The crises of the last year have presented the financial services industry with many challenges – but also with some exciting digital opportunities. A new report produced by Bain & Company and Salesforce, ‘The Customer Imperative in Financial Services: Permission to Personalise’, identifies these opportunities and explores ways in which the industry can innovate to meet them.
Trust, digitisation and personalisation are overwhelmingly shown to be critical to those innovations, as traditional, mainstream banks and insurers position themselves strategically to compete with the more nimble digital disruptors.
Here, Bain & Company’s Katrina Cuthell and Damian Stephenson share their expert insights and discuss the trends revealed in ‘The Customer Imperative in Financial Services: Permission to Personalise’ report with Salesforce’s Sascha Ambrose and Stuart Ward.
A high point for consumer trust and advocacy
For many years, there’s been a stubborn advocacy gap between the digital disruptors and the traditional banks. Indeed, customer advocacy, as measured by factors like net promoter score, had all but flatlined for the traditional banks.
The report, however, shows there’s been more than a blip on that flatline over the past year.
“About 20% of consumers say their level of advocacy for their bank has significantly improved,” explains Katrina Cuthell, Senior Partner at Bain & Company.
“And that’s a significant figure because it’s a relatively high bar. In comparison, when you look at the digital players, only 10% of their customers say their advocacy has improved as a result of the actions their bank took during COVID.
“The banks have been able to be more proactive. They’ve been able to offer flexibility around loan repayments and waive fees in a way that’s earned trust.”
Nearly 75% of banking customers agreed or strongly agreed that they trusted their bank to protect their personal information. Half or just over half were comfortable with how their bank used their PII data and communicated the benefits of data sharing. The figures were similar for insurers. Moreover, 50% to 60% of consumers expressed an active interest in having their banks and insurers utilise their data to take action on their behalf.
What can be done to sustain and improve on this? The opportunity here is for banks and insurers to leverage these new levels of trust and advocacy to provide more personalised services and offerings.
Closing the digitisation gap
The verdict from consumers on digitisation is loud and clear: they want more. Automated and digital options are no longer just for the more straightforward and routine customer interactions. The majority of consumers want even the more complex and emotive support tasks to be digitally innovated for convenience.
For example, consumers want to arrange for a lost or stolen credit card to be blocked online.
“They no longer need the reassurance of calling a contact centre or going into a branch, and that’s a significant shift in consumer behaviour,” says Katrina.
One of the biggest satisfaction gaps in digital experience, however, is in the lack of or breakdown in a smooth omni-channel experience. Around one-third of customers noted that redirection from their preferred channel was not their choice and another 20% noted their preferred channel was simply unavailable.
To bridge this gap, financial service institutions need to meet their customers on the channels of their choice and provide them with an end-to-end experience no matter which channel they choose. As Senior Director Financial Services GTM at Salesforce Stuart Ward explains, just as we expect our streaming service to pick up the movie from where we stopped watching it yesterday on our laptop and continue it today on our smartphone, so too do consumers want banks and insurers to provide connected experiences across myriad channels and platforms.
While the challenge of digitisation is a difficult one for financial services to meet, it is one that is nonetheless recognised and supported.
“What’s striking is the noticeable increase in the ambition of some companies and executives to do more to meet the demand for increased digitisation,” says Damian Stephenson, Partner at Bain & Company.
Even as 40% of customers are saying their bank has improved their banking and mobile app abilities, bank employees and executives are saying ‘this isn’t enough, we need to do more.’”
The demand for digitisation goes hand in hand with the demand for increasingly personalised experiences.
“Customers have expressed an openness to personalisation that involves banks using their data to improve interactions – it’s not seen as ‘creepy’,” says Katrina.
“And yet that hasn’t really happened yet in mainstream banking or insurance. It’s the next frontier. The opportunity becomes how you can go from a relationship that was formed face-to-face or over the phone, and by definition quite personalised, into a digital interaction that feels equally as personalised.”
Using automation and AI-driven data insights to drive decision-making will be fundamental to getting this right. Capturing and keeping the attention of leads right from the beginning of their journey is more important and more of a challenge than ever. Let good leads go stale over 24 to 48 hours, and they’ll go to a competitor. Identifying, targeting and actioning the best leads is the first step in that personalised customer journey.
The missed opportunity that comes with losing leads is obvious. Where it’s less obvious but just as potentially damaging, is in instances of hidden defection.
“Every time a hidden defection takes place,” says Katrina, “the bank loses a bit of engagement and a bit of data and insight around those customers.”
The customer might not shift their entire business to a competitor, but when offered a more compelling proposition, they’ll take it.
“Like products in most industries, financial products are becoming more and more commoditised,” says Sascha Ambrose, VP Enterprise Sales at Salesforce.
“The idea of being a lifelong customer to an institution is almost totally gone. Customers will buy the product that fits with what they need at that time and are very happy to shop around. Financial institutions need to tap into that mindset and use personalisation to retain business and develop products that support that.”
There is then, a strong revenue growth imperative and customer relationship imperative for building personalisation into digital customer experience.
“It’s all about adding to an organisational understanding of me as a customer,” says Stuart, “so ideally my conversations can continue where they left off, and in the future, those conversations and needs can be anticipated and served to me in advance of my need.”
And with consumer trust in mainstream financial institutions and willingness to have data leveraged for personalisation at their highest level in many years, now is the optimal time for banks and insurers to act.
A return to specialisation – but within a multi-player ecosystem
“There has been a shift back to the core business of banks being banks and not multifaceted financial services organisations,” says Sascha.
“There are insurance organisations, banking organisations and wealth organisations – and they’ve got to be really good at one aspect. The ability to cross-sell one’s own products and have a customer across insurance, wealth and banking is yesterday’s model.”
Instead, explains Sascha, “it means that ecosystem players and partnerships are becoming far more important”.
“For example, if bank A has sold its insurance division to insurer B, they’re going to form a partnership around those products for the next five to 10 years.
“Let the insurance companies do insurance really well, let the banks do banking really well. But provide an ecosystem where they can still deliver a total financial solution to a customer by incorporating products from other providers .”
But a step back to delivering on the core businesses of, say, banking, doesn’t mean stepping back when it comes to digital innovation. On the contrary, the emergence of this new ecosystem calls on the traditional players to become more nimble in their approach.
“Look at secondary sets of infrastructure like a new entrant or cloud native would,” advises Sascha.
Setting up new technology stacks, rather than being encumbered by legacy systems, means “being able to stand up new propositions, potentially for new markets and new segments, and being able to have an innovative, nimble brand inside of a traditional organisation.”