In our day to day life we wrap context around nearly every experience, decision and interaction. It helps us decipher meaning, and delivers a significant interaction. This image from someecards pretty much sums it up.
While context in banking is not necessary to survive, customer engagement can only benefit by applying contextual, data driven strategies.
In EY's 2016 Global Consumer Banking Survey, they dove into how important traditional banks are to people's lives today. Supporting all of the hype surrounding FinTech establishments overtaking Finservs they brought to surface some key findings which include:
40% of customers expressed decreased dependence on their bank as their primary financial services provider and have used non-bank providers for financial services in the last 12 months.
20% of customers who have not yet used non-bank providers plan to in the near future.
They identified four main areas traditional financial institutions need to focus on to regain their customer base:
• Build and earn trust, not trust in a bank’s ability to securely look after customers’ money, but its ability to always do the right thing for the customer and provide unbiased, high-quality advice
• Better understand customer behaviors and tailor propositions to different types of customers
• Rethink distribution and customer engagement, in particular the role of branches and customer journeys across channels
• Innovate like FinTechs to radically simplify products and deliver exceptionally
While they note four individual factors banks should seriously take into account, it is easy to roll all four into one major hierarchy… contextual, customer-centric banking.
Financial institutions sit on a mound of consumer data and enhanced data gathering is becoming easier to achieve with open application programming interfaces, which allows for data to be pulled from less traditional spaces, such as social media sites and customer management systems.
It's time for Finservs to capitalize on the data they have, or can have, to be able to take actionable measures and draw in new account holders, as well as enhance transactions among their current customer base. You are probably thinking we've heard this, yeah, yeah, yeah… but hear me out. Most Finservs have taken their current practices and placed them out in the mobile world. While digital e-statement delivery, mobile deposit, online transfers are a definite plus, they aren’t revamping the process to provide what account holders really want, a contextual experience.
This "Phase 1” approach works for many financial institutions looking to make their digital presence known, but stop and think about this for a minute… your account holders have given you access to their data and are asking for advisement, why not run with that? Finservs that take advantage of this data can sell into their current customer base, gain additional wallet share and expand their portfolio.
For example, a current account holder begins to visit Babies “R” Us and Motherhood and you have access to this transactional level data. Using predictive analytics, you can contextualize product offerings and promote a college savings account such as a 529 Plan, a new custodial brokerage account or savings bonds.
Traditional banks and credit unions that implement a contextual approach will see a difference. Here are a couple of tangible statistics:
Engaged Account Holders
Contextualizing the consumer experience will lead to increased engagement, and fully engaged consumers. According to Gallup research that dug deep into the benefits financial institutions get out of fully engaged customers, they found that customers who are fully engaged bring $402 in additional revenue per year to their primary bank compared with those who are actively disengaged. These same individuals also provided an average of 1.14 additional product categories with their primary bank.
Source: Gallup, “The Financial and Emotional Benefits of Fully Engaged Bank Customers”, March 2014
Loyalty and Trust
Loyalty and trust in the banking world carries a bit more weight than other industries. The only other industry that I see loyalty and trust making or breaking an organization's success is childcare and education. Would we place our children in an environment where we lacked trust in their caregivers? Hopefully not; however, it tends to go further than that. We not only need to trust that we can leave our offspring with these individuals, but that they will use their time to mold them into fine young children. To gain account holder's loyalty and trust, Finservs need to understand that consumers are looking for more than someone to just leave our money with. What they want is for their financial institution to do the right thing and provide them with personalized products and high-quality advice.
So how do you get to be the Finserv that really serves?
Here are a few suggestions:
- Access consumer data down to the level of preferences and behaviors
- Use that data to predict
- Keep it personal
When it comes to survival (or revival) it's all about the context…