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Transformation centered on the customer

Focusing on the interactions that matter are the best way for banking institutions to achieve lasting benefits when doing a digital makeover.

Oct 27, 2022 / Consumer Banking
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Consumers, especially those who already bank with your financial institution, want more from you.

Banking leaders have been hearing this message for 20 years as technology companies have launched enterprise relationship management solutions, online and mobile banking, and a host of other software services aimed at improving banking engagement. Digital transformation—in this context meaning “buying software”—is required to serve households well.

No one wins, however, when banks undertake digital transformation for its own sake. When buying technology, banks shouldn’t lose sight of consumers, their needs and the specific tactics that can help them. It’s engagement, not engagement platforms, that grows banking relationships.

Customers need to be at the center of a bank’s technology purchases, and in a very practical way. Yes, they want more from you. But what, specifically, do they want? How do you know that’s what they want? What is the best way to react and engage? And how will this create growth and loyalty for your institution?

While general surveys and studies can help answer the first question, banking data provides the best answers. The second question requires you to interpret that data. The third and fourth are engagement questions, with data defining and triggering communications with customers. You can use these four questions to evaluate and compare technology solutions.

Consider these four questions in the context of a specific consumer need like a mortgage:

What do customers or members want from you? Consumer optimism about homebuying conditions fell to its second-lowest reading in a decade, according to a July 2022 report from Fannie Mae on home purchase sentiment. But digging into the survey results over the past 12 months reveals that consumers would rather buy a home than rent if they were to move. This is the “more” customers and members want from you—the steps to make their goals possible.

How do you know who may need a mortgage? Institutions need to read the consumer-industry landscape, recognize homebuyers’ challenges or opportunities, and use those insights to engage those signaling a mortgage need. Institutions are turning to specific insight tools—such as credit monitoring and multiple listing service alerts—to identify customers applying for mortgage credit or listing a home for sale. But be wary when shopping for integrations for alerts like MLS or credit monitoring.

What is the best way to react and engage? When institutions monitor their mortgage or deposit databases, engagement is the most common breaking point. If data shows that a depositor needs help, who engages? Is it a personal banker or a loan officer? If it’s a loan officer, how well will the marketing team coordinate? Here the bank needs to take a data-based identifier from a depositor, determine the best angle for communicating based on that data and then make contact.

How will this create growth and loyalty? Making contact and providing information does not equal a loan application. This is a critical point to keep in mind because applications have the most impact on growth and loyalty for your institution. Our customers have found that within a typical database of 50,000 mortgage or deposit contacts, there are about 1,650 home sellers, many of whom will soon be in the market for a new mortgage loan.

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Institutions can seek to earn the business of each one of those home sellers/future buyers, but success comes from an orchestration and synchronization of campaigns, loan officers and even real estate agents. This includes ensuring that relevant depositors receive messages based on their data, loan officers follow up with depositors who began applications, and marketing partners reengage potential borrowers when loan applications are not completed. Institutions must test platforms in terms of how they support these steps, because it is these actions that create more loans.

No one wins when banks launch digital transformations without a specific purpose, because consumers for the most part don’t care about what goes into a digital transformation. What they do care about are their own goals and challenges, and institutions should concentrate on those to determine what to invest in to serve them better.

Focus on the interactions that matter—along with the approaches that drive growth and loyalty—and use them to guide your technology purchases. It is the only way for digital transformations to achieve results.

Rebecca Martin is chief marketing officer at Total Expert.

Relevant insights for financial services organizations, regardless of where they are in their digital journey, can be found in the BAI Executive Report, “Where does digital transformation go from here?”