Anthony Jabbour - Chief Operating Officer, Banking and Payments, FIS
Know thy customer, as the old adage goes, is an imperative for legacy banks today. At a time when consumers have so much choice, traditional banks are struggling to engage customers with new offers - especially by mail. In fact, some banks have been doing it wrong for years. In order to gain the attention of customers, and prompt action, banks need to take a page from retailers’ playbooks and use smart data to better engage with customers on and offline.
Predictive analytics is the savior and the logic behind why is simple: by humanising the banking relationship, treating it like a personal relationship, listening is possible. Like with most personal relationships, listening is key to mutual understanding and long term satisfaction. If a bank is listening to its customer, the bank will likely understand the customers’ POV and needs. Similarly, if the bank is offering WHAT the customer needs, WHEN they need it, the customer will be listening and the bank can capture their attention in real time. Alternatively, if banks continue to inundate customers with generic offers, the bank will become more than just junk mail - the bank itself will be, figuratively speaking, thrown out of the psyche of the consumer. This will put legacy banks further away from competitors who are finding ways to differentiate – such as those focused on key life events like student loans and housing – despite the proven history and credibility of legacy brands.
The bank that is selective about how, when and to whom it offers certain solutions to will not only survive, it will thrive. Customers have grown accustomed to brands using information about their online habits to their advantage and offering personalised offers. In fact, many studies show that customers are more likely to make a purchase if the offer is relevant to their life needs, and will repeat purchases and click on these ads in the future. The same learnings and logic can and should be applied to banking. The mindset of the same customer who doesn't even open up the bank letters will transition to one that is receptive and interested in engaging with a bank that "gets me."
Customisation relies upon the bank’s ability to recognise each customer as a human being with emotional and financial needs that evolve throughout their life. The real return on investment comes by dissecting the target audience and understanding each unique customer’s Key Lifestyle Indicators (lifestyle, predictive life events, financial status and demographics).
According to FIS’ 2017 PACE Report, about three-quarters of the contact that UK consumers have with their banking providers are digital in nature. And amongst Millennials, mobile banking has surpassed online banking, branch banking and ATMs as their primary means of conducting banking transactions. Understanding this fact is a critical step in better leveraging predictive analytics. With this knowledge in mind, banks need to be uber-focused on their customers and intimately understand their financial needs along their life journey.
There are multiple categories of life events that are particular to certain consumer demographics, and trigger financial needs: education, career, marriage, homeownership, leisure, wealth and retirement. These life events, while a unique experience for each consumer, prompt similar financial questions and needs which banks are well positioned to answer. By understanding the life events of each segment of the population, banks will be well positioned to grow their relationship as their customer matures.
By humanising the relationship with the benefit of insightful data, banks will more successfully personalise their approach. One-time customers will become loyal customers, and transactional relationships transform to two-way engagements. The customer will learn to trust the bank as more than a financial institution, but as a partner during pivotal moments of their life. Why not help your customer when they need you most?