In the international Fintech bank at the award ceremony Citadel recently received an award as the best digital bank. How important is this award, and according to what criteria were the applicants evaluated?
When evaluating the applicants for the award, criteria such as the ability of the bank’s digital solutions to improve the customer experience, the scope and capabilities of innovative functions, the security infrastructure to protect customer data, as well as the competitiveness of the innovations integrated into the bank’s platforms were taken into account. It was nice to be in the final with a bank of US origin with highly developed digital solutions and millions of active users – Wells Fargoas well as financial technology companies TransferMate. It was an important moment for us, because we were the only bank in the Baltic region that got the opportunity to compete with the world’s leading banks. This strengthened the belief that the digital solutions created in the Baltics are competitive at the global level.
We created the first full-fledged mobile banking solution in 2018. We can be proud that our bank customers are among the most active users of digital solutions in Europe, that is, our customers perform more than 20 operations per month in the mobile app, not including viewing the account balance. This includes transfers, C Rewards managing points, searching for information and other activities. Among our customers alone, 4% are not active users of digital channels and mainly use services available at ATMs or branches. The remaining 96% actively use digital solutions directly. Such indicators are possible thanks to convenient service infrastructure. We were one of the first to introduce customer account opening remotely with a self-portrait photo, as well as FaceID and TouchID for making transfers. Our approach to digital infrastructure solutions earned us this award.
If we have to compare bank and customer relations – how have digital solutions affected them?
10-15 years ago, visiting a branch was everyday. People scheduled time to visit a branch to ask questions, make larger transfers, or receive services. Gradually, the importance of online banking began to grow, and tools such as the code calculator appeared, but the biggest digital transformation came with the arrival of smartphones.
Have the daily habits of the inhabitants changed and how?
Five years ago, the first signs of changing customer habits and generational differences appeared. The older generation is used to visiting branches and does not want to use internet banking. The middle generation likes to receive daily services in the internet bank, but only carry out important transactions in the branch. The millennial generation (born between 1981 and 1996) wants to receive most services on a smartphone and is only ready to talk to someone remotely at important moments. Recently, the generation of “Gen Z” (born between 1997 and 2013) has joined this list, which in principle does not want to “step” outside the boundaries of a smartphone to get the information it needs.
Creating Citadels new mobile app, one of the goals was to create an environment that is functional enough so that the user does not need to visit an internet bank or a branch. Already today, we can see that there is a sufficiently large number of customers who have only used the app and have not visited either the branches or the Internet bank. At a time when you could become a bank customer with self-portrait identification, an audience appeared that performs all actions only in the mobile app. Then we realized that we needed to optimize the app to appeal to younger people who are primarily consumers of digital services.
Is it possible to build a “relationship” with a bank without ever setting foot in a physical branch? What type of communication with the bank do customers prefer?
It is possible and it is already happening. Of course, a face-to-face visit to the branch is important when it comes to larger transactions, such as the formation of a mortgage loan, but it is also possible to receive such advice conveniently remotely. Right now Citadels the mobile app is used by approximately 260,000 customers, and the internet bank by 175,000 customers, so this ratio is already in favor of using the mobile app. As the customer base gets younger and younger, the importance of the app will only increase.
What behavior change is expected in the market in the next 5-10 years?
Currently, there are approximately one million members of the “Gen Z” generation in the Baltics, who are already partially active participants in the banking market. They will soon make up 15% of the active population. This is already changing the financial sector, as the industry has to think about how to serve the first generation, which was born with a smartphone and gets most of its information on a daily basis through various apps. In the near future, people will increasingly expect to receive most of the services they need on their smartphone.
People’s expectations from financial sector services are now starting to approach what we expect from the most popular content platforms. Netflix, Spotify and users of other popular apps are used to having content personalized according to interests and user profile. This trend is slowly entering the financial sector as well. For example, we were one of the first in the Baltics to integrate a generative artificial intelligence chatbot into the service. It currently solves about 70% of customer questions. Soon, this chatbot will also be available in the app to facilitate the user’s journey in searching for information.
The next financial transformation is likely to involve the transition from traditional money to various forms of digital money. The digital euro is expected to enter the market soon, and with it the importance of cryptocurrencies and various digital wallets could increase. An increasing proportion of purchases will be based on the “buy now, pay later” principle. Klix (Citadels a universal online payment acceptance solution created under the aegis) data show that more often people want to pay for the purchase in installments, and the range of different types of “subscription” services could also increase in the future.
How has people’s attitude towards money changed in general? Can it be said that a generation has grown up that has not even seen tangible money?
This cannot be said, because young people’s first contact is still with physical, not digital money. At the moment when young people start to manage money digitally, the overall feeling changes – the sense of reality disappears a little, because you can always ask your parents for money and transfer money with your smartphone. The desire to use cash among young people begins to decrease around the age of 16, when payment functions become available on smartphones, such as ApplePay and GooglePay.
Do people trust the bank and have peace of mind that their money is safe in the bank, even if it is digital and only numbers are visible?
The safety factor is more relevant for people of the older generation, who are more unfamiliar with technology. Young people have more trust in modern technologies that are popular in their sight, that is, if a friend or loved one shares a good experience about a product, they trust it. Older generations used to get knowledge and information from more experienced people, while young people do it from peers, friends and acquaintances.
If we compare internet banking and banking apps in general – how much are functions duplicated and can you do the same in the app as in internet banking?
Since these are both digital channels, of course there is duplication of information. The question is about the customer’s usage habits – who finds it more convenient on a daily basis. It is possible to make payments and receive credit services on both websites. Analyzing Citadele’s data, we observe that customers like to use the mobile app directly to make transfers and use various products.
What is Citadels the new app? What has changed in it compared to the previous one?
The update of the app was necessary to improve its functionality and convenience. Our goal was to understand the habits and expectations of the younger generation as they consume content on a daily basis through the latest entertainment and social networking apps. Citadels the mobile app is built on the principle of an online e-store, where everyday products and services are available in one place and can be received with the help of a few clicks, without visiting a third-party platform. This is the new norm – to receive a service digitally, a person does not want to switch between several platforms, but to manage the process and receive the service in one place.
What has never been offered Citadels the new app?
For the first time, app personalization will be provided, allowing the customer to choose which toolbars and features are available on the front page. This will help to systematize and manage the app to avoid situations where you have to search for a frequently needed function with several clicks. The app also has a stories section, which, similar to social networks, will provide information about new offers and remind you of important announcements. In the future, personalized advertising offers based on customer habits and interests will play an increasingly important role in financial services apps. This will be relevant for the new generation of customers, who will not want to spend time searching for information themselves, but will expect that companies will be able to address their relevant products on their own.
Source: www.diena.lv
