EXCLUSIVE: “It’s time to get deeply personal” – Jim Marous in ‘The Fintech Magazine’
Jim Marous questions if banks are using technology to truly engage with their customers or just to sell them more stuff
Banking customers want more than a personalised experience. They expect a ‘GPS of financial services’ that will help them reach their financial goals as easily as possible across the entire customer journey. Unfortunately, most banks fall far short of customer engagement expectations.
Moving from a transactional mindset to a customer-focussed engagement mindset has become a crucial requirement in banking. It doesn’t matter if the customer is a digital native, branch-based customer or a combination… the ability to provide contextual products, services and recommendations is the foundation for developing a stronger relationship and greater revenues.
Building active engagement on a recurring basis, beyond rudimentary transactions, requires more than traditional personalisation. In fact, research by the Digital Banking Report found that financial institutions that excel at building interactions beyond daily transactions generate more revenue from those activities than average players. This is accomplished by creating real-time contextual engagement for the right customer at the right time, with the right interaction.
The surge in digital interactions since the onset of the pandemic escalated expectations – giving consumers more exposure to the personalisation practices of e-commerce leaders and raising the bar for everyone else. Organisations like Amazon, Netflix and Apple have made personalised engagement the default standard for relationship growth.
McKinsey research found that 71 per cent of consumers expect companies to deliver personalised engagement. And 76 per cent of those get frustrated when this level of engagement doesn’t happen. If a banking customer doesn’t feel they are receiving a contextual experience, it’s easier than ever for them to move to another provider – usually without fully closing their existing relationship.
In a Gallup study, it was found that retail banking customers who are fully engaged bring 37 per cent more annual revenue to their primary bank than do customers who are disengaged. Fully engaged banking customers also have more products with their bank, from current and savings accounts to mortgages and auto loans.
Finally, they also have higher deposit balances in their accounts than less engaged customers with the same products.To build a more positive experience, banks can engage with customers on a hyper-personalised basis via direct mail, email, social media, mobile banking platforms, websites or any other channel where contextual interactions occur.
The power of new technologies and digital tools assists in the most important component of customer engagement – listening. From monitoring transactions and customer inquiries, to asking for insights regarding financial goals, listening builds rapport and enables an organisation to provide an even more personalised solution.
While products may attract customers initially, a differentiated contextual engagement is what keeps them around. Gallup discovered that when companies successfully 75 engaged customers, they reported 63 per cent lower customer attrition, 55 per cent higher wallet share and overall performed 23 per cent better than their competitors.
THE STATUS QUO
As customers have changed their expectations of service and engagement, banks and credit unions must find ways to deliver unique, personalised and contextual journeys. This requires a shift from a traditional, product-centric approach to a customer-centric approach that focusses on intelligent engagement. It is not surprising that research done by the Digital Banking Report found that increasing customer satisfaction and improving efficiency were the top two objectives of financial institutions globally. It was also not surprising that cross-selling was also a major objective.
“Customer engagement must be focussed on value for the customer first and the business second”
Unfortunately, most measures of customer satisfaction are outdated and improving efficiency is not a customer-focussed objective.As a result, most financial institutions fall short of engagement success beyond the basic customer service interaction level. Key areas in need of improvement include easy account opening and onboarding, offering financial wellness tools, proactively providing advice and offers, and the empowerment of employees with analytics to help customers.
Except for offering some level of personal financial management (PFM) tools and account aggregation capabilities, the self-reported engagement maturity level of financial institutions across all asset sizes and regions is extraordinarily low. In fact, at Digital Banking Report we found that less than 10 per cent of all organisations can provide personalised financial recommendations, automated actions based on transactions or lifestyle-related offerings using open API technology.
The challenge for most organisations is doing this level of engagement at scale: most financial institutions need to invest in updating existing technology and architecture.
Technology is the engine that makes customer engagement possible. Customer data is the fuel for that engine. Modern engagement platforms use AI-driven tools as well as internal and external data to automate interactions, creating a personalised experience that encourages a prospect to open an account and a customer to expand a relationship.
The beauty of combining data, advanced analytics and modern communication platforms is that you can anticipate needs, create custom responses to enquiries at scale, build new products and services for micro-segments and retarget potential customers in realtime. By building a seamless, streamlined communications cycle, teams can focus on innovation, custom outreach and learning from previous communication efforts.
A data-driven approach to engagement goes beyond the power of simple incentives and special offers, to providing relevant content that customers value. As customers become more familiar with your highly personalised communication process, they will often go to your brand before others for future needs. If your content provides value (from the customer’s perspective), there is a much higher tolerance for increased amounts of communication. To succeed, customer engagement must be focussed on value for the customer first and the business second.
- Listen to your customers More than ever, you must listen, and also provide solutions that bring value that is timely, relevant and easy to act on
- Use your customers’ channel(s) of choice Provide the opportunity for your customer to have a seamless conversation with you on the channel(s) they are most comfortable with. That may go beyond channels like email, phone, chat and text, to include social media
- Empower customers to self-serve Customers often prefer to help themselves with digital assistance. This is both faster for your customers and more efficient for your service agents
- Leverage AI integration Engagement supplemented by artificial intelligence, allows financial institutions to automate some interactions, augment others with a human, and leverage insights to contextualise communication
- Be authentic and empathetic Outstanding service and engagement must be centred on the customer’s need for financial wellness as opposed to an institution’s desire for product sales
- Create a cadence of consistency Keep the dialogue with your customers ongoing and the message consistent, inspiring customers to be evangelists of your brand
- Build on small victories…now It is often better to create small, repeatable wins for the customer today that create a strong value exchange, than to spend years developing much larger initiatives that may miss the mark. Take action now and build on early wins
- Seek scalability Personalisation can only work if it is scalable. Consider customer engagement software that can manage, analyse, and optimise the customer journey across multiple devices and platforms.
Customer engagement strategies in banking will work if they involve all areas of the organisation (as opposed to just marketing). Creating an exceptional customer experience using powerful engagement strategies expands across the entire customer journey, using all channels and every department of your organisation. Successful banking customer engagement doesn’t eliminate the need for strong branding – it relies on it.
While new technology and marketing communication tools can make the customer engagement process easier and scalable, it is also important to create a brand personality that customers will love getting to know and want to engage with.
To move beyond delivering positive experiences, to engaging with customers in real-time on a value-added basis, will require an investment in modern technology, a data-driven, analytical culture and a focus on serving customer needs with proactive solutions.Personalisation and contextual engagement are the starting points.
Viewing customer relationships in an empathetic way, with a focus on financial wellness, must be the ultimate mission. Done well, loyalty will increase and relationships will expand
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