Balancing human and digital: Bulgarian-American Credit Bank
Ivan Ivanov, Director of Retail Banking at Bulgarian-American Credit Bank, shares insights about his role and the challenges faced by the bank in an interview for the Qorus-Avanade report titled Human-Centered Digital Banking.
Ivan Ivanov, Director of Retail Banking at Bulgarian-American Credit Bank, shares insights about his role and the challenges faced by the bank in an interview for the Qorus-Avanade report titled Balancing human and digital: Are banks losing touch with customers?
What are your roles and responsibilities in the bank?
I am Director of Retail Banking at Bulgarian-American Credit Bank (BACB). My responsibilities cover the whole range of the business of the bank with individual clients, including sales, products and services, process management and development, business development, branch networks organization and management, as well as collaboration with all other departments in the bank on topics concerning the retail business.
What is your top customer challenge right now?
The top customer challenge is the aggressive interest rate policy adopted by the market leaders, which maintain very low interest rates on the market for now, ranking Bulgaria as the country with the third lowest interest rate levels on mortgages in the EU. The issue is that this is not possible to maintain in the long term, and it is expected that the rates will increase by the end of this year, creating certain challenges for the market participants.
How do you decide the balance between human contact and digital interaction for your retail banking customer segments? Can you give an example? Do customers ever get lost in the process or experience lower levels of service?
We are one of the banks in Bulgaria with the smallest branch networks, which is the reason for us to invest in the development of digital channels and digital interaction with our clients. During the last few years, we managed to offer a full range of retail banking services remotely. These include online deposit, online loans and online onboarding (opening current account, sending physical debit card and registration for online banking). The option for fully digital customer service, which is not only digital in the front end, but also in the back end, provides our customers with a convenient, fast and fully digital way to use the essential banking services. The processes are very easy and customer-friendly.
The main stage of the process that is creating some disturbance is remote identification, which some clients feel uncomfortable about. But as the service is growing in popularity in the Bulgarian market, more and more clients do not see it as an issue. Providing a clear, fast and easy process, along with good products at a reasonable price, is core for those customers who use it.
Do you think there are limits to what banks can do by focusing on digital only? Or are the benefits and much greater than the disadvantages?
At this stage, the main obstacle for banks to focus on digital only is customer preferences. Many clients still prefer to have a bank branch to visit if they need to, and at the same time they demand seamless digital processes and services. Many more clients are starting to use the digital services of the banks, so I expect that banks with large branch networks will start reducing them in order to decrease their costs. The road to digital-only banking is still long, however, and we are seeing a good balance between digital banking for everyday and simple operations and the in-person touch for more complex products like mortgage lending.
In the future, how will banks make the most of human engagement? Will such engagement come at an additional cost for the customer, or even at a premium price?
To make the most of human engagement, banks will be implementing the human touch in their digital channels. Clients need human interaction remotely, without the need to go to a branch and waste time in queues. Virtual Reality (VR), for example, has a lot of potential in this area. Banks can create a virtual, digital bank branch using VR where customers can be engaged and provided with insights, and a more personalized approach with virtual assistants. It can provide customers with a 360 degree view of their current position, the status of their various requests, new offerings and much more. Virtual branches can offer a much more realistic experience, keeping the human touch as well as a way to communicate and reach new audiences. VR could also make complex financial products much easier to understand. That’s why financial institutions are already developing solutions to provide banking solutions exclusively in a VR environment. This would be a win-win for both parties: customers will get their service anytime and anywhere, and banks will be able to reduce costs as they will not need to invest in physical locations. As this is expected to save costs for the banks, it will be a way to keep the human touch with clients without additional fees.
As we enter the recessionary period, banks will be keen to demonstrate greater understanding of and support for their customers. What initiatives are you taking to appear more human and empathetic? Or are you relying on more automated contextual responses based on algorithms and avatars?
We are not relying on automated responses. We have direct and personalized communication with our customers and we are acting as their partner in the hard times they face. For example, during the Covid-19 pandemic, there were a lot of businesses that were shut down and many customers faced difficulties servicing their loans. BACB had direct communication with customers to understand their needs and to make them feel supported. Now we plan to keep the same honest and prompt human connection with our customers, as we always did in the tough times.
Are you developing any partner ecosystems? How are they integrated into the end-to-end customer process? What issues do you typically face? Can you demonstrate the benefits of adopting this approach?
We are working with several partners in different directions – intermediaries/partners for mortgages and consumer loans, developers of IT solutions, plus insurance and pension fund partners. The benefits are in offering a wider range of products and services, new sales channels, increased client base and reaching more customers while saving costs.
How do you collect and use customer data to improve the customer experience? Can you give an example?
We use mainly customer data from the core banking system, gathered based on every client transaction. It is used for promotional campaigns, individual offers and pricing. Here are two examples. 1/ For every mortgage loan we make individual offers, based on the information provided, which increases customer satisfaction. And 2/ In fully automated processes, internal controls analyze the whole data for the customer to provide a personalized decision without human interaction.
What issues do you face in adopting technology to manage customer interaction? How have you managed the need for legacy modernization, for example? How are you applying AI and analytics to generate better customer engagement?
Modernization of legacy systems is one of the biggest challenges. The development of IT systems is very expensive for mid-sized banks on the Bulgarian market and we are carefully selecting those innovations where we will invest. We definitely consider the use of AI in customer interactions and we are launching an AI chatbot to improve the customer experience.
Digital Reinvention community
With Qorus memberships, you gain access to exclusive innovation best practices and tailored matchmaking opportunities with executives who share your challenges.