There are many ways financial institutions get consumers to open new accounts, including digital marketing campaigns, aggressive advertising, reward programs and employee incentives. But what happens next? How can banks and credit unions create the level of engagement and emotional connections that will drive long-term profits and loyalty?
Gallup defines customer engagement as the emotional connection between customers and your company. According to Gallup, retail banking customers who are fully engaged bring 37% more annual revenue to their primary bank than actively disengaged customers.
Customer engagement goes far beyond fulfilling transactional needs, delivering services as expected, or creating satisfaction. Customers want to be assured their bank knows them, understands them, and is looking out for their financial wellbeing. New technologies have better enabled banks and credit unions to deliver against these expectations.
Power of Engagement:
Loyalty in the future will be based on the level of engagement between a financial institution and their customers as opposed to simply how well transactions are completed.
According to Dr Stina Söderqvist, science manager at Dreams, “Engagement cannot be deployed as just an end-goal. It must lead to improved financial wellbeing for it to be effective in helping customers change their financial habits for the better and become more trustful of their bank. In other words, an engaging financial service should not simply capture customers’ attention, but rather motivate users to sustain healthier financial habits.”
In early 2020, BBVA announced a 5-year global strategic plan that is focused around helping clients improve their financial health as a means to subsequently improving society’s overall health. After only a year, the initiative has proven to be extremely successful.
BBVA Leverages Data to Improve Financial Wellness
When BBVA first announced their decision to increase the focus on the financial wellness of customers, they explained that they would leverage data to provide personalized insights and provide custom recommendations. They believed the data, combined with person-to-person engagement, would allow them to anticipate customer needs and provide advice in advance of lifetime events that would predicate the need for financial products.
Beyond using data to drive access to product and service recommendations, BBVA also has focused on increasing access to, and the understanding of, financial services across the spectrum of experience and income levels. This has been achieved through an extensive financial education program that includes publishing and disseminating content in diverse formats, promoting research and strengthening ties among the members of the financial education community.
Data + Analytics = Personalization:
Data and analysis are crucial to providing significant personalized experiences that are impartial and proactive.
The BBVA Center for Financial Education and Capability currently includes over 400 publications, over 100 news stories and dozens of newsletters that promote the importance of financial knowledge and skills. The center’s principles include:
- Encouraging behavior change through a learning-by-doing approach.
- Having an all-inclusive focus, targeting people of all ages, socio-economic background and level of access to the financial system.
- Promote innovation through the use of digital solutions as a tool to guarantee responsible access to financial services.
- Supporting financial wellness through cooperation between diverse stakeholders and including engagement in partnerships.
- Actively advocate and promote the role of financial education.
- Maintain an independent-action perspective, not linked to BBVA’s products and services.
One of the recent resources created by BBVA’s Center for Financial Education and Capability was the 2021 EduFin Position Paper, that discussed the key areas of action for the future and offer basic recommendations for stakeholders who wish to get involved in the field of financial education. Other channels the center uses to share knowledge are Twitter (@BBVAEduFin) where hundreds of posts a months are made, and the annual EduFin Summit.
10 Million+ Customers Are Using BBVA’s Financial Health Tools
According to recent BBVA reports, the number of customers using the bank’s digital financial health tools now exceed 10.6 million, which represents a 54% increase over the seven million customers that used these features the previous year. Just as impressive, across the BBVA Group, the interactions of the bank’s customers with these tools increased by 73%, from 11 million in November 2020 to 19 million in November of 2021. The digital tools provide highly personalized and proactive advice through alerts, automated rules and recommendations across the entire customer journey.
The levels of engagement range from providing ways to control daily income and expenses or save for unforeseen events, to more complex communication around debt management and advice on savings and investment products to plan for the future. “We want to go from being infrastructure providers to offering advice,” stated BBVA’s CEO Onur Genç. He believes this should be accomplished with a value proposition that includes impartial, personalized and proactive advice in a multichannel offer that unites the best of both worlds: digital and physical relationship models.
“Branches will be key to offering advice, complemented by the digital offer.”
— Onur Genç, CEO of BBVA
The positive impact on satisfaction, loyalty and sales are all testament to the importance of meaningful engagement with customers. According to the bank, the NPS (Net Promoter Score) for users of BBVA’s financial health tools is 38.6 compared to 29.2 for customers who do not use them. In addition, the probability of losing customers who use the financial health tools was found to be 1.28 points lower than that of non-users.
Finally, between January and November 2021, BBVA sold a total of 1.4 million financial products via digital channels in one of their significant regions served (Spain). Of these, around 172,000 sales were made from the bank’s financial health tools, representing 12% of the total amount.
Financial Wellbeing as the Cornerstone of Engagement
According to Dr Söderqvist, a key reason why many financial institutions often fail in terms of effective engagement is that they don’t fully understand the importance of behavioral change in improving financial wellbeing. As BBVA has found, a financial institution must go beyond simply providing financial tools. This is because, while the majority of consumers are aware of the importance of saving money, only a small minority are actually satisfied with their own savings. Banks need to help customers change their behavior.
Banks and credit unions must motivate users — emotionally and psychologically — to change their financial habits for the better, says Söderqvist. “By helping customers associate positive emotions with their financial goals, for instance, banks will be able to activate their customers’ intrinsic motivation and achieve long-lasting emotional engagement.” For instance, banks can provide positive feedback to savings activity, design goal-based experiences, or help customers to visualize their progress.
It is clear that financial institutions must go beyond excellence in transaction handling to being a financial partner with customers. This is the only way engagement between a financial institution and a customer will increase, trust will be regained, and loyalty will be retained.