As financial services and insurance (FSI) companies strive to deliver the seamless multi-channel customer experience that a new generation of consumers has come to expect, the traditional marketing model has been radically reimagined. Innovative institutions are showing how cross-functional teams focusing on the customer journey can work to develop a single view of the customer––an approach that can bring tangible rewards. Yet research shows that large institutions still have some way to go in maximizing the return on their investment in this area.
Integrating the banking customer experience
The predominance of mobile and digital media continues to drive transformation in the FSI sector, as C-level executives and marketing teams respond to the needs of their biggest demographic market: the millennial generation. This is a market made up of consumers who are accustomed to having a vast array of online and offline options for researching and buying new products and services 24/7—and who increasingly expect the same seamless customer experience from their banks and insurers as they do from the digital pioneers in other sectors, such as retail.
Traditionally fast followers rather than early adopters when it comes to new technologies, FSI companies have also seen other industries encroach on their territory by offering financial services––such as payment processing and short-term loans––as part of their buying experience.
FSI executives and marketing teams are therefore under pressure to integrate the banking experience across physical and virtual channels, not only to cut costs, but to exploit sales opportunities and avoid losing market share to new challengers.
A radical rethink of the traditional marketing model
As a recent McKinsey report explains, most banks’ marketing organizations used to be geared toward relatively slow-paced campaigns focused on pushing single products at a time across a range of channels.
But this traditional marketing model is being turned on its head. Now, banks are shifting investment to “always-on” marketing programs, in which they engage with individual customers at every touchpoint along the decision journey.
These marketing programs are typically conducted according to a test-and-learn approach that gauges an individual customer’s specific needs in real time. The engagement can, for instance, take the form of a text message to an executive on a business trip, triggered when they reach the airport, offering a credit card with benefits for travelers. To take up the offer, the customer simply taps the apply button on her phone to start the application process––with authentication provided by uploading a selfie taken with the phone’s camera.
Under this approach, it is the customer decision journey, rather than an individual transaction, that drives the marketing strategy. And it’s already being implemented, according to a banking sector briefing produced last year by KPMG Nunwood. This presents a case study showing how Kiwibank––a startup created by the New Zealand post office––has made this kind of customer journey-focused strategy the basis for its entire organizational structure.
A cross-functional organization geared toward the customer journey
Kiwibank is not organized along traditional hierarchical and divisional lines. Instead, it is a cross-functional organization encompassing the core capabilities of the three Ds (discovery, design, and delivery): analyzing data from a huge number of customers; modeling how their life journeys might play out for future customers; and delivering the right offering at the right time in the right way. According to KPMG Nunwood: “Customer-focused teams thus become immersed in real life, not product pitches.”
Kiwibanks’s innovative services include, for example, a home finder app that allows you to scana street and see, through augmented reality, which properties are for sale or rent and their previous sales history. More importantly, it suggests ways to add value to the property through a new bathroom, kitchen, or attic conversion. Prospective purchasers can make a return on investment calculation there and then. The app also provides an almost real-time assessment of the mortgage that you might get on the property.
Untapped sales and revenue potential among large organizations
Yet, as Econsultancy’s recent Multichannel Reality report shows, companies in the FSI sector still see understanding the customer journey as a challenge: Only a third of respondents to the survey said that their organization had managed to achieve a single view of the customer through journey mapping.
Brian Manasuma, Research Director at IT research and advisory company Gartner, believes this is because today’s sheer number of customer engagement channels makes it far more difficult to keep track. “It has become very difficult to establish how all our different points of contact are perceived—and I’m not even sure the customer knows.”
Achieving a single view of the customer may also prove more challenging for large organizations than for their smaller counterparts. In this case, it makes sense for larger companies to work with a partner on the three Ds, for instance by helping to put in place the right technological infrastructure and by assisting with the creation, management, and localization of marketing content.
Embracing journey management in this way has the potential to yield tangible benefits for companies. A report by the Aberdeen Group suggests that focusing on the entire customer journey brings a 50 percent greater return on marketing investment, nearly 25 percent more positive social media mentions, more than 2.5 times greater revenue from customer referrals, and, crucially, 55 percent greater cross-sell and upsell revenue than competitors.
((Box out: Of the companies surveyed for Econsultancy’s Digital Trends report in 2016, 72 percent said customer journey optimization would be an important part of their digital marketing strategy in the next few years.))
- In response to evolving customer demands and competition from challengers outside the industry, FSIs are moving toward integrating the customer experience.
- This is turning the traditional, slow-paced campaign-driven marketing model on its head: The need for always-on marketing requires an organizational rethink.
- Providers such as Kiwibank are pioneering flat, cross-functional structures to implement new journey-focused strategies.
- Larger banks and insurers still have some way to go––but choosing the right partner is a good first step.