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Branching Out: Four Key Ways Financial Services Companies Can Use Digital to Improve Customer Relationships

Posted @ 9:01 pm by Tim Ross | Category: Financial Services, Markets | 0 Comments

This is part three of our series on how Financial Services firms can leverage web and mobile technologies to drive business results.

Financial services companies have been in a particularly tough spot since the financial crisis hit: With financial leverage weakened, customers are more important than ever, but the public’s opinion of the financial services industry is at an all-time low. Some banks have managed to respond quickly, restructuring branches to provide more value and better service to customers. But in the race to win the hearts of customers, digital is quickly becoming the key to success. A recent Price Waterhouse Cooper report on the digital tipping point for the financial services industry notes: “The preference for digital is now pervasive across all customer segments, globally, and especially so for Generation Y (people born in the 1980s and1990s). In fact, for this group, now at the threshold of deciding primary banking relationships, the quality of the digital offering is an important factor in their decision process.

Following are four lessons to remember when creating a digital experience for financial services customers:

1. It’s Not Just about New Customers, It’s about Primary Customers. In the past, financial-services marketing has concentrated largely on attracting new customers. In today’s shifting landscape, the emphasis needs to be instead on primacy. The PwC report found that customers were 53 to 81 percent more likely to buy multiple products through their primary financial institution if they were digitally engaged, with North American customers having the highest correlation between digital engagement and wallet share. That means financial services companies need to provide more than just the basics to customers–they need to become indispensable, a one-stop shop for all financial needs, from advice to loans and investments.

Bank of America is one institution that’s been out in front on digital. Although the bank took a beating in the press for announcing and then taking back a $5 fee for customers to use their debit cards, its latest efforts in the digital arena are succeeding in strengthening customer relationships. Rob Aulebach, who heads planning and coordination of the bank’s network of branches, recently told USA Today that B of A is overhauling its digital approach to keep up with an evolving customer base.

“In the past we were a little more product-centric, (saying) ‘Here’s the greatest new product we have,’” he said. “You really won’t see that anymore. It’s more along the lines of, ‘How can we help you with whatever financial need you have?’ It’s much more consultative.”

2. Digital Tools and Content Aren’t Just Marketing, They’re New Products.  While no one wants to pay $5 to use their debit card,  design an app or tool that’s useful enough to consumers and they may happily pay for it. The PwC study found global banking customers to be 50 to 76 percent likely to pay anywhere from $2 to $10 a month for certain digital tools, especially an electric wallet that would store loyalty cards and convert points to cash, and notification of transactions via social media.

Even if charging customers for apps seems like a risky move, financial institutions should absolutely focus on creating the most robust, useful digital tools they can as a way to increase sales of existing products. Commonwealth Bank of Australia, whose stated mission is to be the world’s first “truly mobile bank,”(CBA) is well on its way with its Kaching initiative, which enables customers to pay for products and services through Facebook, email, or text; and its CommBank Property Guide, a mobile app it created in partnership with local real estate firms to help customers find homes and calculate real, tailored mortgage scenarios. Close to a quarter of a million people have downloaded the two apps in the last six months, which blows away any of the bank’s previous, non-digital marketing initiatives.

3. Use Your Data to Know Your Customers. Financial services companies have loads of data about their customers, all of which is heavily protected by various regulations and privacy laws. However, aggregate customer data can help financial services companies segment their customer base, tailor their messaging, and generally do a better job of getting customers what they want. In its report on the digital revolution in finance, consulting firm Accenture points to the use of customer data in this way as one of the key moves financial institutions will need to make if they want to remain relevant to customers over the next few years.

Spain’s Bankinter is an early adopter in this space. The bank launched its Engloba Geo Customer Relationship Management (CRM) tool, using data analytics to develop products and messaging based on customer intel and the frequency of customer contact. The bank has since introduced segmented CRM tools, including Risk CRM and Operation CRM, further targeting its sales and marketing to particular customer groups. Its sales are growing thanks to this approach, and the bank credits the Engloba tool with most of that growth.

4. Bring Digital into the Branch, Too. If bank branch visits are becoming less frequent–and they are–then banks need to make those visits count. One way to do so is to use digital tools to both better serve customers and to introduce them to new products. Scotia Bank recently reported that simply by installing screens behind tellers and in their bank lobbies, that showed looped videos of product advertisements, they increased adoption of new products. Anecdotally, tellers reported more customers asking them about new products than ever before. And that’s just from plucking the lowest hanging fruit on the digital tree.

Bank of America has made a major commitment to digital in its branches as well, shifting them around to highlight various digital tools and tuck tellers in a quiet corner. B of A branches now feature iPad-equipped lounges as well as high-tech digital conference rooms where customers can video chat with loan officers.

In the new economy, the customer is king, but fortunately for financial services companies, customers have never been easier to reach or more willing to share the sort of information necessary to serve them well. Companies that understand that stand to gain more and better customers in the years ahead, while those that don’t are doomed to wallow in the economic downturn.

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