Financial institutions and their customers have always been partners in each other’s progress. But customer experience is a crucial factor in the success of their business. A study revealed that 50% of customers are willing to remain loyal to their bank, albeit the choices many. This loyalty is dependent on banker’s ability to analyze and address the varying needs of customers.
Changing Human Behavior – A Barrier in the Banking Landscape
Studies show that humans are not always rational in their decisions. Over a period, they have also started counting on shortcuts to resolve problems. This approach, also called heuristics, often results in various forms of biases that lead to judgment errors. This situation poses a challenge for banks whose primary focus has been on changing consumer behavior pertaining to investment discipline, insurance coverage, savings, and credit discipline. The needs and consumption patterns of today’s customers are unpredictable, thanks to the plenitude of choices they have.
Less wonder that a study revealed that the average rate of application abandonment across a bank’s retail offerings is approximately 40–50%. Also, the non-performing loans have added to the bankers’ woes.
Behavioral Science – Perfecting the Art of Knowing Customers
Behavioral science is that elusive answer to multiple questions bankers are asking. It is a field of study that deals with human behavior and decision-making. Experts in behavioral science apply the principles of psychology, sociology, economics, and neuroscience to analyze human relationships.
Traditionally, banks have been leveraging the concept of behavioral sciences in the areas of strategy, product design, and marketing. Nowadays, they face the challenge of mitigating the new issues related to acquiring and assisting customers. Many banks and solution providers have realized that the application of behavioral science to banking technology has now become the need of the hour.
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