customer-centric, data-driven culture in financial ... · to gain an edge, banks must wed their...

Customer-Centric, Data-DrivenCulture in Financial Institutions

SEPTEMBER 2018

How to Digitally Activate, Engage and Acquire Customers

Turnkey strategic growth platform

Bryan Adler (646) 518-8238 [email protected] www.ThinkVetter.com © 2018 Vetter. All Rights Reserved.

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Table of Contents

Executive Summary

Using the Customer Journey and Marketing Funnel to Strategize

Getting Wise to the Power of Data Analytics

Making Tech Human

Onboarding Technology

Conclusion

Resources


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Since the internet became mainstream in the 1990s, consumers have succumbed to an even greater need for instant gratification. Music lovers can stream music instantly from a smartphone that didn’t even exist just more than a decade ago. The news business has been turned on its head by the revolution and evolution of the internet, social media and digital advertising capabilities.

The banking industry has not escaped this metamorphosis of how consumers conduct business. Right now, numerous organizations are working to develop blockchain into a workable solution to all that ails banks regarding paperwork, compliance, back-office transaction support and many other pain points. Banking leaders want a simpler, more efficient way to perform the functions they have to on the back-end, while grabbing

Things that happened online in 2017 within 60 seconds - Data source: Forbes

Executive Summary


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consumers’ attention – along with 10,000 other brands trying to capture their attention every day, according to Forbes – and providing consumers a quick and easy user experience. Every second counts, so much so they rarely wait more than a few seconds for a website page to load. What does that mean for the future of your bank and its marketing efforts?Vetter CEO Bryan Adler advocates, “Sophisticated digital strategies are the best way to reach consumers where they are and when they’re interested to Activate at the Point of Excitement. It’s not enough to slap a banner ad on a website. How can you get the modern consumer, with the attention span of a goldfish, excited about buying and then using your products?”

He continued, “And once you have them, what digital tactics can your financial institution use to cross sell or bundle products online? The only way to achieve that is to know the potential client through the data trail they leave

Human attention span is down from 12 seconds in the year 2000 to eight seconds in 2017. That is less than the nine-second attention span of your average goldfish.Source: Time


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and placing the proper ad in front of them where and when they want to be reached.”

Behr’s Paint Your Place feature on its website allows consumers to upload a picture of their room, test out different paint colors and then order what they need. Yet most financial institutions still require consumers to come into the branch to prepare paperwork that could easily and securely be handled digitally. Financial institutions are not only competing with each other, but really with all customer service experiences. People rave to their friends and family and on social media about their latest Netflix binge. Do your customers do the same about their experience with your financial institution?

To gain an edge, banks must wed their marketing strategy to the buyers’ journey. Use the marketing funnel to follow the consumer through the buyers’ journey to grab their attention where they are when they’re ready. Use data to hack the buyers’ journey to offer relevant products and services before the consumer even knows they want them. Tiptoe into data analytics to get clean data that can be used for executives to gather insights into customer behavior and match information and offerings to that; it can also be used to personalize the user experience. Finally, once to have consumers engaged with your products and services, up your onboarding game to keep them engaged and realizing the value your institution provides.


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As a consumer, you probably don’t think much about the process you go through as you’re making a purchase decision. Think about it: You’re at the grocery store and you’re craving some mac and cheese but don’t have any elbow noodles at home. You dash to the pasta aisle at your local grocery store grab your favorite brand and checkout.

What made you go to the grocery store in the first place? A craving you needed fulfilled. What were your considerations for the pasta you purchased? It involved healthiness, price, past experience, brand recognition, product placement or other factors that you value. And you bought based on a balancing of those considerations.

So, while consumers may not pay attention to their buyers’ journey, it’s a must

Using the Customer Journey and Marketing Funnel to Strategize


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for marketers. The three basic stages of the buyers’ journey include:

1. Awareness: Consumers recognize that they have a challenge or an opportunity. Marketers must consider how consumers research their needs and be there, HubSpot recommends. According to PYMNTS.com, 88% of consumers do their pre-purchase research online, so your digital channels must be education and optimized for both search engines and user experience for consumer looking for your products and services to find your institution. Most online shoppers are 18-34 years old, PYMNTS reported, making them an ideal target for banks and credit unions as they enter their prime earning years.

2. Consideration: So, the consumer has done some research and is weighing his or her options. What types of categories are they considering when researching products like yours, HubSpot asks. It could be various levels of credit cards offering different rewards or it could be different types of investments. When you provide educational materials on these types of product offerings you’re educating the consumer, which helps to build trust for your brand. Now the consumer is weighing and prioritizing the pros and cons.

3. Purchase Decision: The consumer has decided on the category, but they need to figure what brand best fits their needs. Who, in addition to the researcher might be involved in the decision, such as a spouse or adult child, and how can you reach and influence them? For example, women tend to be bargain shoppers, while men will pay a bit more for a well-known brand, according to The Houston Chronicle’s small business section. [Comment for this process]

“In the competitive landscape in which banks operate today, engaging


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prospective customers before a competitor does is crucial,” Adler explained. “Using data to better understand the customer’s wants eliminates a step that allows us to reach them first.”

Whether the decision is which pasta to buy or which banking product to use, the same basic process is in effect. In banking, it may be that a small business is growing and the owner wants employees to be able to receive payments from clients through mobile but not have access to the account balance. The way you ensure your institution makes it at least to the consideration phase in the digital world: Activation at the Point of Excitement. Some people are excited about mac and cheese for dinner and others are excited about the prospect of growing their business. It’s really no different. Meet your prospects where they are digitally.

Consequently, a simplified version of the marketing funnel includes:1. Establishing brand awareness2. Engaging with the target consumer3. Lead generation

Awareness at the top makes sense. If the consumer doesn’t know you exist when that need strikes, your institution is far less likely to make it to the buyer’s consideration phase. Brand awareness consists of ongoing, simple representation of your brand. Tactics include sharp-looking digital banners, television commercials and billboard ads, so potential consumers of your products and services have a basic understanding that you exist and what you do.

The second piece to marketing along the buyers’ journey is engaging them online with thought leadership content. Thought leadership content such as blogs, hosting virtual events or publishing digital white papers demonstrate


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your institution’s areas of expertise, such as the steps to launch a new business. This educational content is crucial to earning your institution the role of trusted expert adviser in the minds of your potential consumers.

And, finally attendees of your event or readers of your white paper are giving you their contact information to register for the event or receive the white paper download. They’ve just read your white paper and their excited about the possibilities, now you must activate them. Reach out with a second email with more detailed information or a strategic checklist to help them through the process and determine how warm a lead they really are for your financial institution.

Integrated campaigns across print, digital and face-to-face events are important to reach all of your constituents, but digital is the best method of capturing them at that moment when they’re craving the possibilities for the future of their company because of the expertise and products and services your institution can provide. If you send a direct mailer, add a digital component, like a free hour of consultation for which they have to provide their contact information in your website. If a consumer downloads your white paper on launching a new business, follow up by emailing them a checklist of paperwork that must be filed. They’ll get the idea that your institution has helped them along their journey and turn to you for financial assistance as well. Keep them engaged and excited so you can Activate at the Point of Excitement!


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The conversation around the benefits of data analytics, AI and machine learning always centers on how it will improve the quality of service and lead to a better customer experience.

Financial institutions have been talking about this for years, but how many can honestly say they’ve revolutionized their customers’ banking experience? The answer lies in your culture. Research by McKinsey & Company found that getting the organizational culture right first is key to success in a digital service-oriented world.

Getting Wise to the Power of Data Analytics

Source: Forbes


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“Netflix found success because its culture is built around the customer, not just developing algorithms.”

Eliminate silos, both departmental and functional, in order to achieve a trusted, customer-centric culture. As the term implies, silos create too narrow a view of your customers. The result is an inability to respond effectively to evolving customer needs because information was sent to the wrong department and key signals were missed.

Consumers’ experiences with Amazon, Zappos and Netflix have raised their expectations of service – and yes, your bank is competing with them at a service level.

They expect financial institutions to respond immediately to inquiries, offer seamless customized products and services and provide easy access to the information they need when they need it. The promise of a consistent experience across every touchpoint is why consumers are willing to share their buying and browsing behaviors.

You might recall, Netflix launched more than 20 years ago as a DVD service. It’s since dropped the trappings of the physical world for the virtual. It began streaming video in 2010; it has captured all that customer data since. While it recently missed growth projections, as Reuters reported, it’s still growing 5.2 million customers per quarter. On Aug. 31, it was trading at $367.68 a share.


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The only way that ideal scenario plays out at your bank or credit union is if your institution attains a 360-degree view of customer data and draws proper insights from that to understand the customer, so the right data is connected to the right decisions.

“The underlying benefit of data analytics is drawing correlations between your data and tangible actionable business results. Clean data is the fundamental requirement to achieve these benefits.”Bryan Adler, CEO and Founder of Vetter

According to McKinsey, to anticipate emerging patterns in customer behavior and tailor relevant interactions, customer-centricity has to be what drives all core decisions across all areas of your organization. Banks and credit unions can’t afford to just play lip service anymore. Consumers won’t settle for anything less than getting what they want when they want it, and neither can your financial institution.

Netflix understands this. With 130 million subscribers in 190 countries and an original programming budget of $8 billion, Netflix has changed the video viewing experience. The company’s mission revolves around “access, personalization and choice.” Forget waiting a week to get the latest installment of your favorite show. You can binge watch an entire new season over the weekend and get instant gratification.

Instead of looking at data based on typical demographics or genres, Netflix instead groups its data into what it calls taste communities. Netflix has identified 2,000 taste communities that share nuanced connections.


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The company even hires people from around the world to watch all their content and create tags regarding tone or storylines, as a way to better understand how different people relate to their programming. For example, some people may find the popular TV series, “Stranger Things,” to be along the lines of 80s nostalgia, while others think of it as a sci-fi thriller, so it is discoverable under both tags.

Once like-minded fan communities are identified, the data drill down to the individual member level of personalized interaction. Every member’s Netflix display screen is unique; your bank can achieve this with its data and various screens. The images that accompany your recommendations are also tailored to cater to your tastes and interests. That seamless attention to detail through the digital workflow grabs your customers’ interest with personalized messaging and images. Netflix found success because its culture is built around the customer, not just developing algorithms.

Netflix also recently updated its interface to include a scroll bar, so members could spend less time browsing and more time discovering stories they will love. The company’s research revealed members felt overwhelmed by the choices and needed help figuring out where to start. Netflix delivered a familiar tool to help members quickly find whatever they are in the mood to watch. A scroll bar is not a new algorithm or technology but something practical that improves the user experience.

Financial institutions, in fact, are competing against every service provider of all types on the basis of customer experience. If consumers can get that degree of customization and delight from a subscription video service, why would they settle for less from the financial institutions that support their families’ hopes and dreams? Determine who your institution’s fans are, how they’re using your products and services, and what they may need in the


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future. You have access to lots of income, credit and spending data that, when mingled together, will allow for great insights into your consumers that will help you build customer-centric, digital strategies.

Non-SEC registered banks and credit unions will have to comply with Current Expected Credit Losses, or CECL, by 2021, and many are putting off their preparations as one more box to check. CECL requires lenders to calculate potential losses over the life of a loan and will affect most aspects of your business from capital to expenses, but it is coming, so financial institutions can make the most of it. The silver lining: It can provide better insight into which of your clients may perform better with a little hand holding and may appreciate what they see as assistance and you see as better protection of your investment.The Sloan School of Business, as reported by CIO, found companies employing data-driven decision-making experience a 6% increase in productivity and output versus companies that do not, so it’s good for business, not just the consumer.

Compliance is a hassle for every financial institution, some more than others, but definitely a matter that must be handled. With a little deeper thinking and creativity, you can turn compliance into an opportunity to better know and serve your customers to delight them. Identify personas your institution serves to meet their needs when they need to be met, grab their attention, differentiate and activate at the point of excitement.


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Amazon is synonymous with a personalized digital experience. It has redefined markets and how goods and services are bought and sold, forcing businesses to continue rethinking the customer experience on a daily basis.

When thinking about the evolution of technology over the last decade or so, cell phones come to mind. Most people didn’t even realize cell phones existed before the 90s, and even then, we were only making calls from them. That’s all they did. It really wasn’t until BlackBerry launched in 1999 that they did anything more, but the real game changer was in 2007 when Apple developed the first iPhone. In those 11 years since, we have Apple and Android and apps. We started out typing instructions, and now we’re speaking them. Smartphones have made our lives easier, and everyone (ok, 80% of everyone according to Pew Research) is using them.

Amazon, a customer-service technology company, is dominating more traditional retailers at every turn. How? Data. Amazon has collected copious data on its users from their transactions as well as other data it can find or purchase and mesh that together to come up with purchase suggestions the customer actually wants. You go to Amazon, and sometimes they know what you want before you do. That’s personalizing the customer’s experience through data.

The digital world provides consumers instant gratification, getting them excited to do something immediately. For example, imagine receiving a postcard in the mail for a free shirt that had to be redeemed in a brick-and-mortar store versus simply clicking a link to take advantage of the same offer. Consumers will pick the digital option every time. Certainly, if the consumer were to come into the store, they have to walk past racks of blazers and slacks that would complement the shirt, but this experience can be replicated digitally using data from past purchases or ‘often purchased with’ options.

Making Tech Human


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It’s more than collecting the data, but also analyzing what it’s trying to tell you and the executing on the insights gained from that analysis to create a compelling user experience.In banking, a customer could apply for a car loan and a suggestion pops up for the borrower to also purchase GAP insurance. Banks could also include an ad in their mobile app for mortgage refinancing to a customer that is already making monthly payments to another loan company. Perhaps you know a customer has a 16-year old daughter because she has a checking account at the bank. The bank could then recommend life cycle appropriate products to the parents, such as a college savings account or a deal on a used car loan. The Financial Brand explained the more relevant and seamless the customer experience, the more exciting it becomes to the user.

When they do choose to apply for a loan or purchase another product, pre-populate as much of their information as possible with what the bank knows about them, while also giving them the opportunity to correct it. Make taking advantage of your offers as easy and seamless as possible to avoid abandonment.

Making life easier through technology has revolutionized many parts of our lives today and personalized the digital experience. Banking isn’t one of consumers’ favorite activities, so let’s make it as quick and painless – and even fun – as possible.


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“The more communication the better; as the number of contacts are increased seven or more times, customer satisfaction and cross-sell success increases.”

Your financial institution’s onboarding experience, the first 90 to 120 days of opening a new account, sets the tone and expectations for the banking relationship. If you want a deeper, more profitable long-term relationship, you cannot afford to take existing customers for granted.

The first-year customer attrition rate at the top 100 banks averages about 20% to 40%, according to The Financial Brand. Most customers jump ship because they either don’t see the value in banking at that particular financial institution or what was promised when they joined simply didn’t align in terms of consistent execution.

Digital technology advances have made it easier to focus on building digital customer relationships. Customers should be able to engage with your bank or credit union across every channel. If they start a loan application on their phone, they should be able to pick up where they left off when they get home to their tablet or laptop. The banking experience must be seamless, personalized and convenient.

Ideally it should be intuitive, so if you are asking your customer to take a step, make sure it’s relevant. Have you streamlined processes and communication based on your customers’ needs or the needs of the back office? How many steps are really needed? If you are touting instant loan approval, can the entire process be completed digitally or are you still requiring customers to come into a branch to physically sign a document? Your bank’s leaders

OnBoarding Technology


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must have clear understanding of the user workflow. You want customers to demonstrate to consumers how easy it is to do business with your bank or credit union.

According to the 2018 J.D. Power Retail Banking Satisfaction Study, digital-only banking customers have grown to 28%, but they are the least happy with their banking relationships.

Source: J.D. Power


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The lower satisfaction scores were driven by three factors: communication and advice, products and fees and new account opening. To help resolve this, financial institutions might try taking a page from gamification’s playbook. Maybe you could offer points, badges and rewards for consumers taking certain actions. For example, a saver sets and hits their goal, so they receive savers badge, an encouraging message and an extra 1% of their savings deposited by the institution into their account. One study found that gamification got people to save 25% more often and another found people saved 35% more with gamification, according to Bankrate.com. The instant gratification a saver receives when they receive a new badge, which triggers real human emotions of excitement and accomplishment. Even in the digital world, we’re doing business with a human being at the other end.

Your financial institution has a wonderful opportunity to use your technology wisely to differentiate from your competitors. For example, the study

Source: Bankrate.com


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suggested sending a simple thank you text or phone call right after the customer opens an account makes the greatest impression and results in high customer satisfaction scores. In fact, the more communication the better; as the number of contacts are increased seven or more times, customer satisfaction and cross-sell success increases.

The key is delivering needs-based messages grounded in data from all your institution’s various sources to build trust through highly personalized communication. Last year, Umpqua Bank, known for its sense of community, rolled out its Best Financial Friend, or BFF, pilot, which uses technology to get closer to customers. Knowing its customers better allows Umpqua to respond immediately to customer questions with advice about a financial matter such as investments and marketing.

Part of the bank’s human + digital strategy, renamed Umpqua Go-To, the mobile app is a private banker in your pocket – not an AI virtual model but actual employees. What a unique way to connect employees and customers while addressing the digital divide!

Customers can review banker profiles and choose the personal banker with whom they want to work. Customers can contact their personal banker via voice, video or chat from anywhere at any time. Any interaction they can do at a branch, they can do on the phone with their banker.

A mix of data and analytics prioritizes customer inquiries. Artificial intelligence handles transactional and predictable customer questions like account balances, deposits or withdrawals made. Data and insights gathered from BFF conversations and AI help Umpqua reinforce onboarding, deepen customer relationships and give the bank the opportunity to activate customers at the point of excitement.


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Growing your financial institution through technology and data sounds impersonal on its face, but in fact allows you to know your customers and members better than off-hand remarks in teller conversations. Plus, there’s often a difference between what people say they want to do and what they actually do, and what they do can be tracked through their digital interactions with your financial institution. Using this data, financial institutions can make laser-focused offerings, precisely timed to the consumers’ needs.

“Data comes to life and is effective when it’s used to understand the motives and needs of the customer and address those needs through personalized solutions.”Bryan Adler, CEO and Founder of Vetter

Financial institutions often only look at what their competition is doing, and while this is important, expanding our definition of competition is critical. It’s not just the bank across the street or even the digitally savvy fintech, but also the hairdresser that offers coffee and wine while you’re getting your hair done. They understand it’s not about a haircut - it’s about the entire experience.

Bankers are always seeking more efficient ways to conduct business, but that will not come without a lot of preparatory legwork. Collecting, cleaning and analyzing customer data is a must. In this time in which instant gratification has never been more important to customer service, it’s time banks and credit unions leverage the power of technology and data to fulfill that need. With dedication to a data-driven culture, executives can derive insights IT, marketing and others can execute on that differentiate your institution from

Conclusion


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the pack through personalization and engagement. In summary: 1. Follow the consumer through the buyer’s journey with the marketing funnel to grab their attention where they are when they’re ready. Data can help hack to buyers’ journey, so your financial institution can offer products and services before the consumer even knows they want them.

2. Establish a customer-centric organization and use data analytics to efficiently and effectively get to know your bank customers and credit union members to provide the information and service offerings they need when they need them.This is not just a job for IT, but must be led by executives regarding what types of data will be useful.

3. Personalize the user experience and customize offers using data analytics to enhance your relationship with the customer via digital cross sell and upsell opportunities.

4. Up your onboarding game and consider gamification for greater engagement.


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ResourcesMcKinsey & Company

Forbes

CNN

Pew Research

The Financial Brand

The Financial Brand

2018 J.D. Power Retail Banking Satisfaction Study

Umpqua Bank

Umpqua Go-To

https://www.forbes.com/sites/jiawertz/2018/04/30/why-instant-gratification-is-the-one-marketing-tactic-companies-should-focus-on-right-now/#72dad4c5e91b

https://blog.hubspot.com/sales/what-is-the-buyers-journey

https://www.pymnts.com/news/retail/2018/omichannel-ecommerce-consumer-habits/

https://smallbusiness.chron.com/marketing-men-vs-women-1011.html

https://www.reuters.com/article/us-netflix-results/netflix-shares-tank-after-big-miss-on-subscriber-growth-idUSKBN1K62MM

https://www.cio.com/article/3229853/cio-role/the-secret-of-successful-business-is-data-driven-decision-making.html

https://www.bankrate.com/banking/savings/gamification-helps-people-save-more-money-savings/

http://time.com/3858309/attention-spans-goldfish/

https://www.forbes.com/sites/louiscolumbus/2016/05/09/ten-ways-big-data-is-revolutionizing-marketing-and-sales/#460e00ff21cf

Bryan AdlerCEO and Founder

(646) 518-8238

[email protected]

245 Fifth Avenue, Suite 1102 New York, New York 10016

www.ThinkVetter.com

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