Personalization. Omnichannel. Big data. AI. It’s clear there has never been a more exciting--and challenging--time to be a marketer. However, too many financial services marketers are sticking to the status quo, as a recent report about financial services marketing budgets reveals.
While most bank executives understand the importance of technology adoption, digital banking, personalization and ROI measurement, investments in these areas remain shockingly low -- which has contributed to lower levels of customer engagement and retention.
For banks that have failed to rethink their approach to technology and the customer experience, time is running out. If you aren’t investing in a mobile, customer-first, personalized banking experience, here are three reasons it’s time to get serious.
Millennials Are Coming Into Power
Millennials need banks more than anyone. 34 percent are unsatisfied with their current financial situation, and over 60 percent are burdened by debt. Additionally, 90 percent of millennials anticipate a life event happening in the next 36 months, such as taking on a student loan, or buying a home or car. Navigating the financial changes caused by these life events will be a challenge, as only 8 percent demonstrate high levels of financial literacy.
In spite of these facts, only 27 percent of millennials have sought professional financial advice in the last five years.
Part of the challenge is that banks have failed to invest in educating and engaging the younger generation. As of 2017, 34% of financial marketing teams allocated over 50% of their media budgets to traditional media. And as recently as 2018, “attracting a younger audience” was ranked 9 out of 10 on the marketing budget priorities list.
With all that said, it’s no wonder that 53 percent of millennials believe their bank doesn’t offer anything different than other banks, and 4 of the leading banks were ranked by millennials as a least loved brand.
Given the low baseline, there is a huge opportunity for banks who are willing to invest in products, services, and marketing channels that can engage this audience. This means making investments in social and mobile, and hiring data scientists and adopting technologies that enable more targeted marketing, and more personalized customer experiences -- on and offline.
Technology Companies Are Taking The Market by Storm
Since 2008, banking innovation has fallen by the wayside. This is partly because banks have been so focused on regulatory concerns, and partly because retail banks have not felt the same competitive pressures as other retailers, who have been fighting off Amazon for years.
But that is about to change.
Big tech is coming for banking, and it’s time to take this threat seriously. E-commerce giant Alibaba started online bank MYbank, which can approve loans instantly based on a consumer’s financial history, while Rakuten, a leading e-commerce company based in Japan, operates the country’s third-largest credit card company.
Over 50% of millennials are already using or considering banking applications like PayPal or Venmo, and a majority of US and UK consumers trust companies like PayPal and Amazon nearly as much as they trust the banks with money.
As the mobile generation comes of age, technology organizations are ready and willing to provide digital, seamless user experiences to banking customers -- and they can do it in efficient, low-cost ways. In order to compete, banks must realize technology is no longer an IT imperative, it’s a customer acquisition and retention strategy.
Whether or not your bank offers advanced authentication, advanced mobile services, and an end-to-end digital customer experience is not only your CIO’s problem--it’s your CMO’s problem too.
In order to acquire and retain customers, everything must start with a digital orientation. Technology-spend must engage customers, improve the user experience, and enable ease, speed, and personalization. To that end, developing integrated, user-friendly, personalized experiences should be a foundational part of the customer experience and marketing strategy.
Customers Need More Incentives To Visit The Branch
The role of the bank branch has always been important as a community center where people go to make better financial decisions, and get support during critical periods of their lives--like buying a house or sending a child to school. The problem is that most banks have not invested in their physical locations and real estate for the last 30 years.
In approaching brick-and-mortar strategy, banks need to think less like financial institutions, and more like retailers. For example, why do consumers go to the Apple store? To develop a sense of community, touch products, and get advice. The environment is stimulating and engaging, the products are on display, and the service is educational and consultative.
While banks may not offer a physical product, there is absolutely an opportunity to make the branch a place where consumers go to make big life decisions -- about managing a portfolio, taking out a loan, and becoming more financially secure. But in order to draw people into this environment, and begin forming relationships, it’s critical to create an interactive, educational, engaging experience.
For many banks, this means investments into automation. Not to replace people, but to augment the skills of existing staff, and reduce friction between getting customers connected to answers and support. For example, HSBC recently launched Pepper in their 5th Avenue branch. Pepper is a humanoid robot from SoftBank that can greet customers, offload normal, everyday questions and transactions, and enable staff to focus on building and establishing relationships with members.
Finding ways to bolster the customer experience in the branch, and attract new types of customers into the physical environment, is a critical investment banks must make in order to maintain competitive edge.
Want to learn more?
If you are a banking marketer and looking for ways to take your marketing strategy to the next level, read Four Investments Banks Must Make to Stay Relevant Through 2020.