Becoming the Amazon of Banking

Amazon has become a central part of the retail establishment by mastering the concepts of 'knowing the customer' and flawless delivery. What are the opportunities for banking to do the same?

How many stores does Amazon have? Do you have a favorite employee at Amazon who knows you and who is friendlier than the competition? When was the last time you saw an ad for Amazon? So, why does Amazon perform so well in driving positive brand recognition and such a loyal following?

To find the answer to this question, it may make sense to look into the findings surrounding Brand Intimacy done by MBLM. Through 6,000 consumer surveys, 52,000 brand evaluations, and by applying learning from neuroscience and psychology, they have built a better understanding of the decision-making process across all industry categories.

According to MBLM, “A consumer’s emotion is the driver of decisions, and a consumer’s rational mind retrofits their selections after the fact. In other words, how a consumer feels about a brand is the best predictor of behavior.” And while there are several components to a consumer’s feeling about financial services in general, suffice it to say that financial services does not rank well against other industries. In fact, there are lower percentages of customers who feel a brand intimacy in financial services than in health & beauty, entertainment, technology & telecommunications, or automotive.

Increased Intimacy Results in Increased Revenues

So, how does Amazon (or financial services companies) increase the level of intimacy with a consumer to the level that makes a difference. It’s with consumer insight. And, rather than just using their huge database of insights to build reports around their customers’ buying behavior, demographics and segmentation, they use these insights to directly improve the offerings, delivery and relationship with the customer.

A very important added benefit of using advanced analytics to know their customers better is that the ability to develop an experience that is personalized for the consumer creates a greater propensity for consumers to pay more for products. In fact, the MBLM research found that brands with a higher intimacy score have endured and outperformed the S&P and Fortune 500 indexes in profit and revenue over the past ten years.

Bottom line … using customer insights to improve the consumer experience improves the bottom line.

Becoming the Amazon of Banking

As noted earlier, Amazon is able to deliver on fulfillment, the archetype that drives the retail category. It offers superior service by being reliable, anticipatory and, most importantly, delivering value. The majority of these qualities are driven by knowing customer profiles and suggesting appropriate future purchases.

The Amazon formula for success is not voodoo science – it is taking all of their learned insights and delivering a customer experience that is truly addictive. According to MBLM, “Amazon exceeds expectations by continually innovating, evolving, and expanding its offerings (based on customer insights). By being pervasive, direct and peerless in fulfilling customer needs, Amazon has established itself as essential.”

Despite being an industry that has more insights into the financial well being, product ownership, buying behavior and even channel preference of customers, how many financial institutions believe they are a significant part of their customer’s lives … something upon which they depend? Amazon has achieved this very unique position without promoting an emotionally-oriented brand promise like banking tries to do. They have established brand loyalty and a place in the hearts of consumers by doing nothing more than processing vast amounts of insights expertly and delivering a memorable experience using these insights.

When a customer of Amazon has a problem with a product they have purchased, there is never a lengthy process of asking the customer all of the basics like name, address, account number, etc. Instead, the customer service representative immediately takes action to solve the problem at hand using the insights at their fingertips.

Advanced analytics and delivering insights to the entire organization is worth the expense because it’s a hallmark of human interactions. Why should a consumer tolerate being asked for information that their bank already has? In the age of big data, and digital technology, the consumer knows we can do better. And if you have the ability to show the customer you know them, let them know during every interaction. Reference a previous conversation, life event or previous transaction. It differentiates your organization in the marketplace.

Amazon uses their knowledge of the customer to exceed expectations throughout the customer journey. This may mean nothing more than making returns easy, or may include delivering a replacement product before the customer has even returned the previous purchase. Every Amazon employee knows the value of the customer’s relationship (from the very first purchase), and is passionate about never losing that relationship.

Amazon doesn’t just use their customer insight to build smarter market visualization, better segmentation models, enhanced product development capabilities or to measure sales within different customer categories. They use customer insight to arm every employee with the capability to serve the consumer better than any retailer in the world. Remember, most of the products they sell aren’t manufactured by Amazon. They need to deliver the product better than the manufacturer or direct retailer.

Brands like Zappos, Netflix, and Amazon already know the power of big data and advanced analytics. Not only does smart data provide the power of personalization, it does so without many of the expenses associated with improved service. Customer insight doesn’t require a vastly expanded customer support team … it may actually allow you to reduce call center headcount.

The Intersection of Data and Technology

The foundation of the fintech marketplace has been the ability to marry the benefits of big data with the new digital technologies around the advanced delivery of products and services. The most successful P2P lenders, challenger banks and payment firms like Paypal have built a following by collecting insights and delivering highly targeted solutions digitally. The ability to know their customers and personalize solutions sets them apart from traditional banking organizations.

To succeed against (or with) new fintech start-ups requires the processing and application of the vast amount of data at our disposal to benefit the customers we already have a relationship with. The secret is not in the technology and much as it is in the data … but we need both to succeed.

AI, IoT, VR and the Insight Economy

The future of banking may or may not include branches, but it most certainly will include some level of artificial intelligence (AI), the Internet of Things (IoT) and virtual reality (VR). The ability to provide market insights and advisory services leveraging artificial intelligence (robo-advising) is already a reality. An artificial intelligence system similar to Apple’s Siri is already being used to provide basic transactional support. The ability to recommend the payment of an upcoming bill or to warn about a potential overdraft is also a reality at the best of digital banks. Advanced customer insights are the foundation of this trend.

The ability to use sensors to assist in daily banking activities is also already a reality. The combination of big data and IoT devices can help turn information into a force that can boost efficiency, increase productivity and drive fundamental improvements in customer experiences. “We’re very soon going to be entering a world though, where we may not have to be physically touching a device in order to execute transactions or to be able to engage with computers,” Derek White, chief design and digital officer at Barclays, told CNBC in an interview at London Technology Week.

Capital One already announced a partnership with Amazon’s Echo, a device that users can talk to in order to carry out actions such as paying a bill, transferring funds or opening a new account. Many other examples include ways to monitor inventories for commercial lenders, provide home monitoring devices for insurance companies or even becoming integrated within buying processes with Amazon’s Dash or Flow.

One of the most futuristic uses of customer insight in the future could be in the world of virtual reality or mixed reality. Imagine the possibility of bringing an entire virtual branch into a living room, complete with virtual tellers, robo-advisors and fintech specialists all ready to discuss personalized solutions without the customer ever leaving their favorite chair.

The potential for putting on some VR goggles and entering the ‘branch of the future’ within a customer’s home or workplace is not as far fetched as it seems. The key to delivering this previously unheard of level of customization is all dependent on managing customer insights the way that Amazon does today.

Delivering the Amazon Prime Experience

The banking organizations who win the battle for the customer in the future may not have branches, the friendliest employees, the best products or even the best technology. They will have the best understanding of their customers. Without an intimate understanding of the consumer, enabled through advanced analytics, and the ability to deliver flawlessly, a relationship is always at risk.

But to double down on the value of building and using our stockpile of customer insights, we can again look to Amazon and their Amazon Prime program. The program was launched to secure loyalty by providing unlimited two-day shipping for fixed annual fee. It has since morphed into a program with benefits from video downloads to additional savings on products and services which has resulted in unsurpassed loyalty in a very fickle retail sector.

One of the biggest benefits of Amazon Prime is that it is making customers reconsider doing business with any other retailer. This is an enviable position for any industry, not the least of which banking, where most consumers hold almost a dozen services at as many as five institutions.

To use customer insights and a rewards program that is customized to each consumer not only provides Amazon a lure for new customers, but a barrier of attrition for current customers who don’t want to reteach another retailer what Amazon already knows. In banking, this same logic would make acquisition initiatives more successful as well as cross-sell programs more targeted.

The key determinate of success in banking in the future will not be the firm with the next shiny object as much as it will be those organizations that can understand their customers more than any other firm. Customers are comparing our level of service and proactivity to Zappos, Netflix, and Amazon. Their tolerance for anything else is wearing thin.

This article was originally published on . All content © 2024 by The Financial Brand and may not be reproduced by any means without permission.