Customers Are Telling You What They Want – Here’s How to Listen

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Two years after a pandemic sent more consumers online than ever, 76 percent are now banking on their mobile devices and 82 percent use digital payments – it’s not clear their financial institutions are taking full advantage.

According to a survey by FICO, while 86 percent of consumers report being satisfied with their banks, 34 percent engage in shadow financial activity or have at least one shadow financial account with a non-bank financial services provider, and 70 percent say they would be “likely” or “very likely” to open an account with a competing provider that addressed unmet needs such as budgeting and spending advice.

On the one hand, I don’t blame banks – two years ago they were forced to execute digital transformation strategies designed to be implemented over years in a matter of months. Their focus, correctly, was on getting more products and services into the channel, and insuring a high degree of security. While many financial service companies had been on the journey for awhile – few were mature enough in their implementation that they were “Digital Primary” ready.

However, if banks want to succeed in the new normal, they need to offer more than just digital services – they need to get personal.

Fortunately, the tools they need are already at their fingertips: the digital services they’ve implemented and which their customers have eagerly adopted. That’s because the greatest advantage digital tools offer banks and their customers isn’t convenience, it’s data, and the more data institutions have, the better equipped they are to offer a personalized experience.

Here are three tips for doing so.

Focus on your customers, not your technology

With so many consumers flocking to digital platforms, it’s easy for banks to assume that customers care about technology as much as they do. The truth is, they don’t. Technology only matters to customers to the extent it can meet their needs, and there’s a reason one third of customers stubbornly continue to visit branches: the most sophisticated digital technology can’t replace the personal touch.

Technology still has a role to play, but that role involves monitoring anonymous usage data to uncover customer pain points, which often provide the foundation for new services. Many customers are unaware of their expectations until you meet them – consider the way nobody imagined touchscreen keyboards or tablets becoming standards until the first iPhone and iPad were released – so it’s important for businesses to keep up by remaining one step ahead.

Equally important to remember is that one size does not fit all, or even most. Financial institutions can serve their customers best not by focusing on the widest audience possible, but an audience of one. Today’s digital platforms make granular customer segmentation financially feasible, enabling banks to know, reach, and engage with customers on an individual level. The key is to not just talk about new features when introducing them, but focus on showing your customers an improved experience. They don’t care about how or why it’s changed, only the end result.

Respect your customers’ data

There’s a reason I used the phrase “anonymous usage data” above. Customers don’t like to be tracked unless they’re receiving something in return – it’s the reason Apple device users have chosen to opt out of tracking 96 percent of the time since the release of iOS 14.5. Since they’re still banking with your institution they’re still sharing data, but you should respect this fact by using that data to deliver a better customer experience.

For example, many financial organization departments such as lending, banking, and investments maintain their own libraries of customer data, leading to bifurcated services from representatives that don’t have access to their counterparts in other departments. But customers don’t view their financial institutions as siloed departments, so their institutions shouldn’t interact with them through silos either. Imagine receiving a generic proactive communication from your bank’s mortgage department that ignores factors such as your credit score and payment history that it should already know!

Careful use of customer data also enables financial institutions to differentiate between customer segments, targeting each for maximum profitability. It’s only by constantly reevaluating the experience of each segment across multiple departments that institutions can add the functions they need to meet growing expectations.

The data customers share with businesses – explicitly and implicitly – is an asset and needs to be treated as such. As a financial institution, you must demonstrate the value of that data by using it to provide customers with valuable engaging personalized services in exchange.

Use account security to help your customers feel safe

While conventional wisdom dictates that friction is bad – FICO research indicates that 25 percent of American financial service customers will abandon a digital application if asked to move out of channel, for example – this isn’t always the case. While it’s true that unintentional friction is always bad, thoughtfully designed points of friction can actually be valuable, both by managing risk and helping customers feel safe. In fact, the FICO research above found that 76 percent of Americans are happy to provide banks with biometric information such as a facial scan, fingerprint scan, or voice recording to secure their accounts.

Here, too, data can play a role – with the right analytics platform, financial institutions can use customer data to apply an appropriate level of friction to the customer experience based on a user’s risk level.

To start, financial institutions should ensure they treat prospective customers differently from existing customers – different doesn’t in this case mean worse, but that I don’t know you as well. (I can certainly opine on how to accelerate that knowledge, but that’s another blog.) Existing customers expect and deserve VIP treatment, such as pre-filled information when using a trusted device, standard (but secure) authentication, and location and other low friction data points. When necessary or you can step up this authentication to protect the customer and the bank; of course this goes with good communication to the customer explaining why you need it and to make them feel safe.

Above all, financial institutions need to keep in mind that their chief competitors in delivering a personalized customer experience are not just rival banks, but tech giants such as Apple, Amazon, and Uber that deliver seamless personalized app-based experiences that immediately provide the services customers want. Customers are impatient and will change institutions if we continue to treat them like we just met.

The good news is, small quality-of-life improvements can have an outsized impact on the customer experience – and judicious use of customer data is key. If we need more information to make things more secure, let your customer know that. This is an area where we can live by the adage that “People don’t care what you know until they know that you care” – making them feel safe (and actually being safe) shows you care.

Darryl Knopp
Darryl Knopp rejoined FICO in June 2017 as a Senior Director and led the FICO Advisors Digital Practice before being named to run portfolio marketing for FICO's applications. Before joining FICO, Darryl held many key roles at financial institutions through North America and Asia, including Chief Risk Officer of Grow Financial, a Canadian Fintech specializing in online lending and building software for financial institutions. Darryl is a frequent speaker at industry events including FICO World and CSRSA conferences.

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