Sins of omission rather than commission rank among the most serious mistakes bank marketers are committing in this time of digital upheaval.
BAI research finds a disconnect between the self-perception of financial institutions—54 percent of whom see themselves as relationship-focused—versus consumers who say only 15 percent of financial institutions are relationship-focused. That distressingly large gap points to the failure of many banks and credit unions to build on their digital capabilities to engage and satisfy increasingly tech-reliant customers.
The recent BAI Banking Outlook and BAI Consumer Outlook surveyed leaders from banks of varying sizes and consumers across the country to gain a pulse on the key issues and sentiments in financial services.
Accustomed to frictionless, data-savvy services such as Amazon, Netflix and Uber, customers’ expectations for digital experiences run high. Ironically, financial institutions are awash in customer data. But our research indicates they miss too many opportunities to analyze the data to incisively provide seamless, targeted online and mobile solutions consumers have come to expect.
Customer relationships and brand reputations will live or die on the strength of a financial institution’s ability to digitally deliver the right products and services. We are well into the digital era, and the pace will only accelerate in the next three years. Here are seven digital mistakes bank marketers can no longer afford to make:
- Failing to properly allocate advertising budgets. Consumers overwhelmingly (77 percent) prefer to get information from their financial institutions via electronic sources such as email, websites, texts or social media. Yet a little more than a third (37 percent) of the advertising by financial institutions is done through digital channel; most is presented through such traditional channels as direct mail, newspaper ads and TV and radio commercials. Banks should consider adjusting their media mix to better align with consumer preferences.
- Failing to connect the dots. Too few financial institutions can track a customer getting information about a product on the website and then opening that product in the branch—still the dominant way customers open accounts. Only 29 percent of community banks say they could track the route. Just as surprising, only 70 percent of the largest, more technically sophisticated banks say they can track a customer’s web-to-branch path to purchase. Bank marketers need more holistic attribution models to better understand the digital connection to sales conversion.
- Failing to grasp the big picture. Banks have frequent interactions with customers, generating a mountain of data. On average, customers interact with their banks or credit unions 53 times a month, most of it electronically. Leading the list are:
- debit card transactions (10.14 per month)
- online banking via a website (6.73)
- mobile banking (6.69)
- online bill payment (4.49)
- In-person branch interactions averaged only about 2 per month.
But because data about all kinds of customer interactions comes through a variety of platforms and systems, it’s hard to make sense of it all. Fortunately, banks recognize their inability to better understand their customers and have identified technology, integration and platforms as their top spending priorities in the next three years.
- Failing to live up to the brand promise. Financial institutions have work to do to convince customers they’re genuinely relationship-focused and delivering on their brand promise. For example, 60 percent of big banks say they’re relationship-focused; only 7 percent of consumers would agree. That’s a significant gap in perception. Financial institutions of all sizes recognize that building bonds of trust with customers in the digital era will be a challenge. Only 28 percent of community bankers say it’s easier to build relationships in the digital era, while 54 percent of the large banks say it’s easier to build customer relationships these days.
- Failing to move beyond the digital enrollment process. Signing up customers for products and services in the digital space represents a great first step, but don’t stop at enrollment. Push deeper into the digital realm by, for example, using social media to listen and glean valuable feedback to discover customer pain points. Use digital channels to deliver useful content that customers can use to help them solve their financial challenges. But avoid spamming them with sales pitches that could violate their sense of trust in a financial institution.
- Failing to convert customers’ interest in opening accounts online. Our research indicates that 47 percent of consumers would consider opening a loan account online, and 59 percent would consider opening a deposit account online. But only 18 percent of consumers have opened a loan account online, and only 30 percent have ever opened a deposit account online. Banks should take time to understand why there’s a disconnect in interest and behavior and look for ways to capitalize on this opportunity.
- Failing to take customers up on their willingness to exchange more personal information for better service or product offerings. Customers are essentially saying, “I’ll share more information about myself if you’ll give me more.” Millennials are especially eager to share more information with their financial institutions. 51 percent said they would share more personal data versus 37 percent of Baby Boomers. Interestingly, 80 percent of customers said they were happy with their banking apps, but one-third of them said they would switch banks if it offered a better banking app.
In the digital era, financial institutions face the daunting task of building relationships with customers they rarely or never see. But the good news is that almost everyone carries a mobile device—a direct, digital route to the customer that bank marketers can tap to engage them.
By mining and analyzing a deluge of customer data, bank marketers can create the right digital content for the right customer at the right time to build relationships and live up to their brand promise. In that way, these seven mistakes can point towards a course of peerless marketing that harnesses a waterfall of information—and in turn, an abundant flow of returns.
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Mark Riddle is BAI’s director, research and content delivery.
Mark's colleague, Tom Hoscheidt, BAI managing director of research, is speaking at BAI Beacon in Atlanta, October 4-5, about Organizing for Business Banking Success.