A growing number of consumers fully expect to perform their financial-related tasks digitally and with ease. The good news: Eighty-one percent of FSI companies say they realize that, according to a 2018 survey conducted by Adobe and Ovum.
But saying and doing are two different things. Adobe Digital Insights research found that the gap between leaders and laggards in the U.S. retail banking industry has grown dramatically over the past two years across several key engagement metrics.
Competition is certainly heating up in the financial services industry (FSI), as well, with new entrants popping up all the time. For example, some of the large technoogy companies are starting to dip their toes into the FSI waters, such as Amazon Cash and the integration of Facebook Messenger with PayPal. These companies combine a digital-first, customer-centric approach with the scale that fintechs have historically lacked. Moreover, research by Bain found that 73% of 18- to 34-year-olds would be willing to buy financial products from these tech companies.
But rest assured that banks can and will thrive in this intensifying competitive landscape. How? Three words: data, trust, and scale.
Tip 1: Use Data To Understand Customer Needs
The first step in better serving customers is understanding what they want. However, nearly 70% of FSI companies reported "understanding individual customer needs and local value propositions" as key challenges in meeting customer needs and expectations, according to Adobe/Ovum. This often stems from data silos across the organization, both by product line and channel.
To address this challenge, banks are investing in centralized data repositories and data management platforms (DMP). For example, Citizens Bank revealed at March's Adobe Summit, that the financial company leverages a DMP to bring together siloed data across product categories. In doing so, the bank ensures that its business units treat each customer with consistency and understands their needs holistically to provide the optimal message across products. Bridging the gap in data silos can help banks capitalize on the wealth of knowledge they have about their customers to better meet their needs.
Tip 2: Win Trust By Focusing On Customers, Not Products
Banks have often leaned on their brand reputations to distinguish themselves from new entrants. While consumers today trust banks to manage their money, as noted above, tech companies are encroaching. To maintain their advantage, banks must move beyond a transactional relationship with customers. One way they can do this is by providing financial advice. According to J.D. Power, of the 58% of customers who desire digital advice from their banks, only 12% receive that advice today. Yet when customers do receive advice (and are satisfied), 91% report a high level of trust in their bank.
To that end, banks are developing educational content to help customers take control of their financial futures. Bank of America, for instance, partnered with Khan Academy to create "Better Money Habits," an online platform that provides learning materials by both product type and customer life stage.
Banks can go one step further by offering personalized advice and experiences. Research by Accenture found that 67% of U.S. banking customers expect that if they share their data, they should receive personalized advice about products and services.
At this point, however, banks are largely immature in their personalization programs. Adobe’s Digital Strategy Group identified five stages of maturity for personalization tactics in financial services:
- At the "Nascent" phase, banks have minimal personalization and largely focus on aesthetic changes (e.g., button color).
- As they mature, banks move to "Basic" personalization by focusing on products and offers, such as understanding what products a customer has and changing the home page to promote a complementary product. Given that banks are traditionally organized by product, this is a natural place to begin.
- In the next phase of maturity, "Emerging," banks offer personalized financial education and advice, oftentimes leveraging their existing content marketing platforms.
- Next, banks move to the "Advanced" phase by focusing on servicing and experience design, predicting and surfacing self-service opportunities.
- Finally, in the last stage of maturity, "Cutting Edge," banks are involved in anticipatory engagement, understanding the end-to-end customer journey across touch points and serving messages and experiences accordingly.
Today, personalization in retail banking is predominantly basic and product-focused, indicating tremendous opportunity to cultivate deeper relationships with customers.
Tip 3: Scale By Creating One-To-One Experiences With All Customers Through Digital
As banks invest in developing one-to-one relationships with customers, they must determine how to scale across their large customer bases. Investments in automation can support banks in this objective. To wit, "AI-powered sales and marketing" was the most frequently cited area of digital marketing investment in the next 18 to 24 months for financial services, according to the aforementioned Adobe/Ovum survey. And as demand for unique experiences escalates, automation will only become more relevant for these organizations.
Organizational silos challenge banks in delivering compelling experiences at scale. They slow them down, too; campaigns that should be executed in days can take weeks.
Research by Adobe's Digital Strategy Group has identified three organizational structures that financial services companies can leverage to build seamless digital experiences at scale. One of them, an agile marketing team, is used to reduce time to market and deliver high-quality campaigns. Agile marketing organizations have tribes with a specific digital goal (e.g., grow digital acquisitions). Within each tribe, scrum teams execute discrete projects toward that goal. By bringing together the diverse stakeholders required to execute on a campaign into one team, banks can dramatically reduce the time required to bring new experiences to market.
By using data, trust, and scale, banks can not only remain competitive in the changing industry landscape, they can also enhance their relationship with customers and deliver best-in-class experiences.