It’s the year of customer centricity for the financial services sector
Banks often know more about our habits than even our closest friends or partners, which can create tension between a financial service provider and its customers. However, this is set to change as more organisations adopt a first-party data strategy, AI and ML and a privacy-by-design approach, writes Jonathan Airey.
According to a recent KPMG study, over 63 percent of banking CEOs admit they need to significantly improve their understanding of customers. It may be an uncomfortable truth but the financial services sector (finserv) and customers have always had a rocky relationship despite the likes of insurance providers, the banks and payment companies knowing more about the ins and outs of consumer’s habits than even their closest friends or partners. And yet, at times, it’s like they don’t know us at all.
This needs to change. For many years customers didn’t switch their banking, investment or insurance partners due to the difficulty in doing so, however now with this barrier dissolved and the ever-growing proliferation of choice in the market, loyalty is scarce – therefore exemplary customer service is vital in driving customer retention in today’s market.
With the explosion of online due to the COVID-19 pandemic, the finserv industry is more competitive than ever. More and more online-only propositions are emerging on a regular basis, grabbing consumers’ attention with brightly coloured debit cards and devastatingly attractive insurance deals.
The KPMG study also reveals that 65 percent of banking CEOs say they need to improve their innovation processes and execution. This indicates that finserv professionals may lack confidence in their digital capabilities.
Financial services need to be comfortable disrupting existing business models. The sector needs to be agile. And it starts with customer data to provide value at every stage of the customer relationship.
Here are some of the emerging trends finserv marketers must prepare for to stay ahead of the curve in 2021:
The power of first-party data
Financial services hold a lot of operational data on each of its customers. As more consumers move online to interact, compare products and prices, and make purchases, the volume of available data is increasing exponentially. Financial services collect a wealth of data, but few have found a way to monetise this asset by connecting and integrating customer data.
First-party data is the backbone of understanding the customer experience – and is controlled by you. Whether it’s collected on web properties, apps, or independent systems, the information flows in real-time from the moment it is produced. That is if a customer data supply chain is set up by connecting customer data to the systems that deliver the customer experience.
Investing in a customer data platform is the key to analysing how consumers interact with your business to ultimately improve the experience and deliver better engagement holistically and individually.
Driving hyper-personalised experiences
A first-party data strategy and machine learning capabilities go hand in hand. According to Tealium’s Artificial Intelligence and the Future of Marketing report, more than 8-in-10 professionals with responsibility for their organisation’s marketing data and technology say that AI and machine learning has been successful at improving the customer experience.
Highly regulated industries like financial institutions are increasingly developing customer-centric policies and experiences. Central to this is adopting AI and machine learning to help narrow the scope of customer data and focus on things consumers are actually engaging with or are more likely to engage with in the future. AI and ML are no longer a nice-to-have in the finserv sector, it is a necessity, or risk falling behind.
Protecting privacy must be at the forefront
Financial institutions have long been required to safeguard private information however with consumers demanding more data privacy from their financial institutions in 2020 and the sector joining the digital revolution in earnest, privacy has to be at the forefront. A privacy-by-design approach should influence everything data and customer experience-related, from the way you handle data to the way you market your apps and services to consumers.
Luckily, the value of good data governance doubles for personalisation and other digital transformation end goals. Making sure data is the right quality, in the right place, and ready to use is important to data privacy as well as broader customer experience efforts.
While 2020 was a key turning point for the financial services sector, 2021 is set to be the year of customer centricity. The finserv organisations that adopt a first-party data strategy, AI and machine learning and a privacy-by-design approach are the ones that will continue to push the industry forward.
Jonathan Airey is the director of customer success, APAC, at Tealium.