More consumers are embracing digital, giving banks access to a wealth of valuable customer data. Yet many traditional banks overlook the opportunities that this data presents. The marketplace is changing drastically, and banks need to make use of this data to keep up. It’s a question of not only what they offer, but also how, when and in which delivery channels.
Consumer understanding in banking: how well do you really know your customers?
Our Global Consumer Banking Survey of more than 55,000 consumers, conducted in early 2016, highlights current gaps and opportunities:
- Traditional segmentation: based on demographic factors such as age, financial parameters, profession, earning potential and geographic location –> is inadequate for comprehensive customer understanding.
- Deeper insights about behaviors, attitudes, life stages and lifestyle factors are necessary to gain nuanced understanding, to build actionable strategies.
- “Digital savviness” and “financial savviness”: knowledge and comfort level using online and mobile channels and banking products –> offers an alternative, insightful way of segmenting customers
Our analysis of the survey results demonstrates four new segments:
Pros are confident self-managers of their finances who are fully comfortable in digital channels; pros may try nonbanks and digital providers that offer better digital experiences.
Digital stars also feel in control of their finances, but less so than Pros and still value 24/7 access to service staff. They are the most receptive toward nonbanks. More on Digital stars
Traditionalists feel the least confident with their finances and worry about data security and digital channels. Preferring banks with branches, they are loyal but less profitable than other segments.
Financial stars feel in control and comfortable self-managing their wealth. They are neutral to digital channels and alternative providers, while valuing the expertise and services of traditional banks.
Immediate actions to improve customer understanding
The rise in customer diversity and a deluge of digital data make it more difficult to develop appropriate micro-segmentation and valuable customer insights. To better understand today’s customers and combat the erosion of trust and relevance, banks should:
- Orient an organizational mindset for a digital-first customer culture. An exceptional customer service culture involves communicating and embedding beliefs, values and behaviors to all staff to guide and mold interactions and decision-making regarding customers. A truly customer-centric culture starts with top-level leadership and requires an organization-wide commitment to applying knowledge from consumer data in all phases of operations.
- Address potential “moments of truth” and provide avenues for dynamic customer feedback. Customer journey mapping is an effective first step to gaining broad-based and holistic views of how existing processes and experiences intersect with customer needs and preferences. Because pivotal moments can occur anywhere along the customer journey, banks must know which interactions matter most to which types of customers.
- Adopt an agile use of big data analytics to sharpen their proposition and enhance customer values. More insightful, actionable segmentation is an essential step toward tailored value propositions for unique groups of customers. Banks need to dig deeper into their existing — but often underexploited — transactional and behavioral data sets to determine the right levels of personalization for each segment.
Ready to get to know your customers on a deeper level?
True customer understanding is no longer a nice-to-have agenda item, but a strategic and competitive necessity for banks seeking to boost short-term revenue and promote long-term growth. Customer understanding should be a living, breathing part of everyday business, with insights underpinning the full range of banking operations.
With deeper understanding, financial institutions can identify what customers need and want in their financial engagements, prioritize investments into customer experience enhancements, redesign outdated processes and create innovative, intuitive digital experiences.