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What banks can do to engage with customers when they are neither selling nor solving a problem?

According to a research paper by Finextra and SAP Customer Experience, Engaging the Unengaged Customer, less than half (49%) of consumers agree that their banks work hard to engage them, and that they feel engaged.  Only 36% agree that their bank advocates on their behalf, and only 35% agree that their bank always acts in their best interests rather than its own.

It’s clear that while financial institutions are taking seriously the challenge of customer engagement, and putting strategic effort, time and resource into engaging customers, they’re not hitting the mark. So how can banks deliver value?

Banking is a means to an end, not an end in itself, banks have got to figure out how to engage with customers while not necessarily selling to them all the time, when you see those – when I do have a banking need I automatically turn to my bank, sending credit card offer etc, waste of time, online

Personalised offers is a generic term, interact with your bank more but are engaged less – then these this – going through the motions,

The answer isn’t simple. However, the following parameters help define what good looks like.

1. Don’t just focus on sales

Banks must embrace the idea of a “Bank of One,” which treats each customer as if they were the only customer.  They want – and expect – a more personal, consultative, caring level of service. In practice, this means every communication the bank sends to its customers must be relevant. Excessive offers around products and services is not only annoying to customers but potentially hazardous, leading to unnecessary borrowing and the pushing of products customers do not really need. No one needs a loan or a mortgage that often, which means that banks must create the feeling that they are delivering value via day to day interactions.

2. Reengage your customers 

It’s a paradox that today’s customers interact with their banks more but are engaged less. Without the need for bricks and mortar, customers log in to their bank’s website or app, do their business and leave. Gone are the personal relationships so typified by the branch banking model of long ago. So, the questions is how can you reengage customers? How can you build share of mind so that when your customer has a banking need, they turn to you, rather than the internet, for advice and information?

Rather than through aggressive cross-selling, the way to build share of wallet is to create happy customers. The secret is to truly understand them – something that can be achieved through data collected from any and all sources, structured or not, in real-time- in order to provide a superior and personalised customer experience across any channel or device.

If a customer appreciates their day to day interactions with a bank, they may naturally turn to that bank when they want a mortgage – especially if the bank is leveraging predictive analytics and knows to make the customer aware of mortgage products in a non-invasive way at the right time.

3. Support convenience and simplicity

Digital supports simplicity and forces the creation of experiences and products that can be easily consumed. Traditional banks need to re-engineer their processes as well as their technology to support this, and remove the friction that still remains. For example, many banks are working to streamline customer onboarding, by leveraging technology such as video.

Crucially, to empower the customer to easily avail themselves of capabilities that make their lives easier in the right place at the right time, banks need to rethink their product and distribution strategies, and make the banking utility available to the customer at their convenience. This requires platform thinking and a partnership approach.

4. Develop a strategy for in-person engagement

Some banks still have a very local, community driven approach and, given the universal trend for millennials in particular to want to see their service providers giving something back to their communities, these corporate and social responsibility credentials could prove to be quite important even in an increasingly digital world.

The economics of running a bank might make the local structure and local decision-making required for a true community approach challenging for many players – but that does not necessarily make this goal any less worth pursuing. The under-30s in particular have a very keen sense of the value of their personal data, and if the banks want to use it, then there needs to be a quid pro quo, and in some cases, giving back to the community (being there as a bank for customers as well as a partner for local development) could be a viable option.

5. Don’t underestimate the power of brand perception.

The nature of the value banks can deliver is not obvious and is tied up with the perception of their brand. There is something intangible about the ‘feeling’ customers get when they interact with a brand that they find valuable and banks need to work to embed those values into their brands – or to buy into new brands, as we have seen with acquisitions like BPCE/Fidor and BBVA/Simple. Alternatively, they might concede to partner with fintech brands and win customer engagement by association.

Ultimately, the overarching problem that banks have, is that they are in an “occasional sales” industry, whereby the sales of loans or current accounts are few and far between and once sold they can be in use by customers for decades. Banking products don’t wear out, and they don’t go out of fashion. The implication is therefore that personalised offers need to be more than offers to buy bank products. They need to be about advice, community, and anything else that is of value to the client.

Rather, more often than not, when customers interact with their bank, it’s not to buy anything at all. Usually, it’s to take care of the day-to-day money management issues that shape their financial lives – checking balances, transferring funds, paying bills and keeping track of their mortgage.

This is to be considered in the digital era. Over-delivery of irrelevant proposals is inefficient and incites customers to disengage.  However they do it, banks need to ensure relevance and authenticity in their communications with customers, in order to deliver the value that will engage them and win their loyalty on an ongoing basis.

But banks can’t build trust and loyalty through offers alone. Customers also want advice, and that’s what banks are in a unique position to deliver. This can be in the form of financial seminars for young professionals, guidance on how to close an account that is never used but incurs a monthly fee, or proactive reminders when an account balance is not sufficient to fund a regularly paid, automatic withdrawal or bill. 

This generates a type of connection that cannot be replicated exclusively in the virtual world, and when fully embraced, is the path to ongoing commercial success.

 

 

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James Eardley

James Eardley

Global Director - Industry Marketing

SAP Customer Experience

Member since

08 Nov 2017

Location

Boston

Blog posts

3

This post is from a series of posts in the group:

Banking Strategy, Digital and Transformation

Latest thinking in respect to Banking Strategy, Digital and Transformation. Harnessing our collective wisdom to make banking better. Ambrish Parmar


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