong in areas of traditional strength for legacy banks

(payments, lending, small business), with digital players making inroads despite
a significant softening of venture capital being available. Bottom line, digital
transformation efforts must be continued, but at a more rapid rate.
Financial institutions must continue to move from an iteration mentality to embracing
disruption of legacy banking models. New partnerships and alliances should continue
to increase, with an increased emphasis on the speed and scale of innovation —
leveraging data, advanced analytics, and contextual delivery of services. Banks and
credit unions should also focus on building customer engagement around financial
wellness.
As we move forward as an industry, banks and credit unions must modernize their
technology infrastructure, enhance their data management strategies, upgrade their
talent, and improve the customer experience.

© 2023 Digital Banking Report. All rights reserved.

PAGE 18


RETAIL BANKING TRENDS AND PRIORITIES 2023

Moving From
Customer
Experience to
Customer
Engagement

© 2021
2023 Digital Banking Report. All rights reserved.

PAGE 19

RETAIL BANKING TRENDS AND PRIORITIES 2023

Moving From Customer Experience
to Customer Engagement
Financial institutions can no longer use the excuse
of the pandemic when delivering less-thandesirable customer experiences. Today’s consumer
knows what is possible with the combination of
data, advanced insights, modern technology and
expanded communication channels. More than ever,
customer service is both a differentiator and growth
accelerator.
Two thirds of consumers say most companies they do business with need to improve
their customer experience, according to research from Broadridge. That sobering finding
should make CX improvement a top priority for executive leadership in every industry.
To support experience initiatives in banking, financial institutions need to eliminate
silos and accelerate digital transformation to enable a shift in focus from customer
communications to customer experiences.
Today, a great customer experience goes beyond not making errors. Consumers
increasingly judge their financial institution on such qualities as ease of engagement,
responsiveness, empathy, and transparency. Excelling in these areas will help financial
institutions acquire new customers and grow relationships. Falling short in any of these
areas can result in diminished trust and loyalty or the loss of a long-tenured relationship.
To achieve great CX, bank and credit union executives must engage all levels of the
organization to focus on improving experiences at every touch-point, across the entire
customer journey. Changes must begin at the operational level, rethinking existing
processes while working on user experiences.

© 2023 Digital Banking Report. All rights reserved.

PAGE 20


RETAIL BANKING TRENDS AND PRIORITIES 2023

The Bar Has Been Raised
CX changes must receive high priority in banking
now. Customers are increasingly reluctant to give
second chances if expectations aren’t met.
“Companies that effectively organize and manage customer experience can realize
a 20% improvement in customer satisfaction, a 15% increase in sales conversion, a
30% lower cost-to-serve, and a 30% increase in employee engagement,” McKinsey
finds. This is why 77% of senior banking executives rank CX as a top priority,
according to this year’s trends research.
And, with acquiring new customers and engagement being top banking priorities in
2023, building great experiences can’t be ignored.

CHART 7:
ACQUIRING NEW CUSTOMERS REMAINS KEY
GROWTH INITIATIVE FOR BANKING
Please rank your key growth initiative for 2023.
Acquire new customers

42%

14%

16%

28%

Increasing engagement with existing customers

21%

33%

24%

22%

30%

19%

Growing existing relationships

19%

32%

Retain existing customers

19%

21%

30%

30%

■  Top priority  ■  Second priority  ■  Third priority  ■  Fourth priority 
Source: Digital Banking Report Research © January 2023 Digital Banking Report

Customer Experience Expectations Rising
Customer journeys in banking have grown increasingly complex. Shopping for a
new financial product, service or provider no longer begins and ends in a branch.
Customers want a simplified and streamlined experience — on the channel(s) they
prefer, at the time that is most convenient to them.
More than 80% of customers say a positive experience will drive a future purchase
decision, according to Zendesk, while 61% say a single negative experience will result
© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023
in immediate relationship abandonment … a 22% jump from the previous year. Two
negative experiences will result in 76% customer attrition.
A customer is willing to share personal information if doing so simplifies future
engagements. More than three-quarters of customers want to be able to engage with
a human at the touch of a button, but 70% also want to be able to find the answers
and information they’re looking for — on their own terms, the Zendesk research found.
More than two-thirds of customers expect all experiences to be personalized.

CHART 8:
GLOBAL CUSTOMER SERVICE EXPERIENCE
EXPECTATIONS HAVE RISEN DRAMATICALLY
Global customers say:

A positive customer experience makes them more likely to make another purchase.

81%
They would switch to a company’s competitor due to multiple bad service experiences.

76%
They expect to engage with someone immediately when contacting a company.

76%
They will forgive a company for its mistake after receiving excellent service.

74%
They expect a company to share information so they don’t have to repeat themselves.

71%
They have made purchase decisions based on the quality of customer service.

70%
They expect a company to have a self-service portal or content available to them.

70%
They expect all experiences to be personalized.

68%
They would switch to a competitor after just one bad customer service experience.

61%
This past year’s crisis has raised their customer service standards.

61%

Source: Zendesk 2022 © January 2023 Digital Banking Report

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023
Consumers expect service to be quick, easy, and personalized … and they’re willing
to look elsewhere if this level of services is not delivered. In fact, more than 60% of
consumers say they have higher customer service standards since the pandemic.

Bank Customer Experience Implementation Lagging
While banking executives consistently rank improving customer experiences at the
top of priorities, few have invested and/or implemented the changes needed to
deliver exceptional experiences. More than three quarters of banking leaders say that
their organization views customer experience as a critical business priority, but fewer
than half consider their organizations to have a high level of CX maturity.
More concerning, investment in customer experience initiatives continue to rank in
the bottom third of priorities, according to the Digital Banking Report.

CHART 9:
BANKS WILL FOCUS ON CUSTOMER
EXPERIENCES TO DRIVE GROWTH IN 2023
Please rank your strategies for customer growth in 2023.
Improve digital experiences (digital account opening, UX, digital loan applications).

87%

13%

Leverage data and analytics for more personalized engagement.

49%

51%

Invest in new digital technologies.

43%

57%

Improve branch technology and/or distribution.

16%

84%

Acquisition or merger strategies.

8%

92%

■  Top two priorities  ■  Lowest priorities
Source: Digital Banking Report Research © January 2023 Digital Banking Report

Heart of the Problem
Many institutions still view customer service as a cost

center rather than what it should be — a revenuegenerating engine.

© 2023 Digital Banking Report. All rights reserved.

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RETAIL BANKING TRENDS AND PRIORITIES 2023

Applying
measurable
customer data
throughout the
omnichannel
delivery strategy
gives financial
institutions a
comprehensive
view of customer
behavior, driving
seamless
engagement and
customer loyalty.

Without a financial and organizational commitment to improved customer
experiences, financial institutions risk missing opportunities to differentiate their
organizations in an increasingly competitive environment. Focusing on customer
service opportunities requires a strong communicated commitment from top to
bottom.
Five broad trends will shape customer experience in banking in the year ahead.

Trend 1: Humanized Digital Experiences
In 2023, financial institutions will focus more on partnering with the customer around
their financial objectives and life journeys as opposed to simple transactions and
product sales. There will be a shift from an internally centered efficiency strategy to
a more customer-centered engagement strategy, creating positive changes in the
financial lives of their customers.
“Although focusing on making shopping online faster or simpler for customers is
important, brands must also take an experiential approach by building new ways to
interact with customers on a human level,” states MIT Sloan Management Review. “It’s
this focus — digital humanization — that separates truly revolutionary brands from
those just trying to get by.”
Beyond traditional self-service solutions, augmented reality (AR) will become a
bigger component of humanizing self-service options as consumers seek more
immersive ways to interact with their financial institutions. Through well-designed
digital experiences, financial institutions can replicate the sense of exploration and
discovery that consumers have at traditional brick-and-mortar branches while also
providing personal virtual assistance. The goal will be to maximize digital engagement
while becoming more human at the same time.

Trend 2: Omnichannel Experience
Omnichannel experience strategies prioritize customer engagement by providing a
seamless experience, whether customers visit a physical branch or engage with a
bank or credit union on any digital channel. According to Twilio Segment research,
69% of customers want a consistent experience with a company across all physical
and digital channels. Unfortunately, few companies are delivering on this desire.
Modern omnichannel strategies in banking include multiple contact channels, such
as app-based platforms, in-branch transactions, and social media marketplaces.
Applying measurable customer data throughout the omnichannel delivery strategy
gives financial institutions a comprehensive view of customer behavior, driving

seamless engagement and customer loyalty. Sharing the insights across the
organization, allows all customer contact points to engage from the same perspective.
38% of customers expect service agents to know who they are and their queries,
according to research from Forrester. Consumers want matters to be dealt with
quickly, but you can never be sure they’ll contact support through the same channels.
Financial institutions must ensure all contact employees can always access the
correct data. This means they can produce customer account and query information
no matter what platform the request comes from.

Trend 3: Enhanced Personalization
In 2023, banks and credit unions will increasingly harness customer data to deliver a
higher level of personalization at every touch-point. This will include targeted product
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RETAIL BANKING TRENDS AND PRIORITIES 2023
recommendations via chat support, predicting consumer needs based on behaviors,
and delivering content that can improve a customer’s financial wellness.
With 80% of consumers more likely to purchase from a company that provides a
personalized experience, personalization is no longer optional. Brands will also begin
to use technologies that enable customers to build hyper-personalized solutions
online, without the traditional product parameters. The flow of funds between
products will be seamless, with integration within and outside the primary financial
institution.

“Companies don’t achieve the impact of personalization
without changing their internal operating model to be agile,
focused on key customer KPIs, cross-functional, and driven

by rapid decision making.”

The key dynamic with personalization is that the collection of insight and the
development of “living profiles” (very detailed customer profiles) is considered
valuable by the customer … if they are used to receiving a more personalized
experience. In other words, a direct value exchange. Financial institutions can collect
data from every step of the customer journey — including web chat, calls, emails,
social media, or apps — and integrate these data points into future learnings.

Trend 4: Increased Support of Self-Service
69% of customers want to resolve as many issues as possible on their own, through
self service methods as opposed to speaking with a customer service representative,
according to Zendesk. By offering them ways to solve their problems, banks and
credit unions may make their consumers’ interactions easier and improve the overall
experience.
On top of more traditional self-service solutions, augmented reality (AR) can become
a bigger component of self-service options as consumers seek more immersive ways
to interact with brands and their products. Microsoft research indicates that more
than 90% of customers expect firms to provide self-service choices, ranging from
a knowledge base, product FAQs, tutorials, AI-powered chat and messaging, and
automated contact centers.
Advancements in natural language processing and conversational intelligence have
made chatbots more effective than ever, and automation can help customers find
the right information without ever having to speak to a human. As a result, financial
institutions will get even closer to providing an effective human experience without
involving a human.

Trend 5: Emergence of the ‘Total Experience’
Many believe that factors beyond just CX contribute to the success of a company and
its relationship with its customers. For example, employee experience and employee

engagement are believed to have a direct impact on how satisfied customers will be.
Gartner suggests that organizations in all industries embrace an integrated total
experience (TX) perspective that brings together the four disciplines of experience:
the multi experience (MX), customer experience (CX), employee experience (EX) and
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