The rise of customer centricity in banking: 3 vital points that matter most to customers

The competitive pressure banks face is growing. Product comparability is high, customer expectations are rising, and today's inflationary market and regulatory pressure create new challenges but also clear opportunities. Over the past few years, it became clear that intuitive and well thought-out banking products alone are no longer enough for financial institutions to attract new clients, foster customer loyalty and drive revenue. Instead, the focus has switched towards customer centricity in banking, meaning generating clear added value and designing new customer-centric products and services. Today's article shows you the crucial role that real estate can play in improving customer interaction in banking.

Customer centricity in banking: from new technologies to a new banking experience

The paradigm shift towards more customer centricity in banking did not happen overnight, nor did it originate in the banking and finance industry. “To understand where this comes from, you have to look at customers themselves and how their behaviour and habits have evolved”, explains Dr. Stefan Heitmann, Founder and Executive Chairman of PriceHubble. “Ground-breaking technology has heavily influenced our digital habits and the way we consume content and information. This change can be traced back to the first iPhone”, he adds. 

Over the years, this change in customer needs and behaviour, coupled with evolving demographics (i.e. digital natives representing an increasingly important proportion of banking customers) and segmentation started to affect different industries, including banking and finance. Retail banking customers –– particularly younger generations –– expect more from their banks. Real-time insights based on their customer data and personalised content delivered in a seamless way should now be the norm.

“What do our customers really care about?”

Faced with new consumer behaviours and expectations, banks quickly understood that a critical determinant of their success was how much they would be able to focus on enhancing the customer experience in their business model. Johannes Frosch (Head of Innovation & New Business and Head of the PrimeHome Business Unit at die Bayerische) explains that there is a crucial need for banks and insurance companies to establish a personalised and high-value bond with their customers. This is because insurance services are often commodity products –– meaning, they are highly comparable and interchangeable. He elaborates: “It’s all about finding that key differentiator to foster conversion and retention”.

To ensure business continuity and to enhance their activities, financial institutions and insurance companies need to provide clear added value leading to higher customer satisfaction, and that requires a fundamental change in perspective. In addition to only asking: “What products should we offer to our customers?” they need to ask: “What do our customers actually care about?” and more importantly, “How can we offer better support in that regard?”.

We have identified three areas deemed important by banking customers –– if properly integrated into a customer-centric banking strategy, they can drive decision-making and thus create new revenue streams: 

1. Offer customers a real-time 360° view of their wealth

Get closer to customers and foster lasting relationships by becoming a data-driven “one-stop shop” for financial, investment and wealth services; a good first step would be to provide a holistic view of wealth in a few clicks.

While many institutions have already integrated a view of financial assets into their digital ecosystem –– they also enable customers to check their value at any time within seconds. However, only a few banks offer a total 360-degree view of wealth that includes all asset classes.

Tony Prestedge, former Deputy CEO of Santander UK and advisor to PriceHubble, gives a concrete example: “Banking clients who own share portfolios are used to checking on their performance and current balance on their device at any time”. Unfortunately, the same cannot be said for those who own real estate–– they often depend on third parties to value their assets (i.e. appraisers or real estate agents). “The whole customer experience around buying, owning and selling a property lacks transparency and is still extremely manual”, Tony Prestedge adds. Providing customers with real-time, comprehensive and an easy to digest overview of their real estate assets could be a key differentiator for financial institutions.

2. Provide transparency on a highly emotional asset class

As an investment category, real estate is an excellent anchor point that banking customers will engage with again and again throughout their lives. “Not only is it the largest asset class, but it is also the most emotional one”, explains Dr. Stefan Heitmann. “Banking customers, and their families, are closely connected to their residential properties. It is an asset class that accompanies customers over a lifetime and evolves with their preferences,” he adds. Connecting banking services to important life events shows customers that they are heard and understood and allows financial institutions to set themselves apart. “Let’s keep this in mind: consumers don’t speak to their bank because they need a mortgage –– they speak to them because they dream of buying a house”, Dr. Stefan Heitmann concludes.

Creating customer journeys around real estate fosters customer loyalty and enables financial institutions to create multiple touchpoints over the years, as customers are eager to get regular updates on the value of their home.

3. Support customers in ESG and sustainability-related initiatives

Banks can position themselves as go-to experts on all matters relating to ESG and real estate, and thus become one of the driving forces behind energy renovations. Find out more about that topic and gain many more exciting insights by downloading our new ebook:

Real estate as a promising driver for customer centricity in banking

Financial institutions that do not provide customers with a comprehensive wealth overview –– including real estate –– miss out on a brilliant opportunity to stir up interest, start meaningful conversations and stay relevant. As explained by Dr. Stefan Heitmann: “the banking industry is still falling short on leveraging that potential because so far, most of its focus has been on transactions”.

You can read more about how banks can leverage real estate data in our latest ebook.