Leveraging data to keep pace with changing consumer behavior

Social distancing, work-from-home and other lifestyle changes arising from COVID-19 have created a ripple of growth areas, as consumers become more confident in their surroundings and learn how to thrive within these new limitations.

To meet the needs of this flux in lifestyles, banks need the ability to track changes and track them quickly. But many, saddled by traditional approaches, lagging digital technologies and simplified views of their competitive landscape, can overlook or misjudge the trajectory of these consumer trends.

To respond successfully in this changing environment, financial institutions can gain better insight into customer behavior by merging financial benchmarking and customer and user experience research, layering quantitative and qualitative data for a holistic view of customer journeys.

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That means integrating peer analysis on the most successful customer journeys with macroeconomic analysis and aggregate consumer trend data. Banks can also better leverage their internal data to build AI and predictive models to gauge market changes, forecast behavior and more clearly understand demand, along with expanding their own social media analysis.

With qualitative research, banks can improve the customer experience by tracking and analyzing competitors’ features and functionalities across mobile and desktop platforms. They can spot additional patterns on the quantitative side by using real-time behavioral data to detect emerging trends in risk, price sensitivity or propensity for conversion. With a synchronized view of their business, along with an ability to track timely changes, banks can help maximize portfolio performance across the balance sheet.

From payments to mortgage lending to digital engagement, we’re likely to see the transformation of behaviors continue into 2021. Having an integrated view of data could reveal nascent developments that, in turn, need to be supported with new approaches.

We can see from data supplied by EPFR, for instance, that flows to sector funds since Q3 2020 indicate investors expect consumers to build on newly acquired IT skills to order material goods they abstained from purchasing earlier this year, shifting some tech-bound funds into consumer and industrial plays.

Consumers have become more receptive to digital services in general, with more having to rely on chatbots for their initial financial conversational interaction to avoid call centers or physical branches. Tech-challenged consumers who reluctantly adopted video chat for work may be seeking other ways to expand and diversify their digital interaction, a lifestyle change that will likely continue long after the pandemic has subsided.

Customers worried about cash flow or job security may opt to increase savings or curb spending, using personal financial management tools offered in their newly adopted banking app. With mortgage rates near all-time lows, others might move to refinance their homes or finance new vehicles to avoid public transportation, driving preference for institutions that enable them to complete their financing entirely on digital channels.

With the need for more living space, others may be looking to finance larger homes away from crowded urban centers, such as beachfront or countryside properties, perhaps with greater sustainable living potential. Or, they might focus on financing a home renovation instead of saving for a family vacation.

Parents with financial means concerned about social distancing may choose to enroll their children in less crowded schools or those which provide superior remote learning. Others may even delay having children. Students might postpone college and continue living at home, creating unexpected financing issues for the household.

Job insecurity fueled by lingering uncertainty means “buy now, pay later” – installment plan options can become powerful tools that provide consumers with immediate point-of-sale alternatives to credit cards. Some customers may simply want more insights into their banking and spending habits, and more routine engagement with their provider as their own finances and lifestyles undergo more changes.

With better intelligence and integrated research, banks can isolate key details in niche areas and identify larger market trends. They will need to adopt new strategies and re-evaluate business models. They can better assess their go-to-market position, conversion tactics and product performance to address weaknesses and build on their strengths with greater agility

They can improve their understanding of their digital performance and adapt to new opportunities and innovations, to create a holistic and engaging customer experience.

While consumers will still prioritize security and control, they have been shifted onto a path of exploration and discovery while seeking to build resilience to cope with further changes ahead. Banks need to follow suit if they don’t want to get left behind.

Suraya Randawa is head of omnichannel experience at FBX.