The rapid rise in digital channels creates opportunities for banking providers to develop more meaningful relationships with consumers by using data to optimize the experience.
Not long ago, a bank manager was more than just a person who ran a branch. They were financial advisors, mortgage brokers and trusted confidants. They held a personal relationship with their customers. They would consult with customers on many important life decisions — from funding weddings and purchasing a car to planning for children and buying a home. Then, over time, the branch manager transitioned to more of a salesperson than an advisor.
The personal relationship customers once held with their banking provider has been reduced even further through the rise of digital banking. While a seamless digital experience is vital for a modern financial institution, consumers still appreciate that human touch, and it remains key to forming meaningful relationships and building loyalty. This presents an opportunity for those banks and credit unions that can strike the right balance between delivering great digital experiences and being a trusted advisor again. For this to occur, retail institutions need to shift from product-based, transactional focus, to a model that is more customer centric.
In the US, the number of bank branches has dropped by 6% since 2009, and is now at the lowest level in more than a decade. Branch closures are not just a trend in the US. In the last year alone, more than 600 bank branches were closed in the UK. Bank of East Asia closed 22 outlets in Hong Kong, and Citi has closed branches in China.
The decline of the branch is being driven by increased demand for digital services, and improvements to online and mobile banking platforms. Yes, financial institutions need to harness the power of these digital tools to offer more personalized service and build customer engagement. But now it’s imperative that they put the customer at the heart of everything they do, designing and offering products and services around the consumer’s needs.
Being customer centric is not just about listening to how people want to interact with you, it’s about recognizing what they value beyond your products and services, so you can identify the total worth of the brand-customer relationship. Many fintech firms disrupting the sector have built their businesses from the end-user’s perspective rather than a product perspective. This is what gives them their competitive advantage — generating both buzz and results.
Customers now expect to have an experience tailored to their individual needs. Collinson Group’s study of affluent middle class consumers in the US found that nearly half (47%) feel more loyal towards banking brands that know who they are and treat them differently, and 49% expect their bank to proactively offer products and services that meet their needs. Furthermore, the research found 52% of banking consumers expect to be rewarded for their loyalty, and 66% actively want a choice of rewards and benefits that best suit their tastes and interests.
Banks and credit unions have the potential to use data to both improve the customer experience and to build a more personal and emotional relationship. Financial institutions can use rich data insights to become consumers’ “financial friend” and trusted advisor. For example, banks can analyze spending behaviors to identify key moments in someone’s life, such as getting married, starting a family, or booking a family vacation. Data collection and analysis — at transactional, behavioral, and attitudinal levels — is what drives this insight and creates opportunity, and must be better leveraged by banks and credit unions if they hope to deliver tailored offers and services with real value and relevance.
To fully capitalize on this opportunity, banks must offer solutions that help serve consumers’ broader lifestyle needs. When polled, 58% of affluent middle class consumers in the US identified theft protection and 57% said assistance with lost cards were areas where they would appreciate more support. Indeed, motor breakdown recovery, identity theft protection, discounts with partner retailers, purchase protection, SOS travel assistance, home emergency coverage, and airport lounge access were also rated highly.
Consumer demand for these additional services creates real opportunities to build loyalty and significantly improve both people’s perception of value and the overall customer experience. Research suggests that consumers would embrace a one-stop-shop for all their financial services products vs. spreading their financial services across multiple providers. But think about it: currently, there is no real incentive for them to do so. By analyzing customer data to capitalize on key life events and providing relevant, tailored offers off the back of this insight, banking providers can deliver incentives to encourage multi-product purchases.
Focusing on consumers’ needs should be central to any financial institution’s business strategy. It brings that feeling of a human touch back to the banking relationship — even across digital channels. However, for this to work successfully, banks would benefit from collaboration with partners, and by adopting an open API approach to facilitate greater levels of data enhancement. By aggregating their own data with that from third parties, financial brands can paint a picture of their customers across multiple touchpoints. Ideally this would include granular detail about unique customer journeys, preferences and behaviors to deliver relevant and seamless experiences in all channels.
Ultimately, financial service organizations need to set very clear goals and objectives for customer engagement and align their investment against these to build functionality that facilitates key customer actions effortlessly — e.g., repeat purchases, adding more services, or accessing incentives/rewards. Ultimately, the experience should make the consumer feel like they are in control.
In most organizations, this will require an organizational shift to better align processes and resources, and to better connect marketing with customer service departments. This may sound challenging, but there is a significant pay off for those that get it right.
Once retail financial institutions figure out how to reward, incentivize and engage consumers, it becomes significantly easier to cross-sell other products and services. A single customer view lays the foundation for organization-wide loyalty initiatives to be developed and funded — something that drives incremental revenue and allow people to be invested both emotionally and tangibly in their banking provider.
The provision of more self-selected and tailored products and services could herald a new era for the role banks and credit unions play in the lives of consumers — now and in the future. The “Bank of Me” may not be that far away after all.