A customer-first approach can unlock serious growth.
The banking and lending industries make significant strides previously few decades, adopting innovative technology and marketing tactics to better serve their customers. But after the 2007-2009 economic crisis, many financial institutions set innovation aside, instead prioritizing reliable products that generated predictable revenue.
This conservative approach, coupled with new regulations and mistrust from the public, limited the adoption of significant innovation for many from the decade to come. While big data and customer analytics rapidly transformed other industries-providing insights on changing customer needs to guide product development and services-the financial services industry largely retained its product-centric, safe approach.
Jump to 2022, and there is no doubt that fintech disruptors have cracked the code on understanding the customer-centric approach and how it impacts customer buying behaviors. Now more than ever before, consumers can easily see through a product-heavy sales pitch. Disruptors quickly took advantage of this mistrust in financial institutions and started delivering personalized, digital-first financial tools with alluring branding and costs.
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Fortunately, this formula isn't unique to Silicon Valley. Banks can use available financial data to unlock insights which help their employees deliver intentionally designed offerings and experiences that drive desired outcomes at precisely the proper time.
The new financial consumer
Why now? There isn't any doubt that COVID-19 fast-tracked alterations in consumer expectations, with experts estimating digital transformation timeline jumped ahead six or seven years from March to December of 2022. Customers now expect more personalized offerings and frictionless, intuitive, and digital-first experiences. As needs evolved throughout the pandemic, consumers discovered that the very best brands knew exactly what they needed, once they needed it, without asking. And now, they expect it from every brand they interact with. This is where many banking institutions and lenders can improve.
A December 2022 survey by Total Expert discovered that only 31 percent of shoppers surveyed believe their primary financial institution offers relevant products or creates new offerings. To solve this and meet new consumer expectations, the narrative must move from \”Here are our products – determine what you'll need,\” to \”We understand what type of financial products, services or insights you need at this time, Here is an offering we've configured only for you.\” This customer-first approach has the potential to unlock serious growth.
If traditional banking institutions can utilize their extensive understanding of financial products to tailor-fit their offering as to the the consumer needs at any given life stage, they are able to eliminate concerns that fintech firms can compete for traditional, lifelong customer loyalty.
Understanding the client journey
In order to anticipate a customer's needs before they can themselves, banks should comprehend the entire customer journey. People don't typically think about managing money, borrowing money and understanding money as different activities. These are a part of the same path toward achieving financial goals. While fintech firms have selectively picked individual elements from that journey to focus on, traditional institutions have the upper hand. It's clear that trusting a single provider may be the simpler, seamless choice for the client, so long as that provider can demonstrate that it fully understands the customer.
The key to achieving this is data-and more importantly, taking action onto it. If banking institutions and lenders can harness the financial data that streams to their organizations every day, they can obtain a clearer picture of the customers and also the touchpoints along their financial journeys. As customers mature and move through big and small financial events, this data can evolve and unlock real-time understandings to inform product fit.
Imagine the opportunity to offer a low-friction mortgage experience to a customer that has just started hunting for a first home, or contacting a person with a 17-year-old child having a perfectly timed lending solution for school. Financial institutions can go past the simplicity of offering a product (what fintech firms offer) and move toward the simplicity of promoting financial targets and overall financial health.
The data and the tools
Managing data is the key to understanding customer intent, and banking institutions have no lack of data. But how are you able to blend that data with real-time information about the industry to obtain a comprehensive view? How can you filter the data right down to actionable insights? Fundamental essentials questions which have prevented many institutions from unlocking deeper customer relationships. In-house data science, AI or machine learning staff can be expensive, and few financial institutions and lenders have the capacity to integrate critical customer data from an ecosystem of third-party providers.
\”If banking institutions can harness the financial data that streams into their organizations every single day, they are able to obtain a clearer picture of the customers and also the touchpoints along their financial journeys.\”
New technologies have solved this data problem by combining data integration, analytics and marketing automation into single end-to-end platforms. Focused solution providers are developing customer engagement platforms which are purpose-built for banking institutions. Using real-time customer data, lenders could be notified when their customers trigger clear intent signals, like a mortgage credit inquiry.
Harnessing customer data to the highest potential and taking advantage of those insights to create hyper-personalized experiences empowers financial institutions to transform into customer-first organizations in addition to offer valuable financial coaching. Providing customers with predictive and tailored financial guidance allows lenders to help build the meaningful personal relationships which the banking industry was founded.
Harnessing customer insights to power product innovation
Playing catch-up will only get financial institutions to date. They benefit by modernizing their customer experience to complement the personalized marketing capabilities that data and CRM tools now provide. Transforming CX goes beyond personalized, well-timed marketing. It has to get to the products. If banks can predict customer intent and create engaging marketing messaging throughout the entire customer journey but it still only leads their clients to some product which was designed with a one-size-fits-all approach, an encouraging lead could quickly are a wasted opportunity.
To avoid another decade of catch-up, banking institutions and lenders have to apply their hard-earned customer intelligence to evolve their product offerings. Banks benefit by understanding their customers' specific needs, recognizing how their life stage and environment impact how they engage with their product and taking advantage of that information to create hyper-personalized product offerings. For instance, offering loans specifically designed for young families, purpose-built to aid stability and flexibility today while helping them achieve long-term financial goals.
In this future state, the line between product design and delivery-between customer experience and product innovation-only gets blurrier. The most successful financial institutions will harness deep and broad customer intelligence to power a culture of customer-centricity, delivering empowering messaging and merchandise that help customers meet their financial goals.
Joe Welu is the founder and CEO of Total Expert. Find him on Twitter: @JoeWelu.
