Engagement Banking: the comprehensive guide

Introduction

Engagement Banking is crucial to success in today’s fast-paced, constantly evolving financial sector. These days, it's more essential than ever to deliver continuous, consistent value for your customers and your business. But actually doing so? That’s become all but impossible. Thanks to the complexity that comes with the build-up of legacy technology, technical debt, and operational silos, many banks are finding it increasingly difficult to keep the lights on, let alone innovate.

And with neobanks and digital challengers breathing down your neck and claiming your customers, things are starting to look quite dire, indeed. But there’s a way out, and it’s called Engagement Banking.

What is Engagement Banking?

You’ve probably heard the term, but maybe you’re still wondering: what, exactly, is Engagement Banking? Well, it’s so much more than a fancy new app or simply digitizing your bank’s old ways of working, that’s for sure. Instead, you can think of Engagement Banking as a customer-centric, platform-based, long-term strategy that will help your bank fundamentally rethink its operating model to deliver constant value and innovation for both your customers and your business. By adopting Engagement Banking to re-architect around your customers, you’ll be able to gradually hollow out your core and construct a modern digital banking architecture where only isolated channels and journeys stood before — a key part of survival in modern banking.

What are the 3 key features of Engagement Banking?

First of all, Engagement Banking is customer-centric, with the user experience as its North Star. Rather than focusing on channels or products, it’s all about finding a way to easily and effectively orchestrate customer journeys and make that your chief concern. Secondly, Engagement Banking is platform-based. By using a unified platform, you’ll be able to consistently generate customer and business value, an impossible feat when you’re dealing with outdated operating systems and legacy tech. And thirdly, Engagement Banking is a marathon, not a sprint. It takes time to rethink your bank’s value, journey by journey, and make ongoing, incremental improvements over time. But by working with a trusted platform provider, you’ll be able to accelerate your bank’s digital transformation and make the biggest possible impact in the shortest amount of time.

Why does Engagement Banking matter?

It’s become increasingly clear that traditional banking will not survive. How could it, when it’s founded around a channel-centric, inside-out approach that alienates customers and results in ever-increasing tech debt. That’s why Engagement Banking is so important: it’s a chance to eliminate the burdens of the past and start fresh with a lean, agile operating model that will stand the test of time, thanks to a customer-centric approach. And the results speak for themselves. Consider the fact that more engaged customers can lead to 68% higher customer acquisition and 66% higher customer retention, as well as a 35% increase in share of wallet, according to the Financial Brand. If that’s not incentive enough, you’ll also reduce operating costs and reallocate budget towards innovation, which will have a massive impact on your bottom line, not to mention customer and employee satisfaction.

What’s the difference between Engagement Banking and digital banking?

There’s some overlap between Engagement Banking and digital banking, but there’s also 3 key differences between the two. For one thing, digital banking is channel-centric. Even with the best intentions, this approach inherently reduces the issue to limiting binaries — physical vs. digital, mobile vs. web, etc. — with little notion of customer-centricity. Secondly, digital banking is outdated, as simply digitizing your old ways of working means upgrading your silos and adding new point solutions, rather than innovating. And, finally, digital banking isn’t future-proof and keeps you investing in your legacy tech, deepening the problem instead of fundamentally reinventing the best way to serve your customers, day after day.

What are the benefits of Engagement Banking?

The benefits of Engagement Banking are vast as they are impactful. For starters, by taking the leap to a new paradigm of banking, you’ll be able to swiftly transform your IT and business operations, allowing your bank to innovate and differentiate in a crowded market. For example, with the right Engagement Banking platform partner, you’ll be able to leverage out-of-the-box journeys to cover 80% of what you need to get to market, according to our research, significantly accelerating your bank’s digital transformation. And that’s only the beginning. But your bank isn’t the only one that will benefit — your customers and employees will, too. Engagement Banking will help you orchestrate seamless user journeys across all touchpoints and lifecycle moments. By putting the end-user at the heart of everything you do, you’ll significantly boost both engagement and retention, not to mention share of wallet.

How can I adopt Engagement Banking at my financial institution?

Like McKinsey, we see three clear paths to banking modernization, each with its pros and cons:

• Big bang replacement — Making a monolithic system update to overhaul your user interface, core systems, and integrations all at the same time.

• The greenfield approach — Reusing elements from your existing infrastructure to create a cloud-native tech stack, saving you time and money while minimizing disruption.

• Progressive modernization — Leveraging incremental change and iterative improvements to modernize your most important customer journeys and underlying processes, allowing you to mitigate risk and maximize customer and business value.

While all three are viable options, we believe progressively modernizing your tech stack is your bank’s best path forward because it allows you to prioritize where you want to differentiate — and even where you’d like to start — without diluting your focus and attention. With this unique approach to tech modernization, you’ll be able to super-charge innovation while minimizing time, cost, and risk. Check out our step-by-step guide to learn more.

What does the future of Engagement Banking look like?

Engagement banking has always been about re-architecting around your customers, so it should come as no surprise that its future is also incredibly customer-centric. In the years to come, you’ll need to find new ways to continuously enhance your channels — both digital and physical — so you can create a truly omnichannel customer experience. And on the employee side of things, you should focus on using cutting-edge tech to streamline their ways of working and offer a unified portal for all tasks, instead of various fragmented channels. AI and big data also represent an opportunity for you to increase personalization and offer your end-users superior banking journeys across all touchpoints. Finally, with new advancements in tech comes new opportunities to support your customers as they pursue financial wellness, either through personal finance management or business finance management.

MCB: an Engagement Banking success story

Mauritius Commercial Bank (MCB) is the largest commercial bank in the country, so you can imagine how complex their digital transformation could be. Thankfully, by embracing Engagement Banking and a unified platform model, MCB was able to streamline their operations, scale their modernization journey across channels and business divisions, and facilitate seamless customer interactions.

Here’s a few of MCB’s key achievements, which you can explore in greater detail in the full customer story:

• Launching a new mobile app in only 11 months

• Boosting customer satisfaction by +70% across retail, business, and wealth

• Pulling off a 51% year-over-year increase in retail transactions

• Releasing new SME app features in only 2-3 months

Taking the first step

If you’re inspired by our Engagement Banking mission, there’s a million ways for you to get started. If you want more information on digital transformation and key industry trends, check out our Banking Reinvented podcast, a weekly release where you’ll hear from our leadership and chief executives from across the industry. Alternatively, you can check out our easy-to-follow guide to Engagement Banking or explore our other customer stories. Or, if you’re ready to actually take the first step to modernize your bank’s tech infrastructure, feel free to schedule a chat. Our experts are standing by, and we can’t wait to help you jumpstart your digital transformation journey.