# The power of digital: Why there’s still life in the traditional retail banks yet Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-11-11 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Challenger Banks vs. Legacy Banks: Trust in the Digital Age Meta Description: Discover the battle between traditional and challenger banks in the digital age. Learn why trust is the key factor and how legacy banks can adapt to modern URL: https://financedigest.com/the-power-of-digital-why-theres-still-life-in-the-traditional-retail-banks-yethtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/common-modern-business-skyscrapers-high-rise-buildings-architecture-raising-to-the-sky-sbi-301984730-6-1736837458568-compressed.jpg) _By_ **_Ryan Hall,_** _Chief Growth Officer, 4 Roads_ Challenger banks have more than given legacy banks a run for their money in recent years. The likes of Monzo, Revolut or Starling’s more modern, fun and human-centred branding alongside their USP of ultimate banking convenience has certainly turned consumers’ heads. Having worked to transform the digital customer experience for many a high street bank over the years, the challengers have achieved with great agility, what the [big banks have struggled](https://www.financedigest.com/banks-struggle-to-harness-big-data.html "BANKS STRUGGLE TO HARNESS BIG DATA") to do in over a decade. However, there’s one area where challenger banks aren’t so savvy, and it’s an area that traditional [retail banks](https://www.financedigest.com/transforming-the-retail-banking-ecosystem-its-all-about-technological-innovation.html "TRANSFORMING THE RETAIL BANKING ECOSYSTEM: IT’S ALL ABOUT TECHNOLOGICAL INNOVATION") continue to win out on—trust. Sure, traditional banks seem dry in comparison to Monzo’s flashy pink debit cards, but credibility goes a long [way when it comes to big financial decisions such as buying](https://www.financedigest.com/5-top-ways-to-buy-ethereum.html "5 Top Ways to Buy Ethereum") a house, taking out a loan, or investing a huge sum of money. In these moments, most of us still prefer to rely on legacy providers, according to [research](https://thefintechtimes.com/are-challengers-always-going-to-be-the-secondary-bank/) from payment card company Curve. But this won’t last forever, particularly as [challenger banks](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation") up their game (and technology) around community, responsiveness, knowledge sharing and communication. So legacy banks quickly need to capitalise on this strength and focus on creating a community-led service offering that will ensure longevity with future generations. Which has [seen many banks](https://www.financedigest.com/bank-of-canada-seen-on-hold-even-as-economy-accelerates.html "Bank of Canada seen on hold even as economy accelerates") within banks spring up, such as Natwest’s Mettle. **Do you really know me?** Most banks invest heavily in KYC, but this stops at verification and doesn’t really transfer to a more customer centric approach. Instead, there’s heavily reliance on personas and [focus groups](https://www.financedigest.com/pizza-group-dp-eurasia-sharpens-turkish-focus-as-russia-risk-high.html "Pizza group DP Eurasia sharpens Turkish focus as Russia risk high"). But as we’re peering down the barrel of 2022, is this just a tired and dated approach? Where traditional banks should be taking lessons from is more modern, [customer centric sectors and look to incorporate digital community](https://www.financedigest.com/communicating-with-the-customer-is-the-future-of-mobile-banking.html "Communicating with the customer is the future of mobile banking") into the mix to support further building trust. Knowledge bases (i.e. libraries of informative resources) can help, but this is a one [dimensional service](https://www.financedigest.com/dimension-data-introduces-next-generation-managed-services-offering-accelerate-client-innovation.html "Dimension Data introduces next-generation managed services offering to accelerate client innovation"). Communities make access to knowledge, [insight and opinion much easier than forced research techniques and significantly raises levels of customer](https://www.financedigest.com/insight-into-tomorrows-retail-banking-customers.html "INSIGHT INTO TOMORROW’S RETAIL BANKING CUSTOMERS") service either by being able to self-serve, find the answer among peers or access digital customer service support. Why? Because consumers are [time poor and need](https://www.financedigest.com/the-psd2-deadline-extension-why-you-need-it-and-how-best-to-use-your-additional-time.html "The PSD2 deadline extension: why you need it and how best to use your additional time") quick, convenient solutions that satisfy their immediate need for instant gratification. And frankly, press 2 for this and 5 for that just doesn’t cut it anymore. Weren’t we promised hovercars and moon colonies by now? Even so, touch button call handling seems a bit archaic by anyone’s standard. First direct [innovated on that front over 25 years](https://www.financedigest.com/the-next-upcoming-years-to-see-the-aesthetic-lasers-and-energy-devices-market-get-through-the-best-of-both-innovation-and-inquisition.html "The Next Upcoming Years To See The Aesthetic Lasers And Energy Devices Market Get Through The Best Of Both – Innovation And Inquisition") ago! But there is hope. [Digital communities build on the convenience of knowledge bases by encouraging “channel hopping” to a new self-service channel: the digital community forum](https://www.financedigest.com/young-leaders-forum-debating-what-successful-leadership-looks-like-in-the-digital-age.html "Young Leaders Forum, debating what successful leadership looks like in the digital age"). Let’s say a traditional [bank’s customer has lost their credit](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") card. A knowledge base might answer how to order a replacement but if they don’t, they’ll have to ring [customer service](https://www.financedigest.com/video-collaboration-is-pushing-the-boundaries-of-the-customer-experience-in-financial-services.html "Video Collaboration is pushing the boundaries of the customer experience in Financial Services") which soon turns the ordeal into a drawn-out procedure. Yawn. The opportunity to jump onto a digital community, however, where fellow customers would have likely discussed and [resolved the same issue](https://www.financedigest.com/apple-says-issues-with-imessage-facetime-resolved35792.html "Apple says issues with iMessage, FaceTime resolved") already, means customer service information is readily and conveniently available. And after all, greater convenience means greater customer satisfaction, which only improves [bank to customer](https://www.financedigest.com/how-will-open-banking-impact-the-customer-experience.html "How will Open Banking impact the customer experience?") trust. **Value is a two-way street** What fosters [customer loyalty](https://www.financedigest.com/how-to-maintain-customer-loyalty-and-trust-in-the-face-of-a-pandemic-and-digital-competition.html "How to maintain customer loyalty and trust in the face of a pandemic and digital competition") more than anything else today is a feeling of being heard. The informal, conversational environments of a [digital community allow customers to be entirely honest of their banking](https://www.financedigest.com/how-will-the-introduction-of-digital-banking-impact-customer-perception-and-overall-loyalty.html "HOW WILL THE INTRODUCTION OF DIGITAL BANKING IMPACT CUSTOMER PERCEPTION AND OVERALL LOYALTY?") experience – it’s real insight and interaction. So much more than a tired old feedback form, meaning observations can be trusted and carry much more value in proactively reacting to them and [staying ahead](https://www.financedigest.com/staying-ahead-of-risk-this-black-friday.html "Staying Ahead of Risk This Black Friday") of customer expectations. Customers feeling heard, handled quickly, in conversation and valued goes hand-in-hand with [trust and building](https://www.financedigest.com/how-sonic-branding-can-build-trust-and-confidence.html "How sonic branding can build trust and confidence") advocacy. And through digital communities, [banks can offer](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") a potent platform to promote customer voices. **We’re human after all** This just about scrapes the surface of the practical advantages of a [digital community](https://www.financedigest.com/in-a-digital-world-what-is-the-future-for-community-banking.html "In a Digital World, What is the Future for Community Banking?"). It goes far deeper than the [picture I’m painting](https://www.financedigest.com/a-picture-of-data-paints-a-thousand-words.html "A picture of data paints a thousand words"). But perhaps more importantly, and bringing it back the traditional banks’ cornerstone of trust, is a [digital communities’ proven ability to build customer loyalty](https://www.financedigest.com/the-evolution-of-loyalty-and-its-place-in-the-digital-age.html "THE EVOLUTION OF LOYALTY AND ITS PLACE IN THE DIGITAL AGE") by cultivating online real conversation and relationships. It’s human nature to seek validation, and while already having customer trust based on heritage is a great start, the perfect confirmation from a customer’s viewpoint is to discuss, challenge and confirm their feelings with the only people in the same situation; other customers. Peers trust peers, so the validation of feelings via a digital community can often be the all-important assurance that makes up a customer’s mind in trusting one [banking service provider over another with a significant financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") decision. **Embracing the possibilities** Ultimately, it’s not complicated for traditional banks to utilise the advantage they have thanks to their heritage, which brings with it a unique level of trust [challenger banks](https://www.financedigest.com/5-things-to-consider-when-choosing-a-challenger-bank.html "5 Things to Consider When Choosing a Challenger Bank") can’t yet compete with. But this can only be achieved if traditional banks recognise this, respect the need to evolve and embrace new ways of utilising their [customer loyalty by providing digital communities](https://www.financedigest.com/talk-to-me-the-changing-face-of-customer-communications.html "TALK TO ME :THE CHANGING FACE OF CUSTOMER COMMUNICATIONS"). It’s a race. The challengers are [moving fast at the heels of the challenged heritage banks](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks"), and it’s very much a ‘when’ not ‘if’ that’ll they’ll overtake. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---