Why Big Banks Have a Customer-Service Edge
Modern consumers conduct most of their banking online, and applications are their primary platform for doing so. According to a 2023 Consumer Reports survey, 75% of Americans use one or more banking apps.
As noted in the survey, however, the availability of digital tools for financial well-being is inconsistent across these apps, as are accessibility features. In addition, data security remains a challenge, with most banking providers sharing more data with third parties than they need to provide core services.
Smaller banks and credit unions find themselves in a difficult position. Traditionally, they’ve regarded superior customer service as a crucial advantage over large institutions: The big guys treat you like a number, they say, but here you’re a valued member of our community.
But in the financial services industry today, digital experience is all but synonymous with customer experience. That’s why the big institutions hold the customer-service advantage.
In fact, large banks hardly regard small banks and credit unions as competition at all. Yet smaller institutions most definitely compete with larger banks, mainly to prevent their own customers from deserting. As a result, it’s critical for smaller financial firms to keep pace with larger institutions when it comes to digital services.
Why Small Banks Struggle to Develop Apps In-House
When it comes to application development, small banks are faced with two challenges.
The first is cost. In-house app development is complex and expensive. Large banks have dedicated DevOps teams employing sophisticated platform engineering principles, as well as experienced experts in application design and user experience. Small banks don’t.
The second challenge is their partnerships with fintech firms. While these companies excel at creating financial applications, these apps may not be designed for the audience that smaller banks cater to. This creates a situation where credit unions or local banks may pay for apps and services that over-deliver in some areas and under-deliver in others.
RELATED: The solutions and services that can grow your financial service organization.
The Value of Experienced Development Partners
By partnering with experienced application developers, smaller banks can access multiple benefits, including:
- Process automation: Processes such as loan approvals and fraud detection are complex and time-consuming. Experienced app developers can help small banks build applications that automate these processes, in turn reducing the time it takes to evaluate loans or assess potential fraud.
- Artificial intelligence integration: AI and machine learning integration empowers the creation and training of customer services tools such as chatbots. On both financial websites and mobile apps, chatbots offer a way for customers to find answers quickly and without waiting for service agents.
- Design iteration: In some cases, smaller banks aren’t sure what they need to compete with larger firms. While they could simply spend money on prebuilt fintech apps, if this app fails to deliver, they’re stuck looking for another tool or app to augment existing functions. Software design and consulting services can help companies explore and iterate designs to find their best fit.
The bottom line: While experience is increasingly important to users, banks aren’t always hitting the mark. To keep customers engaged, smaller banks must invest in both web and mobile app development services.
This article is part of BizTech's EquITy blog series.
