Consumers have long been burdened with choosing from financial products designed around traditional banking. These products have not always been customer focused due to the long tradition of bundling services which lack applicability across all consumers. This tradition however is seeing the end closing in as non-traditional banks are creating consumer-centric packages, resulting in a new level of brand loyalty; this is proving to be troublesome for those stuck in their old ways.
New technological advances are breaking up the classic bundles based on a consumer’s income, job, and status. Instead, companies are turning to data to track spending habits and interests, and to build customized offers as they fit into their customer’s routines. The name of this game is, of course, personalization. This requires predictive analytics and a full time, 360 degree view of each customer’s lifestyle. Through such data, retail banking is able to adopt new capabilities in understanding consumers.
Upsell and cross-sell opportunities began to appear as this omnichannel view emerges. Recognizing that a customer has enough money in savings to warrant opening an investment account, for example. Additionally, they may have enough to generate an upsell offer to the next tier of checking without any fees. This is only the surface of personalized opportunities. Consider for example, lending products.
Historically, banks have relied on their solid foundation to sell loans. Their lending power, combined with loyalty, helped to sell their products, but competitive rates from fintech companies without the existing overhead of traditional banks are creating problems. It used to be that families would have one bank for all of their financial needs. That level of loyalty is irrelevant to today’s digital consumers. Today, consumers do business with multiple financial institutions. Those who offer the most access and best rates, win.
It’s not as simple as just investing in all of the right analytical tools, either. At least half of us have once thought buying that fancy sports car was going to win us hearts, but without the right approach and delivery, we just ended up in debt. The same goes for banking. All of these digital trends are causing banks to invest billions in the technology, but without the right strategy, the loyalty doesn’t follow.
As a result, banks are faced with a dilemma to maintain pace with fintech, and the loyalty of their customers. They are investing an enormous amount into technology to allow them to track, analyze, and market to consumers on a personal level. Their more complex demographic continues to be the 35 and under age group - customers who have grown up with the technology surrounding us today. Currently, that demographic is most focused on wearable tech. Banks are struggling to keep up.
Infographic: Cashing in on Omnichannel
According to recent study from Misys, 15% of banks either already have a wearable app in the marketplace or are currently building one. 72% relay they have an app on their 3-year roadmap. This study was not only focused in the US. In fact, of those who do not have a wearable strategy in place, 78% are in the EU and US; this is a strong indication of innovational focus in Latin America and Asia.
These numbers are interesting, but how do they translate to customer loyalty? Wearable tech offers much more to customers than a mobile wallet. The technology to this point has been focused around small screens, limiting the potential benefits of their apps. However, speech recognition is now being implemented into smart devices. While traditionally those small screens would limit input capabilities, these new advancements are eliminating those restrictions. As banks create hands-free applications which are easy to use, loyalty will continue to increase. As simple as it sounds to have an application built, you also need to have your payment method accepted in stores.
In a survey from eMarketer, by the end of 2016, total mobile payment transactions will reach $27.05 billion, with consumers spending an average of $721.47 annually. This is nearly double the spending from mobile wallets in 2015 - $376.00. The cause for all of this? Device availability. Consumers have the technology to use, and it’s the retailer and bank’s job to keep up.
As an example, Apple Pay is accepted in stores across the world. I use it all the time, and am always inconvenienced when I’m at a store who doesn’t take it. So to put it simply, banking customers not only assume they can bank on their mobile device but also expect nothing less from retailers, too.
Other benefits focused on increasing customer loyalty revolve around the financial incentives banks have been offering on credit cards. There is an opportunity to push offers to customers based on what they have previously shopped for, and where they are physically located. Combining powerful analytics from an omnichannel strategy with locational awareness, banks are able to send customized offers to shoppers as they walk past the stores they most frequently shop at.
In a PWC study, 55% of bank executives view nontraditional players as a threat to traditional banks – and rightfully so. It continues to be a challenge to attract new customers and maintain their loyalty. However, the technological advances in the marketing landscape are shortening the learning curve with power software capable of focusing on multiple channels – both on and offline.
The future of banking will need a customer-centric business model, requiring advanced technology to understand exactly what the customer does with their money, where, and how – all of which comes down to an information advantage. PWC found that despite agreement across banking professionals that these are important factors, fewer than 20% of them believed they are prepared for the changes ahead.
These fintech advancements can be a distraction to the industry as banks can’t forget about those original core strengths of their branches. Customer loyalty isn’t as simple as offering the latest tech. Many banking customers still visit branches to learn about products. How often is it just easier to talk to someone rather than being buried in menus and computers asking, “Tell me how I can help you!”
You can help me by connecting me to a real person.
All of this is to say there is nothing easy about advancements. Be aware of the core systems your customers use to make a decision. I shudder at the thought of an all online bank – simply for the reason that I’d have to either stuff my dollars under my mattress or actually mail cash to them.
The complexities of customer loyalty should be thought of similarly to those of omnichannel marketing. A 360-degree view is required when considering the needs of the customer. Basic needs can be met with a well-built website, but how often do you wish you could simply talk to someone to answer a simple, personalized question? While the need for human interaction to answer complex banking questions may slow as computers and AI becomes smarter and adaptable, consumers will continue to rely on them to make purchase and banking decisions.
Are your customers expecting more from you? Is your technology ready to adapt to their demands to maintain their loyalty? One thing is certain, the changes are happening now, and in the coming years the landscape will have shifted to require a unified banking experience and personalized customer service through the advancements of banking technology.