Tighter product and service ecosystems drive loyalty for financial institutions
Traditional financial institutions have been chipping away at digital transformation roadmaps, but most are still playing catch-up due to internal silos that have been in place for decades. According to a study by Oliver Wyman, financial services firms are spending 5% of revenue per year on digital transformation—but only 25% of investors are confident that their digital transformation strategies will be effective. Blame the dreaded “silo” effect: the various divisions and respective product goals that make up most banks, credit unions, investment brokers, and insurance companies are often inward facing to a fault. Of course, the industry relies on subject matter experts to run complex financial products and services, but who is looking at the customer—holistically and individually?
Long-standing financial services firms tend to have separate ecosystems across products and services, making it difficult to synthesize customer information and understand motivations. Without having the architecture built properly from the ground up, it is much more difficult for banks and credit unions to reach the same degree of personalization that their fintech counterparts have achieved. These challenger fintechs have been able to quickly earn consumer trust by putting the customer and financial education at the center. They are reliable, approachable, and continuously evolving the UX to make it more seamless for customers to participate in—and become more attached to—the relationship with each passing day.
How can banks bring disparate products together in a way that incentivizes customers to consolidate their finances under one brand?
In our current climate of pandemic recovery, financial institutions have an opportunity to be more relevant than ever. Today’s “homebody” economy has been forced to adapt and learn new skills resulting from the enormous acceleration of e-commerce, emphasis of omnichannel, and everyday use of videoconferencing. With the amount of multi-tasking needed to survive and thrive during a 21st century pandemic, when given the choice, we’re looking for affordable products and services that ultimately make our lives easier and save us time. Convenience is winning now more than ever—whether it’s the most superior option or not. A seamless ecosystem can engender loyalty and advocacy through the utility and ease of use of well-planned services and offerings.
Brands that drive the most meaningful customer loyalty connect their products and services so that customers experience added value.
Apple, for example, has been continuously finding new ways to connect and build out its mobile payment strategy with the evolution of Apple Pay, Apple Wallet, Apple Cash, and the Apple Card. It hinges on leveraging strategic partners and its brand power to architect and execute a tightly knit ecosystem that demonstrates it is investing in making its customers’ lives easier. Many of us have experienced this synergy first-hand: I recently evaluated a few options for my 13-year-old daughter to dip her toes into financial independence, encourage her to make good spending choices, and learn more about digital payments and the difference between credit and debit. We landed on an Apple Cash account because it was the easiest for me to open and for her to use. She has been both fascinated and delighted by her newfound spending freedom, and this experience has undoubtedly increased her loyalty to Apple products and services.
Leveraging strategic partnerships can help brands tailor the customer experience to individual lifestyles and preferences.
Look for partners who are willing and able to collaborate to create a mutually beneficial relationship. Partnerships offer both a shared risk and shared reward for companies and can help meet changing consumer expectations. Apple shines here as well: Its namesake credit card, issued by Goldman Sachs, proved that teaming up with a company that already has loyal customers is an efficient way to acquire new customers. It’s been called one of the most successful credit card launches ever after Goldman Sachs extended $10 billion in credit lines in just over its first month. The card partnership also expanded Apple’s financial services play, making the company a real threat to everyone in the space as the Apple Card could be at or near the top of the Apple Wallet (which, when used to make purchases at Apple’s App Store, reduces the transaction cost for Apple). When it comes time for my daughter to open her first credit card, you can bet that the Apple Card will be the easiest and most convenient option.
Make sure the strategic partnerships you create provide added value to your customers.
According to MX Research, consumers are looking for proactive, personalized recommendations with nearly 70% wanting banking experiences that mirror those of brands like Netflix, Amazon, and other leading tech companies. And 91% agree or strongly agree that it’s important for their bank to offer the ability to connect all their accounts in one place.
I count myself among that majority: I’ve been a Mint.com user for more than 10 years, largely because it gives me a full-picture view of my finances. As a SaaS company focused on personal financial management, Mint allows its customers to link and aggregate all types of accounts including cash, credit cards, loans, and investments and property to get a holistic view of their net worth. This feature makes my life easier—helping me manage my assets and debt, offering custom budget alerts by categories I care about, and providing monthly credit monitoring to keep me informed. Although Mint is a free tool, it continuously adds value to the customer experience and, in turn, has created ongoing revenue streams through its recommended financial services partners. This leads to incremental lift and engagement among its customers, which allows for further investment into building out its ecosystem. Trust is earned when placing customers at the center of everything and investing in tech and UX that unifies the digital experience, demonstrates the value of consolidating finances under one brand or organization, and leads to the outcome of lift in overall lifetime value (LTV) of customers.
Innovation and usability must go hand in hand.
People of all ages are doing more in a digital setting, both because they want to and increasingly (thanks to the pandemic) because they must. Today’s customer expects online enablement and ease of use. When companies are successful, their prospect and customer base expand due to accessibility. Design the digital experience not only around customer needs and priorities, but with a foundation of usability. Incorporate customer involvement in testing the softer metrics of the functionality (i.e., ease of use, trust, wording, and pathing). Gaining customer feedback and listening to the voice of customer (VOC) will help ensure optimal experience and utility prior to launch and as you make ongoing refinements to products and services.
Collaborate with data scientists to harness the power of automation and AI.
A recent survey of 500 financial service consumers found that more than 63% of respondents agree that adding seamless and easy-to-use, mobile biometric features would improve their service and support experience. And a separate study found that 66% of consumers expect these changes to be permanent in the wake of the COVID-19 pandemic. If you are like most financial firms, you have extremely smart people working for you, including data analysts who help you make data-driven decisions. But are they data scientists? These are people who know how to measure success and dig into the data from different angles to reveal valuable insights you may not have realized from simply reviewing a monthly dashboard.
Creating a better connection between your products and services can help drive more cross-sell of products and lift the overall lifetime value of your customers, while making it more difficult for them to leave you for your competition. Above all else, your customers just want to believe that you care about them. What they need more than anything is a guide—both digital and human. If you can successfully balance customer needs, you will gain their long-term loyalty through a reciprocal relationship with your organization that can withstand fleeting temptations to leave for the competition. Where to begin? Consider these steps to get started:
- Assess and map your products and services ecosystem.
- Identify opportunities to make your experience more seamless and seek strategic partnerships to collaborate and fill the gaps.
- Unify the digital experience and place the customer at the center of everything.
- Ask for customer feedback and listen to the VOC to ensure optimal experiences and utility of the ecosystem you are working so hard to build.
- Know what to look for throughout your data sources and how to measure success.
