The Need for Contextual Commercial Banking

The past two years have demonstrated how dependent we are on digital services. In today’s world of technology, we depend on apps and devices for all of our day-to-day essential needs. Today, more than ever, we rely on the ability to transact at our leisure from the comfort of our chosen device. We also want to view our relationship with a bank or supplier, on demand, from a single screen.

According to a global report, more than two-thirds of Indians surveyed are willing to switch to a digital-only lender for their banking needs. The survey, which included respondents from Tier I and Tier II cities with a savings account, showed a willingness towards digital forms of banking, with 91% mentioning that they use digital banking at least once a week. month.

While financial institutions understood the benefits of digital for their retail customers early on, the corporate banking sector has not embraced digital with the same fervor, even as demand increases and customer satisfaction declines. The Global Treasurer’s Banking Transaction Survey 2021 reveals that corporate customer satisfaction has fallen to the lowest level recorded in the history of the survey, with 80% being only moderately satisfied with the services offered by their primary banking partner. So, the question that comes to mind is, why haven’t financial institutions gone digital faster when it comes to their business operations?

First, business banking is primarily about relationships, many of which are nurtured over years, through meetings and face-to-face interactions. Additionally, many processes remain paper-based, even requiring wet signatures. Corporate banking is complex compared to retail banking where processes are linear and services are highly productivized (loans, savings and checks). In business banking, large corporations may have many accounts in multiple banks and currencies in different countries and regions. Positions and portfolios also require constant monitoring and management. Therefore, businesses are not just looking for a financial services provider, they are looking for a partner to help them run their business efficiently.

Today, corporate banks are eyeing a digitization opportunity that could be worth over a trillion dollars. Therefore, adopting a contextual banking practice is an imperative and no longer an option. Contextual banking occurs when financial services become increasingly embedded in the context of consumers’ daily activities and businesses’ business processes. The contextual banking experience offers a relationship with customers based on transparency and enriches the customer experience by offering them services tailored to their specific needs. As various industries embrace technology “as” their business, rather than “in” their business, the combination of smart devices, rapidly evolving customer experience capabilities, and real-time processing of big data means that new opportunities arise for banks to meet customers. needs on a highly personalized and dynamic basis.

Expectations are changing, and banks that can quickly transition to digital are likely to deliver critical and cost-effective benefits to corporate customers, such as a contextualized and enriched customer experience that leverages digital to enhance critical personal relationships. It also provides new levels of capital clarity and agility, as digital technologies enable banks to deliver actionable insights, such as a holistic view of all positions, the impact of currency movements and regulatory changes. . When actively and effectively managed, they can have a positive effect on a company’s bottom line. Additionally, it also provides greater operational efficiency through automated processes, such as reconciliation, transaction processing, account opening and management. By embracing contextual banking using new technologies such as artificial intelligence and machine learning, banks can leverage large amounts of data by breaking down silos to generate detailed insights and drive digital transformation.

Contextual banking involves understanding the variety of relationships, purposes, and contexts that underlie transactions. This is what happens when a bank listens to its customer and pays attention to the details of his journey. With contextual banking, a bank’s digital offering anticipates what the user is trying to achieve and upsells and cross-sells directly, positively impacting the bank’s revenue.

In this sense, it has a data-driven view, as in the case of Apple’s virtual assistant Siri which uses historical transaction data and data analysis tools (such as AI and ML ) to recommend specific solutions and advice to customers. Additionally, contextual banking uses customer data to refine how transaction banking services are delivered. This can range from identifying account shortfalls and suggesting how to fix them, to using artificial intelligence and data analytics to determine an optimal payment method, balancing speed , convenience, cost and risk.

Banks looking to unlock the full potential of contextual banking services may need to shift from a product-centric to a customer-centric approach. This would mean that banks should ideally aim to create a single view of the customer, using the vast volumes of data generated at internal and external touchpoints. It would also require them to design products and experiences to meet customer needs. They will also have to use technology as a lever to build a contextual experience. The cornerstone of better customer understanding is upgrading data analytics capability to ensure data is captured and new data is generated frequently. The integration and use of structured and unstructured real-time data from internal and external sources is essential. Banks that quickly rise to the challenge and offer end-to-end hyper-personalized products and services will create a significant advantage over their competitors by differentiating their brands and multiplying revenues.



The opinions expressed above are those of the author.