Insights and understanding – the key to customer experience?

Customer experience and the relationships consumers have with their banks have never been more important.

Fintechs are carving out their niche in the financial services industry by making the needs and expectations of the modern-day consumer their number one priority. They also offer a genuine alternative to established financial institutions, which must respond by showing they are not being left behind in the customer experience stakes.

There are encouraging signs, with a recent report from research and advisory firm Celent indicating that improving customer relationships has overtaken stronger sales as “job number one” for North American financial institutions.

Another recent study – professional services firm EY’s 2016 Global Consumer Banking Survey – concluded that traditional banks “need to reconsider current practices” in order to stay relevant in an increasingly competitive and rapidly evolving marketplace.

EY recommended four key steps financial institutions should take to improve their relevance among consumers, one of which is strengthening understanding of customer behaviors and tailoring services to different types of customers. But what is the best way to go about improving your understanding of your customers, and how can these insights be applied?

How to improve your customer understanding

Understanding is “the key to customer loyalty”, according to EY. Given the nature of technology and consumer habits in the retail banking sector today, one of the big challenges for financial institutions is identifying and applying usable insights from the ever-expanding array of customer data available.

In a LinkedIn blog post, Jan Bellens, global emerging markets leader for banking and capital markets at EY, noted: “Traditional banks have historically segmented customers by basic attributes such as age and earnings. But is that genuinely relevant or sufficient in today’s world? With the amount of valuable data available, banks need to paint a much more precise picture of their customers’ needs if they are to compete effectively against new market entrants.”

As you seek to build up a more detailed image of your key customer groups, it will become increasingly important to take full advantage of the growing range of data sources on offer in the modern world.

Consider the Internet of Things, which will consist of 8.4 billion connected ‘things’ this year, according to Gartner. That number could exceed 20 billion by 2020, while total spending on endpoints and services is expected to reach almost $2 trillion (£1.53 trillion) in 2017. This exploding network of connected devices represents an unprecedented opportunity for businesses to engage with consumers, learn more about their habits and brand expectations, and tailor services accordingly.

Mobile beacons and GPS data, for example, can help banks to improve their understanding of consumer behavior and provide relevant product recommendations or messages when a customer enters a branch.

In an article for Martech Advisor, Rick Kelly, vice-president of product at Fuel Cycle, pointed out that traditional methods for gaining customer insights are “outdated and fail to provide the deep level of consumer understanding required to make it in today’s competitive market”.

He added: “As consumers continue to seek out brands that make an effort to understand and cater to their unique needs, more accurate targeting will benefit both parties.”

Another valuable source of consumer data that has undergone huge growth in recent years is social media. Social data can help your business to improve its understanding of what customers are saying to one another, what they expect from financial services and what they have found most pleasing or disappointing in their various interactions with providers.

Using insights to achieve customer benefits

If collecting customer data and insights is the first step, how do you then analyze this information and turn it into experiences or services that are genuinely beneficial to the customer?

According to EY, one important tool in the process of turning raw data into customer value is agile, targeted analytics. The firm advised: “Banks need to dig deeper into their existing – but often underexploited – transactional and behavioral data sets to determine the right levels of personalization for each segment.”

Delivering a relevant, personalized service should be one of the ultimate goals for any financial institution that is working to better understand its customers and consequently strengthen brand loyalty. Hugely powerful, influential brands like Amazon, Apple and Facebook have made personalization a priority, and the repercussions of this are being felt in the financial services industry, particularly in the fintech sector.

One example of this is Atom Bank, a UK-based, purely digital start-up bank that launched in October 2016 and, by the end of that year, had taken more than £110 million in deposits. The concept of personalization is at the heart of Atom’s business model, which is designed to deliver a tailored experience that is relevant and contextualized for each individual.

Speaking to earlier this year, Stewart Bromley, Atom’s chief operating officer, discussed how the development of the bank’s app was crucial in enabling this level of personalization.

“We wanted to bring all the relevant information to the customer in their homescreen,” he said. “But what might be relevant to you might be different to what’s relevant to me, and therefore you have to have a level of personalization through the technology in order to deliver that level of experience.”

Financial services providers can also use data-driven insights to help their customers through more informed decision-making. This was the focus of a recent webinar hosted by NCR Digital Insight, which featured contributions from Kristen Berman and Maura Farver from Common Cents Lab at Duke University. They explored how more in-depth awareness and analytics of customers’ financial situations can help providers to make relevant recommendations and help people to achieve their goals.

This could encompass anything from inviting customers to make a pre-commitment to saving before they receive a one-off income boost (such as a tax refund), to encouraging mortgage borrowers to round up their regular repayments so they can pay off their loan earlier and pay less interest.

With ongoing evolution in consumer expectations and technology, combined with rising competition in the retail banking sector, we can expect these kinds of bespoke service offerings to become increasingly commonplace.

This trend will be largely driven by consumer data and understanding, with the providers that are most effective at collecting and applying customer insights the most likely to succeed.


Image credit: iStock/Jirsak

Written by Glenn Tom

Glenn Tom

Glenn Tom is NCR’s Senior Director of Global Solutions Marketing. In this position, he is responsible for leading global marketing efforts for all of the division’s consumer- and FI-facing solutions, including digital banking, branch, ATM hardware and software, channel management, payments & transaction processing and enterprise fraud & security. Prior to joining NCR and Digital Insight in 2008, Glenn previously held marketing and general management positions at Intuit, Morgan Stanley, Citibank and American Express. Glenn has a BA in Liberal Arts from Claremont McKenna College, a BS in Industrial Engineering from USC and an MBA from The Wharton School, University of Pennsylvania.

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