It wasn’t all that long ago that a bank manager was more than a person who ran a branch. They were financial advisors, mortgage brokers and trusted confidants. They held a personal relationship with their customers – they would be consulted by customers on many important life decisions from funding weddings, purchasing a car, planning for children or buying a home. Then, over time, the branch manager transitioned to more of a salesperson than an advisor. The personal relationship customers once held with their bank has been reduced even further through the rise of digital banking – although it has given customers more flexibility in how they engage.
While a seamless digital experience is vital for a modern bank, customers still appreciate that human touch, and it remains key to forming relationships with customers and building loyalty. This presents an opportunity for banks that can strike the right balance between delivering great digital experiences and being a trusted advisor again. For this to occur, banks need to shift their focus from product-based, transactional interactions, to a model that is more customer centric. Branch closures have been common across the west. In the US, for example, the number of bank branches has reduced by six percent since 2009, and is now at the lowest level in more than a decade, while more than 600 bank branches were closed in the UK in the last year. The decline of the branch is being driven by increased demand for digital services, and improvements to online banking platforms. It is understood that banks need to harness the power of these digital tools to offer more personalized service and build customer engagement.
But, now they need to put the customer at the heart of everything they do – designing and offering products and services around the customer need, not products and banking infrastructure. With reduced interchange fees impacting revenues and thus the ability for credit cards to offer rewards as they may have in the past, and emerging new ventures disrupting the market, banks must change to meet customer expectations or risk reduced customer engagement and even custom. Being customer centric is not just about listening to how customers want to interact with you; it’s about recognizing what they value beyond your products and services, so you can identify the total worth of the brand-customer relationship. Many fintech firms disrupting the sector have built their businesses from an end-user’s perspective rather than a product perspective. This is what gives them their competitive advantage.
Customers now expect to have an experience tailored to their individual needs. Our study of affluent middle class customers in the UAE found that two thirds (65 percent) feel more loyal towards brands that know who they are and treat them differently, and the same percentage expect their bank to proactively offer products and services that meet their needs. Furthermore, the research found 69 percent of bank customers expect to be rewarded for staying, and the same percentage actively want a choice of rewards and benefits to best suit their tastes and interests.
Banks have the potential to use data to both improve the customer experience and to build a more personal and emotional relationship. Financial service organizations can use customer insights to become a customer’s ‘financial friend’ and trusted advisor. For example, banks could analyze spending behavior to identify key moments in a customer’s life such as getting married, starting a family, or booking an extravagant holiday.
Data collection and analysis—at transactional, behavioral, and attitudinal levels—is what drives this insight and creates opportunity, and should be better used to deliver tailored offers and services that customers truly value.
To seize this opportunity, banks must offer solutions that help serve customers broader lifestyle needs. When polled, 68 global affluent middle class customers in the UAE highly value health insurance, 64 percent lost cards assistance and 62 percent travel insurance. Indeed, all of the following services were rated highly valued by over half the 6000+ respondents: motor breakdown recovery, identity theft protection, discounts or offers with partner retailers, purchase protection insurance, SOS travel assistance, home emergency/boiler cover, and airport lounge access.
Customer demand for these additional services creates an opportunity to build bank wide loyalty and significantly improve both customer value perception and the customer experience. Research indicates that customers would value a one-stop-shop for all their financial services products, rather than spreading their current account, home insurance, mortgage provider. But currently, there is no incentive for them to do so. By analyzing customer data to capitalize on key life events and providing relevant, tailored offers off the back of this insight, banks can deliver incentives to encourage multi product purchases. The end result is bank wide loyalty, engaged customers and increased profit.
Focusing on customer needs as central to business strategy brings the ‘human’ touch back to the banking relationship, even across digital channels. However, for this to work successfully, banks would benefit from collaboration with partners, and by adopting an open API approach to facilitate greater levels of data enhancement. By aggregating their own data with that from third parties, brands can paint a picture of their customers across multiple touch-points. This would include granular detail about unique customer journeys, preferences and behavior to deliver relevant and seamless customer servicing and experiences on digital channels and others.
Ultimately, financial service organizations need to set very clear goals and objectives for customer engagement and align their investment against these to build functionality that facilitates key customer actions effortlessly. Be this repeat purchases, purchasing of additional services, or accessing incentives and rewards – the experience should make the customer feel in control. In most organizations this requires an organizational shift to better align processes and resources, and to better connect marketing and customer service departments. While this sounds challenging, there is a significant pay off for those that get it right. We are seeing this happen already in growing markets with high levels of wealth. The UAE is leading the way in this regard, as bank-wide loyalty initiatives are driving increased customer satisfaction, and increased engagement. Our research into the UAE affluent middle class found that participation in bank loyalty programs increased 56 percent in the past year.
Once banks reward, incentivize and engage customers, it becomes easier to cross-sell other products and services. This could include savings and loans to protection and experience products. A single customer view lays the foundation for bank-wide loyalty initiatives to be developed and funded—something that will drive incremental revenue for the sector and allow customers to be invested both emotionally and tangibly in their bank.
The rapid increase in demand for digital services provides financial services brands the opportunity to develop deeper meaningful relationships with customers by optimizing and integrating data, interactions and offerings. The provision of more self-selected and tailored products and services, could herald a new era for the role banks play in the lives of consumers now and in the future. The bank of me may not be that far away after all.
Christopher Evans joined as a Director in 2013 from Coty, a $4.6bn fragrance and cosmetics company. His career there spanned 17 years and included both Marketing and Managing Director responsibility within teams based in London, Dubai and New York. Christopher is responsible for uniting the complementary skills and experience across Collinson. Christopher is also responsible for Collinson Latitude, which combines advanced earning, redemption and ancillary revenue platforms with global content and e-commerce expertise to drive engagement and revenue for clients.