Imagine a chef who has leading-edge cookware at his disposal, top-of-the-line appliances and virtually limitless access to the most delicious, exotic, and exciting ingredients imaginable. You would think he has everything he needs to serve guests at his restaurant the most amazing meal they’ll ever eat. Except he’s missing one key element — an element that is, in fact, absolutely essential if he’s to create a great meal: the knowledge of how to use all those ingredients, appliances, and cooking tools. So far, banks have been a lot like that clueless chef when it comes to optimizing customer experience by making the most of the vast amount of data that banks already have at their disposal. Many banks have no problem prepping the kitchen, but they can’t tell whether a spatula or a spoon is the best tool for preparing a customer’s favorite dish. In fact, they don’t even know what that dish should be, even though they’ve got the customer’s past ordering history as a reference.
To be fair, banks face a number of obstacles when trying to effectively use data, including regulations, disparate systems for gathering and processing data, and relatively short experience with real-time tracking of consumer behaviors. During a recent Banking Exchange roundtable, I had the honor of brainstorming solutions with some of the best minds in the banking and data industries. On the panel with me were Rob Cook, vice president, retail marketing for BMO Harris Bank; Scott Moore, president of M32 Partners; Drew McMonigle, VP, head of product development and product marketing for NBH Bank; and Bob Meara, senior analyst at Celent, a division of Oliver Wyman.
During our two-hour discussion, several key insights emerged. Added into your bank’s strategy mix, these insights could help you serve up an exceptional customer experience to your customers.
Insight No. 1: Consumers want relevancy, and data is the key to delivering it.
Who hasn’t experienced the minor aggravation of getting a marketing offer for something you would never buy? When a company knows nothing about you, it is difficult for them to make a relevant offer. When a consumer receives relevant offers, they are significantly more likely to engage. The juiciest steak is disgusting to a vegetarian.
Cook put it well: “Banks are still woefully behind other industries (in achieving marketing relevancy), and the gap has widened. Our customers’ frame of reference is not other banks. Customers compare their banking experience to their experiences with Amazon or Starbucks, and banks are scrambling to catch up in using data insights to drive relevant solutions.”
The reason why banks, in general, aren’t doing a great job of leveraging the volumes of data they have is that their focus is wrong. “Many banks talk about delighting the customer, but they don’t really use data to make decisions with that mindset,” Meara explains. “Instead, they focus on how to translate customer experience into return on investment.”
Insight No. 2: There’s no silver bullet for innovation.
The banking industry talks a lot about the need for innovation, especially as FinTech disruptors continue to challenge the dominance of traditional financial institutions. Many banks are leaning heavily on technology to drive innovation, but technology is only one facet of the solution.
While it’s critical for banks to explore new technology solutions that make it possible to better engage customers, they need to remember the key is data. Knowing your customer can be the difference between being a valued partner in financial success and being irrelevant.
Insight No. 3: Not every use of data has to be dramatic in order to deliver meaningful value.
Not every financial institution will have the wherewithal to create sweeping, dramatic changes in their use of data, but smaller changes can also have a meaningful effect on the customer experience.
Roundtable members cited specific examples of relatively simple uses of data that can yield impressive results. For example, most financial institutions have volumes of home equity loan data, but few have leveraged it to revamp the product to be more relevant to consumers. Understanding the simple characteristics of your most profitable customers can spark changes to your branding and/or messaging to attract more of these value customers.
“We look at call drivers, such as the number of questions about certain features,” McMonigle says. “And often, we can alleviate that pain through the development of something very simple and actionable.” As an example, he points to a financial institution that converted to a new online platform without giving customers the ability to unlock their accounts after three password attempt failures. Installing a password reset function within the application decreased call center traffic by 70 percent the week after implementation of the functionality.
Insight No. 4: Understand what the customer needs before they do
The patterns in customer transactions can make you a mind reader and drive greater profits. When cooking the perfect ribeye, you can look at the sweat on the steak to know when you have rare or medium rare steak. Similarly, you can look the patterns in transactions to understand when customers will be in the market for certain products. The sudden drop in credit card balance after several months of high utilization in conjunction with debit card activity is the tell-tale sign of a major purchase such as a car or home. Looking at these or other patterns can allow banks and other FIs to present specialized offers as statement inserts or 1-to-1 offers when they log into online banking.
These well timed highly relevant offers can drive three times higher sales but most importantly improve the likelihood your customers will pay attention to your marketing in the future. All of this without silly gimmicks.
Improved customer experience can be achieved if you know how to use all the ingredients at your disposal. Starting small doesn’t mean small results, but it can mean quick success. Just like that chef’s special bite on a spoon, sometimes the things you remember most are the smallest bites. If you want to read more about this roundtable discussion, the Banking Exchange published the discussion in a special edition of their January publication.