In almost every industry the traditional boundaries defining it have blurred. Banking was a little later than some in this digital transformation, but no longer. New entrants seriously challenge long-held notions of how financial services are defined and delivered.
Eight in ten bank and credit union chief marketing officers, surveyed by Accenture, acknowledge that consumers are becoming more open to engaging with new entrants for products and services. The success of direct banks such as Ally and Marcus by Goldman Sachs, as well as some challenger banks such as mobile-only bank Chime, which now says it has signed up five million customers, serve as clear indications of this new landscape.
As a further indication of the changed landscape, more than three quarters of financial institution CMOs agree that the new banking players use customer experience as the key differentiator and that they are often better at providing more relevant offerings than traditional players, according to the Accenture survey.
That is one measure of the challenge facing thousands of banks and credit unions. In addition, with some notable exceptions, many financial services brands are not well-recognized by consumers, the consulting firm notes. There is a failure to differentiate within an industry in which almost all players typically offer the same products.
These challenges can be overcome, and the impetus for change may — and likely should — come from the marketing function, Accenture states in a report on financial services marketing.
“As currently structured, most financial services marketing teams are not well-equipped to deal with these issues,” the report states. “They typically operate in organizational silos, rely heavily on agency partners and remain product- rather than customer-focused.” The reports cites the example of focusing only on the mortgage rather than on the home-buying experience and the associated needs for advice and information, or how other, similar people approached home-buying.
“Financial marketers need to develop a new core competency: The ability to work across the functions and brands inside their organizations as well as with external partners.”
Financial marketers need to develop a new core competency: Namely, being able to work across the functions and brands and geographies inside their organizations and connect with outside partners.
In addition, more effective use of data is vital now. It powers so much of the customer experience. This by now is a well-known challenge for financial institutions, but solving it will be a key to future success in an age when consumers have come to expect personalization as a baseline for dealing with a company.
Success now comes from being able to use internal and external data in real time. Nearly two-thirds (64%) of financial services CMOs say they have increased access to key data, but are struggling to make better decisions and to apply insights from this data to their businesses, according to Accenture. It’s a big challenge, but not insurmountable for banks and credit unions that are willing to invest in the systems, skills, partnerships and organizational change to bring it about.
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Trust Goes Far Beyond Deposit Insurance
The starting point for the transformation of banking is to become a trusted financial services advisor, in Accenture’s view. Many banks and credit unions take consumer trust for granted, in part because as insured and regulated institutions, people know that their money is safe. But trust goes far beyond that.
A Bain & Company survey found that 54% of consumers globally trust at least one big tech company more than banks in general, and 29% trust at least one tech company more than their own primary bank. Figures in the U.S. are a little better, but clearly this marks a significant shift and a challenge for financial marketers.
“Banking must become a “thoroughly modern machine that offers speed, convenience and simplicity in real time on the customer’s preferred channels.”
There’s no doubt that traditional financial institutions can shine as trusted financial players, Accenture maintains, but to do that they must deliver relevant financial advice and traditional services in “best-of-digital” ways. Banking must become a “thoroughly modern machine that offers speed, convenience and simplicity in real time on the customer’s preferred channels.” Industry CMOs need marketing strategies aligned with this new model.
CMOs, the report states, will need to own and manage customer trust — a combination of hyper-relevance, brand, reputation, social agenda and other elements. Gaining the trust of the consumer means that the bank or credit union can obtain consent to use customer data, allowing the institution to generate insights and offer new services. This is a critical point, because banks and credit unions need to be able to use large amounts of “consented” internal, external and inferred data, with real-time propensity models to drive interactions and predict the “next best action” the institution can take.
Shifting focus of financial services marketers
|Current focus||Emerging focus|
|Trust as one of many agenda items||Trust as main driver|
|Product- or channel-centric perspective||Customer hyper-relevance|
|Complex, fragmented offers/conversations||Simple & seamless interactions|
|Limited partner relationships||Narrative & ecosystem orchestration|
|Brand management||Brand values living across all touchpoints/behaviors|
|Charitable donations & sponsorships||Social agenda as enabler of trust|
|Use of predominantly internal data||Use of internal, external & inferred data (Trust drives consent)|
|Use traditional communication channels||Leverage Google, Facebook and other “GAFA” platforms|
Source: Accenture © September 2019
Ecosystems Key to Delivering Customer Experience
Consumers increasingly seek product and service propositions that address their core needs, of which personal finance, is one of the most fundamental. People have always had core needs, but what is fundamentally changing is development of what Accenture calls ecosystems to engage consumers and provide them with relevant value propositions and experiences. The most obvious example of this is the so-called GAFA ecosystem comprising Google, Amazon, Facebook, and Apple. All of these giants are deeply embedded in the lives of millions of consumers and also, significantly, deeply engaged in providing financial services products.
Financial institutions seeking revenue growth need to progressively develop ecosystem strategies, according to Accenture. One strategy is to become an “ecosystem orchestrator.” In other words, a bank or credit union operates as a platform, merging its customer journeys with other providers. For example, obtaining a mortgage with house search, legal and relocation services all provided or available.
“These are typically ‘life moment’ areas in which banks have traditionally played an essential, yet supporting, role,” the consulting firm states. By becoming the orchestrator of these life moment ecosystems, financial institutions’ role becomes more primary.
At the same time, banking providers must also become a participant in some or all of the GAFA ecosystems. That could mean, for example, working with Apple and Google in regard to their digital wallets, or with Amazon with its Echo smart speakers and Alexa voice assistant.
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Two Types of Financial Institution CMOs Are Emerging
The marketing function — and the CMO role in particular — is ideally suited to help banks and credit unions meet the challenges of a rapidly changing industry, according to Accenture. However, not all marketing executives necessarily see themselves in that role. If they do, they may face the reality that other key executives may exert leadership over customer experience and digital transformation. It’s not a “winner-take-all” situation by any means. Collaboration is an essential element for success.
In its report, Accenture explores the differences in views and attitudes of the typical CMO compared with what it terms “new model” CMOs — individuals who embrace and can manage the complexities of the current environment. Their focus is on creating value for consumers while connecting with them at key moments in their lives. The firm points to five key factors for the head of marketing to address:
- Execute a business plan to drive trust, leveraging consented data.
- Redefine the consumer experience across all touchpoints, at an acceptable value-to-cost ratio.
- Power-up the social media agenda by focusing on financial education and leveraging physical spaces to create strong ties with individuals and communities.
- Master marketing technology capabilities, including analytics, AI and machine learning through a mix of partnerships, acquisitions and/or participations.
- Build a lean, agile, data-driven organization with the right skillsets both within Marketing and throughout the organization.
- Measure outcomes, using large amounts of data (from different sources, including those external to the organization) in real-time.
“Transforming the traditional marketing function requires not only new ways of thinking but mastery of organizational complexity, deep insights into the mind of the consumer and the use of highly innovative technology, bringing together and applying both internal and external data to support sophisticated analytics,” the report states.
In other words, this process is not just a new way of marketing. It is a company-wide shift in mindset, behaviors and priorities, reflected in the table below.
Consumer willingness to share data with financial institutions
|Willing to share data…||Pioneering consumers||Pragmatists||Skeptics||Traditionalists|
|In return for relevant advice||95%||87%||81%||58%|
|To receive faster, easier service||95%||87%||82%||59%|
|To receive personalized, location-based offers||94%||82%||76%||50%|
|To receive a priority service||95%||87%||82%||59%|
|To receive discounts on non-banking products||94%||79%||77%||45%|
|To receive more competitive prices||96%||89%||84%||63%|
Source: Accenture © September 2019
The “new-model” CMO should be prepared to take on this responsibility, which requires the right tools, skills and the right organizational span of control. “In effect, evolving business models require a triangular control and feedback matrix for customer experience and growth that involves the CMO, the Chief Experience Officer and the Chief Data Officer,” says the report, “with the CEO sitting in the middle and holding ultimate responsibility.”
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4 Functions of the Financial institution CMO of the Future
In its report, Accenture outlines what it sees as the essentials of the what the CMO job must evolve to.
1. Pursues disruptive growth. “Not afraid to pursue radical new avenues for future growth and overturn conventional legacy thinking and processes.” CMOs should be willing to challenge the status quo in pursuit of better customer experiences and to increase growth.
2. Leverages the data. To power growth strategies CMOs should put the newest and best technologies to use with the abundance of data they have available — leveraging analytics to drive granular insights.
3. Owns the end-to-end customer experience. A modern marketing department led by a new-model CMO unlocks value by “relentlessly ensuring the institution can deliver relevant experiences at every touchpoint.” To that end, the CMO helps build agility into the organization to evolve around the changing needs of customers.
4. Becomes the architect of a new operating model — “one that heightens collaboration among both internal groups and external partners in ways that line up the right skills and behaviors to drive successful and sustained growth.”
If they follow this path, CMOs will play a key role in creating an institution that adapts at speed, achieves customer relevance and sustains growth, says Accenture. Where this has already happened, the results are measurable.
In a separate study, the consulting firm found that companies that employ new-model CMOs that deliver highly-relevant customer experiences can see an increase of up to 11% in yearly shareholder value.