Few industries are as impacted by mobile and digital as financial services. The advent of new competitors, in the form of mobile payments and other disruptors, are pushing the envelope. Add to that the discomfort that legal & compliance departments have had with newer marketing and digital channels; financial services and particularly retail banking marketing teams are finding themselves far behind the expectations of their customers. Financial institutions are faced with big technology changes, that are continuing to evolve. Not only does their technology need to change, but also the way they communicate which is strife with regulatory and legal considerations. I think there will be some extensive changes coming in the next few years, as marketers push their legal teams into grey areas. Do branches and locations even need to exist, as mobile banking and digital technologies change the way we do business with financial institutions? To quote Bill Gates, in 1994(!), banking is essential, banks are not.
The good news is that many financial services companies have a great deal of first party data. The question is how much they are using and how they are using it. And many financial institutions are taking these changes seriously and planning the future accordingly. Today’s financial service customer expects their data to be leveraged to provide customer benefits (personalized offers and advice), tailored to their financial goals and life stage[1]. The goal will be to leverage as much data as possible.
When plotting customer journeys, it is so important to understand different factors based on the customer’s situation. This may evolve to a segmentation layer based entirely on behaviors (both online and offline), that will help determine the right messaging as well as a technology stack that can identify where the customer is in their journey, based on the journey map.
Other Considerations:
27% of millennials have used their phone to checkout at a store using mobile payments.[2] 71% of millennials say it is very important to have a mobile banking app.[3] To turn that into reality, that’s 50 million of the ~70 million Millennials. With Gen Z coming right behind at about the same numbers, we can assume even higher mobile adoption rates. According to Citi’s Digital Disruption report, 25% of bank employees could lose their jobs by 2025 due to new technologies. And a Mortgage Bankers Association survey stated that 86% of executives of leading companies are increasing investments in automation technology; the back-end of digital mortgages.
Let’s look at some points in the customer journey for financial services:
Banking: In the past, we made decisions on our banks based on location, convenience, interest rates, free checking, etc. The decision process today is more likely to include availability of digital services – mobile apps, SMS reminders and online banking. Expectations are very high; templated mobile apps will not be enough as consumers expect one stop service. And the range of competitors and innovators has increased considerably; to compete, banks must include mobile payment services. What seems clear is that banks will need to find the moments when human interactions can still occur, and capitalize on them.
Most banks have created communication streams for upsell and cross-sell, and focus heavily on traditional channels to sell those products. And I’m sure they would agree that it would be better if they knew customer lifestage information, to provide them with the right offers and information. Bringing in the right data to inform those strategies, whether behavioral, 1st, 2nd or 3rd party data, will make it possible to be more relevant. But banks will need to create the reasons for customers to easily engage with them, based on their brand promise, customer demographics, locations, and unique value propositions.
Home Lending: The mortgage business is transforming into a digital and mobile play, with companies like Quicken Loan’s Rocket Mortgage paving the way with a “mobile first” attitude. For many years now, consumers have taken more control of the process. We research different options, and get advice. We may start with our current bank, but disruption will likely occur. The convenience of processing the loan and the extensive paperwork requires a sophisticated online interface. The “banking relationship” will not out-rank interest rates and user experience. In addition, professionals get involved along the way – such as real estate agents and investment counselors. Or disruption comes from competing ads that will most certainly follow the consumer once they begin the research process.
The mortgage and refinance process begins with specific needs. A new baby means needing more room; a child going to college means needing funds; retirement and downsizing; these lifestage events signify a potential need and an opportunity to be relevant. A sound data strategy can get you partly there, along with an engagement strategy that mirrors the 1:1 relationship that bankers had with their customers in the branch.
Investments: Trying to keep a customer loyal in investments is trying, especially with the digital and mobile options that are available today. It comes down to the level of service; the 1:1 connection that the customer may or may not need, the mobile options such as apps, educational video, and other account related value propositions. Most brokerage companies know that the first hurdle is getting the account funded, beyond an initial deposit. Onboarding communications can help get the account fully established, that are relevant and reactive to what the customer is doing.
Different types of personas in investments will come into play. Active traders, high balance investors with fewer transactions or low balance investors all have different signals in the journey that bear watching as potential breakage.
We also need to consider channel impact. To be considered “omnichannel”, financial institutions should be ready to provide messaging in the channels desired by the customer, relevant and personalized. The messaging strategy should be channel agnostic, while still leveraging the uniqueness of each channel and the role each plays in the overall journey.
While all industries should be putting mobile first, it is table stakes for financial services. SMS is a channel that is heavily transactional and relevant. Mobile apps and messages provide more of an opportunity for cross sell and upsell, along with email. Customers will use whatever is most convenient and will move seamlessly between devices. Simplicity is the key. Make it easy, fast and let people get on with their day.
When a customer shows signs of risk, it’s important to identify them quickly, and communicate in the channel(s) the customer is engaging in. Looking at opens and clicks doesn’t accurately reflect their value as a customer, or whether they are actively looking elsewhere. But financial services companies have more cues in their data than many other types of companies. Changes in “account behavior” such as dwindling balances, accounts left unattended without transactions, fewer investment related transactions, changes in direct deposit activity, fewer banking transactions when comparing to previous periods of time; all are signs that a customer may have already moved on. But take those behaviors and consider the segment or persona of the customer, and you may have a different messaging strategy to keep them. Keeping a customer engaged with the value propositions that mean the most to them will help keep them loyal.
Financial services companies have tremendous opportunities, but they need the right infrastructure to keep customers engaged. Moving from “everyone” messaging to 1:1 intelligent messaging may require an investment in marketing automation solutions tied to a digital marketing infrastructure, where messaging can be activated automatically. In-the-moment opportunities to engage are the top priority moving forward, which can’t be done with batch and blast messaging.
Stay tuned for my next installment on pharmaceutical and healthcare.
See previous installments:
Breakage in the Customer Journey Part 1
Breakage in the Customer Journey Part 2 – Consumer and Automotive
Breakage in the Customer Journey Part 3- Retail
[1] Accenture Consulting, 2017 Global Distribution and Marketing Consumer Study
[2] BI Intelligence's Digital Disruption of Retail Banking
[3] BI Intelligence Millennial survey