When Innovation Hinders Your Marketing

By Murthy Veeraghanta

While innovation is usually hailed as a good thing in any industry, when approached the wrong way, it can actually hinder a bank’s marketing initiatives. Here’s how.

Today’s consumer can engage with their bank via smartphones, tablets, or even wearable technology, like smartwatches, at any time of day—regardless of location. Digital banking channels provide flexibility that has significantly increased the number of interactions a customer has with their financial institution. And we can expect this trend to endure as digital channels continue to gain popularity.

According to Accenture, customers have 17 interactions per month with their bank. Of those:

  • Seven interactions happen online.


  • Three interactions happen through a mobile device.

Still, 61% of customers expect their bank to be even more accessible via digital channels.

Often acclaimed for being the best way to engage younger consumers—and the cheapest delivery model for certain financial products—digital banking offers less obvious benefits, like empowering banks with customer insights.

With digital channels, banks can easily collect customer data, gaining valuable insight on a customer’s spending profile to determine what products and services they may be interested in next. This data also helps banks identify how certain products are being used by their customer base and in turn, develop marketing strategies that deliver tangible results. By effectively leveraging data from digital channels and analyzing it, banks can quickly adapt to the latest click, transaction, or response from a customer to recommend the next best action and provide an optimal service experience.

However, the volume and variety of data banks amass on a day-to-day basis can be difficult to manage—let alone analyze—and innovation often exacerbates the problem.

Siloed functionality results in siloed data.

The problem with the financial industry’s current approach to innovation is the tendency to focus on a specific channel. Banks often narrow their efforts for introducing new technologies or functionalities to one channel, such as a new mobile banking feature or a chat bot for online banking. This feature or tool becomes a new silo to manage and collect data from, but disparate digital banking channels and functionalities result in disparate stores of data.

Therefore, it becomes incredibly challenging to harness the full potential of customer data and gain actionable insight from it to strategically address marketing initiatives.

Beyond the issues with analyzing data, introducing products to one channel creates a disjointed customer experience. Today’s consumers expect a consistent interface and experience across devices, similar to what Amazon and Netflix offer.

In order to remain competitive long-term, banks must address these issues by taking steps to consolidate digital banking channels and deliver consistent functionalities across devices. Although such an endeavor will take time, tackling the problem now will eliminate future frustrations related to product development and marketing efforts.

Your bank’s underlying technology—is it a legacy system?

To start, banks should examine their core systems. If it is time for an upgrade, make sure the bank considers an online, real-time system that is browser- and operating system-independent.

Additionally, systems that run on HTML5 will support interoperability between devices, making it much easier to integrate new features like video chat or biometric authentication across channels. This also makes updating mobile banking apps faster when Apple or other smartphone providers release new operating system updates. In short, banks should start by reviewing their underlying technology, as today’s systems have a shorter shelf life on them. A system from 2007 could easily be considered legacy technology nowadays.

Unifying digital banking channels with flexible technology, like HTML5 or APIs, can empower banks to innovate more effectively and benefit from the latest applications on the market. This ensures customers receive a consistent and frictionless digital banking experience.

Beyond that, banks can use data more efficiently to fine-tune their marketing efforts and uncover opportunities to drive wallet share. Banks can access this aggregated data, regardless of the channel or device used, to obtain more accurate and comprehensive intel on customers, strengthening their understanding of their target audience.

By analyzing this data, banks can uncover patterns in past account holder behavior to predict future behavior and identify the next service or innovation that will deliver the most value to customers.

What about the branch?

Approximately 75% of interactions between a customer and their bank occur through a digital channel, according to Accenture. Yet, this does not mean the branch is going away.

Customers often trek to the branch for research on rates, offers, and advice, which they trust bankers to provide. However, banks can enhance the quality of the customer experience in the branch by leveraging the data gleaned from the frequent digital interactions with customers.

Making use of the information that is available on a customer ensures the bank and its employees deeply understand the context and intent of every interaction, including the ones that occur in the branch. As a result, the branch becomes an extension of its digital banking channels and vice versa, delivering a seamless, optimized experience for the customer.

As customers demand more from their financial institution, banks will have to streamline their processes for introducing new services—and become more flexible toward innovation—while maintaining the accessibility of data.

Backed by data, banks can make intelligent decisions regarding what their customers need both now and in the future. Rethinking the financial industry’s approach to innovation and digital banking is necessary if banks want to boost customer loyalty in a market that is growing increasingly competitive.

Murthy Veeraghanta is chairman and CEO of VSoft, a leading provider of banking and payment solutions to financial institutions of all sizes worldwide.