Australia and New Zealand are no strangers to digital disruption. With pioneers like Afterpay, Xero and Humanitix setting the standard, organisations across all sectors – including banking – face a new reality: customers now expect the same frictionless, intuitive experiences across all their interactions. Falling short isn’t just a misstep—it’s a fast track to losing customers.
Customer satisfaction with traditional banks is generally lower than with customer-owned banks and digital-only banks. For example, only 66% of users report satisfaction with traditional banks, compared to 79% satisfaction for digital-only banks, reflecting the growing preference for user-friendly digital services[1].
As a result, having a digital presence is no longer enough for banks in Australia and New Zealand. With a typical mid-sized bank having on average over 1,500 customer journeys spanning business units, products, and interactions, each one needs to deliver—or you risk losing customers to more agile competitors. In today’s high-stakes environment, where customer expectations are higher than ever, ensuring that your customer journeys are seamless across all touchpoints, from digital to physical, is crucial to maintaining loyalty and staying competitive.
It’s not surprising that the 2024 Mutuals Survey[2] by KPMG, revealed 80% of respondents identified reducing ‘points of friction’ at the customer level as a crucial strategy for enhancing customer experience and cutting costs. The survey also revealed that 39% of respondents view personalized member service and experience as the top differentiator for mutuals.
Legacy systems slow many banks down, preventing them from being agile and responsive. Outdated technology can be a costly burden, limiting their ability to innovate and improve customer experiences. According to industry studies, up to 80% of IT budgets in banks are consumed by maintaining these legacy systems, leaving little room for innovation (McKinsey).
The Five Challenges Holding Banks Back
1. Poor User Experience
While 98.9% of banking interactions in Australia are now conducted digitally, many digital channels still fall short.
Banks investing in user experience see measurable benefits. Research shows that improving customer experience can increase revenue by up to 15% and reduce operational costs by 15-20%[3]. These figures highlight the financial and reputational gains of prioritizing customer-centric strategies.
The issue isn’t just the presence of digital platforms but their usability – not just for retail customers. Many banks struggle with clunky, unintuitive interfaces that frustrate users. Too many customers still encounter friction in tasks like transferring funds, applying for a loan, making payments or setting up and approving payments.
Customers today expect the same smooth, intuitive digital experiences they get from today’s tech giants. When banks fail to meet these expectations, they risk pushing customers toward competitors who do.
2. Limited Digital Functionality
It’s one thing to have a polished digital interface; it’s another to offer full functionality across retail, business and private banking, wealth management and investing as examples. One of the biggest frustrations for banking customers is reaching a point in an online process, only to be forced to visit a branch or make a call to complete the transaction. Despite increased digital adoption, a significant portion of Australian financial institutions still don’t offer full seamless, self-service capabilities across all business lines, leading to abandoned transactions and dissatisfied customers.
Providing end-to-end digital services, whether it’s opening an account or applying for a loan (retail or business), is now a necessity. Banks that can’t offer these capabilities are likely to lose out to more agile, digital-first competitors who cater to the demand for instant, hassle-free service.
3. Missing the Human Touch
While digital channels have streamlined banking processes, they often come at the expense of human connection. According to Accenture’s Global Banking Consumer Study, 44% of consumers aged 18-44 struggled to access human support when they needed it. Digital channels may be efficient, but they can feel emotionally disconnected, leaving customers frustrated when complex issues arise.
By integrating digital tools that offer a 360-degree view of customer data, banks can bridge this gap. Empowering staff with instant access to complete customer profiles ensures they can provide timely, personalised support—whether in person or digitally—improving both service efficiency and customer satisfaction
4. Cumbersome Onboarding Processes
First impressions are everything in banking. Bain & Company notes that 40% of Australians abandon the onboarding process if it takes longer than 10 minutes.
Despite the rapid digitisation of services, many traditional banks are still burdened by cumbersome, time-consuming onboarding procedures that require customers to visit a branch or submit physical documents.
In contrast, digital-only banks have set a new standard, offering account openings in under five minutes through KYC automation, instant digital verification, and paperless processes. Streamlining onboarding not only improves customer satisfaction but also increases conversion rates, making it a critical area for improvement.
5. Fragmented Services Across Channels
Consistency is key when it comes to customer experience. Whether customers interact online, via mobile, or in person, they expect the same level of service. However, 71% of Australians express frustration with inconsistent service across different channels, and less than half of banks can currently provide a seamless omnichannel experience.
Ensuring that processes and experiences are consistent across all channels reduces customer frustration and enhances satisfaction. By creating a unified customer experience, banks can build the trust and loyalty necessary for long-term success.
Elevating Customer Experiences through AI and Engagement Banking
Traditionally, overhauling customer journeys required significant time and investment, but today’s emerging technologies offer banks a faster and more efficient way forward. Indeed, in recent times, however, there’s been a great leap forward through the adoption of AI in enabling banks to deliver the effective personalised experience customers are seeking, swiftly and cost effectively.
In the near future, AI is expected to integrate across the customer lifecycle, with GenAI driving customer-centric use cases and specialised AI supporting broader applications, risk management and fraud prevention being examples.
Beyond Bank for one is working to improve its call centre experience for customers through the deployment of AI tools and chatbots[4]. The bots allow the call centre to respond to 50% more chat queries than in the past with the capability being made available 24/7.
Supporting this are Engagement Banking Platforms providing banks with pre-integrated, out-of-the-box customer journeys that directly tackle the challenges outlined below—ensuring a cohesive, seamless experience across every channel.
Whether it’s addressing clunky interfaces, integrating human support, or streamlining onboarding processes, these platforms are designed to meet modern customer expectations. By automating key processes and offering a 360-degree view of the customer, engagement banking solutions help banks enhance service delivery, reduce costs, and improve efficiency. Ultimately, they provide the tools banks need to consistently deliver standout customer experiences in line with rapidly evolving customer needs—building the loyalty and trust that drive sustainable growth and competitiveness in today’s market.
[1] https://www.statista.com/topics/5778/customer-satisfaction-in-australia/ and https://www.nimbleappgenie.com/blogs/mobile-banking-statistics/
[2] Mutuals Industry Review 2024 – https://assets.kpmg.com/content/dam/kpmg/au/pdf/2024/mutuals-industry-review-2024.pdf
[3] https://www.csp.com/8-banking-customer-experience-trends-to-know-for-2024/
[4] https://www.itnews.com.au/video/case-study-beyond-bank-boosts-call-centre-expands-digital-capabilities-612354