What Banks Can Learn from Retail

By Jason Fordham

In July 1994, a small online shop called Amazon was founded in Seattle. Their specialty? Books. Twenty-three years later, roughly 4% of all U.S. retail transactions occur through Amazon.com. While that may not seem like an eye-popping number, Amazon has been credited by industry experts for singlehandedly disrupting the entire retail vertical.

This isn’t about retail, though. This is about the mindset that every millennial (the largest generation in history) has grown up with. And if other B-to-C industries don’t look at their retail counterparts and adapt from their resistance to change, they will soon be consumed in a similar fashion. Financial services is certainly not immune, with 31% of consumers expressing interest in switching their banking to Google, Amazon, or Facebook if any of these three giants were to enter the space.

So how can financial services institutions better cater to the digital mindset of millennials?

It’s all about the seamless experience.

If there’s only one thing learned from this, it’s the premise that an organization is expected to be omniscient with regards to customer interactions. End-users do not distinguish each engagement they have with a brand. A trip into the branch to deposit a check needs to have the same data footprint of an in-app deposit. Consumer fear of Orwell’s Big Brother has dissipated—and will only continue to shrink—given that only 17% of consumers aged 18 to 24 request personal information be removed for privacy-sake.

While this sounds like a data problem, with each interaction point controlled by a siloed system, few institutions are desiring more data—along with the complexity of trying to make sense of it.

Frequently, there is a data overload leading to paralysis.

The issue is commonly one of organizational strategy. Banks and other financial institutions view their online banking operations as different from those of their associates in the branches. In reality, the capabilities of the online portal should be akin to a personal banker:

  • Knowing all the holdings and accounts a customer owns
  • Understanding their family dynamics and financial goals
  • Extensively knowing the product portfolio, allowing for individualized recommendations based upon each customer’s unique circumstances

So too, then, the associates in the branches should have access to the same suite of clienteling information.

Fortunately, this idea is not simply a utopian concept. The cloud has provided access to real-time, dynamic data to businesses of all shapes and sizes. The financial services industry has been a laggard in adopting cloud-based technologies. That said, leading cloud technologies, Amazon Web Services and Microsoft, have been making inroads with some of the larger firms over the past three years.

But just having data universally accessible does not solve the problem. Actionability and context must be applied to the data. This is where the biggest shift must take place internally for financial services—viewing the data in a manner that’s aligned with retailers. More than that, they must view the customer in the same vein as that of a retailer.

Banks must respond to the ever-changing competition by developing a one-to-one relationship with the consumer. This is only achievable by delivering the best experience across all the consumer touchpoints. No silver bullet exists to deliver this unparalleled experience, but there is a path to excellence:

  1. Crawl—walk—run. All organizations have at least started the adventure by creating a website. Most have a unique mobile site, and many have created a mobile app—all expanding access and means of interaction with current and prospective clients. Many institutions have also started to leverage email to nurture and grow their relationship with their clients. (This is the most efficient and cost-effective means of mass—yet personalizable—communication.) For those that haven’t evolved to this level, there is still time, especially as so few brands have mastered the art. As such, venturing off with 100 concurrent projects (or worse yet, a single massive project) to own the entire experience will result in non-delivery—or at best, an inconsistent offering. Start simple and expand. Simply by launching additional marketing channels, one at a time, companies improve their relationships.
  2. Be consistent. When delivering content, regardless of channel, ensure the message is consistent. Whether it’s available mortgage options, life insurance plans, or online banking rewards, keep the message consistent. This does not mean show the same image time and again. But ensure a consistent theme based upon the desired message track. As previously mentioned, start small and expand. Introduce multiple messaging paths in the existing marketing channels, then launch new ones incorporating the multiple tracks.
  3. Know the customer. This is one seems obvious, but far too often organizations respond to an interaction—rather than take into account who is taking such action. This is rarely the case when dealing in person. Yet digitally, the customer is only treated uniquely once signed into the online portal. Even then, the personalization is limited to account type and, perhaps, available product offerings based upon account balances. The digital identity of an individual is easily captured and stored. This knowledge can then be used to create a custom experience from the start by delivering the most relevant content whether it be via email, on the website or mobile app. If Tom Brady walked into a branch, a bank associate wouldn’t offer him a super-saver savings account as opposed to the most personalized and high-return investment service. Why do it digitally?

The digital transformation has already gripped the financial services industry, but the cataclysmic shift has not yet befallen its institutions. There is still time to adapt the lessons learned from the retail industry. More importantly, organizations can create the foundation necessary to succeed in delivering the personalized customer experience required to thrive in the future.

Jason Fordham is vice president of Product at SmarterHQ, a multi-channel behavioral marketing platform. There he defines and drives the product strategy and company vision. With more than ten years of expertise in both the technical and marketing sectors of the ecommerce industry, Jason is a thought leader and expert source for clients, prospects, and partners. Email: [email protected]