Technology leadership is considered a critical attribute in the selection criteria applied to financial services products and providers by US consumers, according to research by Forrester.
The Forrester study, based on a seven-year rolling analysis of 1 million US consumers, claims to have uncovered critical shifts in customer behaviour. It outlines changes firms can implement to secure high consumer retention through increased customer advocacy - offering products and services that are best for the customer, not just for the firm's bottom line.
"Although changes to consumer behavior have been gradual, they are deep and sweeping - and they won't dissipate with a recovered economy," says Ekaterina Walsh, senior analyst at Forrester. "There are significant trends showing that consumers lack confidence in their financial providers, and they are more interested in controlling their investments and financial lives to a greater degree."
Nearly half of US households have switched their financial provider at least once because they were not satisfied with their previous provider, states Walsh, and more than a third of these dissatisfied consumers have dumped their providers more than once in the past.
In an effort to increase and maintain high levels of client retention, firms must focus on initiatives that increase customer advocacy, he stresses. For example, firms will succeed in providing customer advocacy by becoming more transparent about how they make money. According to Forrester, banks that provide detailed fee structure information on their Web sites and advise customers on ways to reduce their fees receive high marks for customer advocacy.
The Vanguard Group, Edward Jones, Fidelity Investments, credit unions, and local banks are seen as customer advocates and are best-positioned to retain the evolving financial consumer.
The research suggest that firms that have grown organically, rather than by acquisition, and that sell direct to consumers are are better able to maintain a unified culture and are thus seen as more effective customer advocates.
Finally, firms that rely on technology to serve their clients' best interests score high on customer advocacy. These firms understand that their clients expect them to be at the forefront of technological advances in the financial services industry, concludes Forrester.