Infobip: Digital Transformation in banking needs to underpin improved Communication to enhance the Customer Journey

Female hands using touch screen device for online payment

By Barbara Gjurasin, Enterprise Sales Manager at Infobip

As customer demand for richer engagement with brands continues to grow, it is becoming crucially important for banks to be where their customers are, ensuring that they are more accessible, diligent and responsive to ever-evolving customer needs.

The increasing customer shift to online banking has spurred the need for banks to digitally transform and remain innovative to maintain a competitive edge. According to Statista, Nigeria had 73.2 million active bank customers in 2019, with a growth rate of around 10 million per year.

Currently, it is estimated that the country has about 100 million active banking customers.

Going by these numbers, Africa’s most populous country boasts a dynamic banking landscape, with online banking uptake accelerated by the outbreak of the COVID-19 pandemic last year. Yet, Nigeria currently still has a marginally larger mobile phone penetration rate (101.7 million) than it has active banking customers, and this figure is expected to reach 140 million in 2025.

At the same time, a large portion of Nigeria’s population remains unbanked, with reports suggesting that the total number could be in the region of about 60 million people. This suggests that online or digital banks still have a sizable market share to compete for.

No more business as usual
Traditional banks can no longer rely on the status quo and ignore innovation. The era of business as usual in the banking sector is over and banks must look to technology and innovation to maintain a competitive edge.

But digital transformation is not just about adopting new technology, it is about investing in emerging technologies to bring something innovative and fresh to the market. Innovation is more crucial than ever and banks must listen to their customers and continue innovating to retain and grow their customer base.

Of late, we have seen that banks are finally starting to talk to people in the form of two-way communication, in response to customer demand for richer and deep engagement. The key to digital transformation is that banks have had to change the way they communicate with their clients, as digital banking start-ups, and new regulation are making it increasingly easy for people to switch from one institution to another, should their needs not be met.

This is keeping banks on their toes; especially given the significant competition they face from Nigeria’s large consumer loan sector. Many loan companies have started using digital channels to communicate with their customers, enabling them to be more agile and process loan applications faster.

The COVID-19 pandemic has also encouraged many loan providers to take advantage of the gap in the market and switch business models to become fully-fledged digital banks. These transformations are typically underpinned by these smaller companies’ innovative use of technology and communication channels that have allowed them to respond to customers’ demands for online banking services.

Emphasis on CX
Traditional banks must realise that the new rules of banking in the digital era dictate that emphasis must be placed on enhanced Customer Experience (CX). Furthermore, it is no longer sufficient to merely provide excellent support – customers expect this support to be highly personalised. Customers demand interaction that is deeper and makes them feel valued. Therefore, banks must ensure they leverage technology to target the right clients, at the right time and through the right channels.

Banks’ digital transformation strategies should not only focus on changing technology, but also on optimising their processes and operations, with the ultimate aim of changing their relationship with the customer. Adopting an omnichannel approach would not only streamline their operations and increase the productivity and efficiency of employees, but also enhance the customer journey. Banks that integrate WhatsApp for example into their channel mix will truly discover the secret to getting closer to their end users, allowing them to keep up with fierce competition. Chatapp and even social media messaging adoption is a key step for large enterprises to forge deeper engagement with today’s customers.

Cloud-based omnichannel solutions have the potential to help each part of the digital transformation journey for the banking sector. On the one hand, customers benefit from easy access to the banking system and enjoy an overall improved CX. On the other hand, banks can lower their technology spending and cut costs by eliminating physical branches.

At this stage, many of Nigeria’s traditional banks are missing the point that digital transformation – while requiring some expenditure – can result in a relatively quick return on investment. Not only that, but investing in this technology now will also save them a lot of money in the future, improve CX and ultimately help them to grow market share.