Like all businesses, banks have a hard time retaining their customers. So, naturally, in order to achieve this objective, they do what every other business does. They provide customers with benefits such as lower rates, customized banking experiences, and no charge transactions.
However, these benefits cannot be applied to every customer that walks in due to obvious reasons – a reduction in profits.
Recent surveys and studies covering the banking sector tell us that bank branch walk-ins have reduced by 50% since 2013 and that figure isn’t likely to go down soon. One major reason for this is that banks are a little slow when it comes to catching up with technology and there seems to be massive division between the customers and the banks regarding technology. The customers are far ahead.
Of course, now, banks are realizing how important technologies such as social media can be in helping them connect with customers. For instance, social media is being leveraged to help banks meet customer expectations by exploiting it as a channel for quicker and cheaper delivery.
However, this isn’t enough. Banks need to leverage data from all sources and channels. This includes everything from tablets and phones to ATMs and online banking portals. The goal must be to create a single idea of data throughout the banking landscape.
This is where contextual banking comes in.
Understanding contextual banking
Contextual banking is a banking model that offers a connected banking experience where the customer is presented with offers and updates at the right place and time. Apart from providing timely updates and promotions, contextual banking also serves as an effective tool to aid with up selling and cross selling. For example, it can be possible for banks to extend a customer’s credit limit the moment his/her account balance is found to be too low to make a particular purchase.
The underlying concept behind this banking method is context. Throughout human history, we have used context to make decisions and communicate effectively. This is exactly what contextual banking is all about. There are several benefits that come with this banking strategy.
For starters, banking apps can be leveraged to analyze trends and situations. The data obtained from this process can be used to offer valuable advice to the customer. The advice can be related to decisions concerning whether or not the customer can afford a mortgage or how much he/she needs to allocate in savings to afford mortgage payments in the future.
By knowing such details about a customer, the contextual banking strategy can be leveraged as an “on the spot” financial advising system. It can be used to offer recommendations that are tailored specifically to fall in line with the customer’s financial capabilities.
Contextual banking also helps banks improve their brand value among customers as they can now offer their products and services via digital channels.
Other than that, the value provided through contextual banking can also motivate customers to make the shift to digital banking and gain more control over their banking affairs.
Author of this article Jonathan, he has founded his own management consulting firm A.K.A. Furman Transformation, igniting his full passion in transforming all aspects of a company’s Sales, Marketing, and Operational Growth strategies, into the most powerful and polished version of themselves.