As challenger companies drive digital transformation in the financial services and insurance sector, optimizing the customer experience (CX) has become crucial to survival in the face of this new competition.
At a recent Lionbridge Learning Symposium held in the UK, Lynette Saunders of Econsultancy discussed digital transformation in financial services with an audience of industry marketing professionals. She explained why she sees understanding the customer journey as a vital part of global digital marketing strategies, and why she believes a data-driven approach can help companies produce compelling, relevant content.
Adapting to digital is vital for survival
The financial services and insurance (FSI) industry is ripe for digital transformation, with market incumbents being challenged by new, innovative players. This is according to Lynette Saunders, Senior Analyst at Econsultancy. “The challenge of new players entering the market drives the need for change, innovation, and agility if established companies are to survive,” says Saunders. To underline the very real threat that companies face, she cites a report by Thomson Reuters showing that only 63% of companies that were in the S&P 500 a decade ago are still in the index today. In addition, Yale University suggests that by 2027, 75% of companies in the S&P will be names we would not recognize today.
Millennials: a new generation that shuns traditional banking
The new players entering the market are targeting a younger audience, made up of consumers born in the two decades leading up to the year 2000—hence the label “millennials.” For many consumers of this generation, mobile is the preferred way of accessing the internet and carrying out all kinds of transactions, including banking. According to a recent Viacom study, 71% of millennials would rather visit their dentist than their bank.
Optimizing the customer experience
It is the inability to appeal to this new generation of consumers that FSI companies perceive as the biggest concern in terms of industry disruption, according to a report from Econsultancy entitled Digital Trends in Financial Services and the Insurance Sector. So how can established companies avoid losing market share to new players in the FSI industry who are successfully targeting the millennials market? As Lynette Saunders explains, the answer lies in offering a seamless customer experience—similar to that offered by non-FSI companies such as Uber and Amazon. This in turn means anticipating rather than simply responding to customer needs, identifying pain points and thus turning a potentially negative experience into a positive one. As a recent Accenture Pulse Survey showed, if a customer has experienced poor service, they switch brands in 52% of cases. And once that has happened, it is often too late to respond: The same survey indicates that 68% of consumers, having switched, will not go back.
Recognizing that the power now lies squarely with the customer, both in the FSI sector and in other industries, new digital banks such as Atom and Monzo are blazing the trail as they challenge existing ways of operating. Atom—the first mobile-only bank to receive a regulatory licence in the UK—aims to make security procedures painless for customers, with voice recognition and face scan replacing traditional ID numbers and passwords. Monzo, meanwhile, is addressing overdraft issues by helping to prevent customers from going overdrawn in the first place, offering short-term loans where appropriate. Monzo sees itself as “a bank for people who want to get things done in a click and who don’t see the need for branches and cheque books”—clearly an attractive proposition for a generation of consumers who see traditional banking as more painful than pulling teeth.
Understanding the customer journey is key to digital marketing strategy
As the influence of mobile and other digital media grows, understanding not only individual interactions but the entire “customer journey” across multiple devices and touchpoints becomes key to delivering the right messages and solutions to consumers. Econsultancy’s research proves this, with 72% of companies surveyed for its Digital Trends report saying that customer journey optimization will be an important part of their digital marketing strategy in the next few years.
In practice, optimizing the customer journey means bringing together both online and offline customer data. This enables data-driven marketing decisions to be made in real time, according to Saunders. Gartner Research recently predicted that 60% of large FSI organisations will have these journey mapping capabilities in place by 2018, compared with 20% in 2015.
Embracing journey management in this way promises tangible benefits for companies. A report by the Aberdeen Group suggests that focusing on the entire customer journey brings a 50% greater return on marketing investment, nearly 25% more positive social media mentions, more than 2.5 times greater revenue from customer referrals and, crucially, 55% greater cross-sell and upsell revenue than competitors.
Compelling content for digital experiences
For consumers, the practical benefits of a journey-focused, data-driven approach are equally clear. It means, for instance, that they have the option to begin filling out an insurance form on their mobile and then complete the process on their desktop or by speaking directly to an advisor. It also improves the quality of the communications that customers receive from their financial services provider, ensuring that they benefit from targeted messages that are relevant to their specific spending habits and financial position. It is little wonder, then, that FSI companies see data-driven marketing—focused on the individual—as the most exciting opportunity in the next five years, along with the ability to create compelling content that enhances the customer experience.
- Digital is transforming the FSI sector, and established companies need the agility to adapt if they are to survive.
- The needs of a new generation of consumers with different expectations are driving the development of fresh, mobile-first banking and insurance models.
- In the new digitalized banking and insurance landscape, customer experience is the key differentiator for companies to compete.
- Understanding the whole customer journey is key to effective digital marketing strategy, and a journey-focused approach creates greater increases in revenues and social media mentions.
- Data-driven, real-time marketing enables companies to communicate with their customers in a targeted way and to produce powerful marketing content.