The banking sector has been slow to keep pace with the customer experience revolution, especially as delivered by major tech platforms. While there have been lots of technological innovations to make financial transactions easier, including mobile banking, there hasn’t been much emphasis on improving the customer journey, particularly within traditional retail banking.
At the same time, banks and financial services are facing increased competition from non-traditional competitors like Alipay, WeChat, MoneyLion and Chime, along with the need to improve their customer relationships. Of the 40 banks evaluated in the 2019 American Banker/Reputation Institute Survey of Bank Reputations, only two earned an “excellent” reputation with customers, down from six the previous year.
That’s why it’s now mission critical for banks to get into the customer journey mindset.
The customer journey is the cumulative experiences customers go through when interacting with a company or brand. In banking, the customer journey starts with deciding which bank to open a new account with, and continues long after customers have made their fair share of deposits or purchased a product. Their post-transaction experiences may include using a mobile banking app, or speaking with a call center representative to resolve a specific issue.
The benefits of knowing a customer’s process from beginning to end are extremely important. With the difference in products and services offered continuing to be slight, improving the customer experience will be one of the most powerful differentiators in the future. In fact, an exceptional customer experience can be worth at least as much as a superior product or efficient process — building customer loyalty, reducing costs, making employees happier, and boosting revenues significantly.
How Customer Analytics in Banking is Helping Improve Customer Experiences
Victory in the new battlefield for customers in the banking industry will depend timlely, relevant, hyper-personal and exceptional customer experiences. But how can banks pivot from their traditional rear-view mirror and siloed perspective, to become proactive and serve their customers’ needs holistically?
Using advanced analytics to extract customer insights can help banks craft more relevant offers, which in turn increase engagement and drive conversion. Consumers expect interactions with their bank to be based on insight built over time, with the relevance, personalization and contextuality of engagement, and data analytics help banks deliver these very interactions.
Moreover, a bank’s analytics capabilities should be able to accommodate and account for data regardless of channel. Consumers also expect the experience they receive to be seamless across channels, with accurate & consistent data and insights regardless of the channel or device.
Using Customer Segments in Banking to Better Serve Your Customers
Using data analytics to gain valuable customer insights becomes even more powerful when applied to the right customers at the right time in their journey. This is achieved through customer segmentation.
What is Customer Segmentation in Banking
Customer segmentation is the process of dividing customers into groups based on common characteristics so you can market to each group effectively and appropriately. It’s another type of analysis that helps banks to get know their customers on a more granular level.
The best segmentation reveals intelligence that can be used to inform messaging for marketing (think upselling, cross-selling and other share of wallet opportunities) and customer service strategies (think financial literacy, financial wellness etc.). It can also help banks better understand the customer lifespan and predict customer behavior.
All of which means, the more insights banks can uncover about their customers, the easier it will be to create personalized financial services for them. Which, in turn, will make it easier to connect and build long-lasting customer relationships.
What are the Different Types of Customer Segments?
There are many different types of segmentation and nearly infinite ways customers can overlap within certain segments. The common segments include;
• Demographic - The most basic type of segmentation, usually includes age, geography, gender, generation (e.g. Millennials and Baby Boomers), income level, marital status and other vital statistics.
• Psychographic – Tells the banks important information like who may be more likely to adopt online mobile banking vs. someone who might be more change adverse.
• Peer Benchmarking – Vital context gained from vast, highly accurate data sets that compare peer financial trends and patters across similar income, geographic locations and more.
The purpose and advantages of segmentation are easy to grasp, but the farther one gets into analytic methodology, the more highly technical it becomes, and the more complexity it presents. So much so that it can become a point of diminishing returns.
That’s why artificial intelligence and machine learning have increasingly important roles in automation and personalization within digital banking. AI enables a higher level of personalization while removing human bias; machine learning gives systems the ability to learn and progressively improve performance on a specific task. The result is hyper-personalization at scale.
Examples of Customer Journeys in Banking
Listening to Customer Feedback
This can range from the old-fashioned “I’d like to speak the manager” in-person visit at a branch and customer feedback surveys, to more modern-day online review sites, social media groups — even digital labs where customers rate and provide feedback on concepts and pilot programs.
Seamless Cross-Channel Experiences
A customer can begin a pre-approved car loan application at a branch office; snap pictures of his paycheck for the loan and deposit a check to cover the down payment using his cell phone on the way to work; complete the loan signature requirements on a tablet and transfer the funds by tapping an NFC-enabled smartwatch.
Partnering with Envestnet | Yodlee
To learn more about how Envestnet | Yodlee is helping financial service providers deliver a seamless customer journey, be sure to visit our solutions homepage.