by Jeremy Lehman
“I like Uber because it’s so easy. Really, anything informative and elegant.” “To be honest, it probably sounds stupid-Amazon-they have a million products, and I can get what I want in 10 seconds.” “It’s such a cliché, but Apple because I use them for everything, even news now. I’m constantly on their devices. I’m holding their phone right now.” Several consumers shared the brands or businesses that best engage them digitally in a casual survey. Sophisticated consumers almost apologized for citing big, predictable names in content streaming, ecommerce, and ride sharing. These companies-all digital natives-are defining consumer expectations.
Leaders in digital engagement share common attributes. First, they make it easy for consumers to accomplish their goals with simple design and experiences. Second, their offerings are seamlessly integrated both internally and with external products that form part of a consumer journey. Third, digital leaders use data to understand consumers’ goals and actively help achieve their intent.
Examples demonstrate how digital leaders bring simplicity, integration, and data-driven understanding. Uber and Lyft provide streamlined apps that predict destinations, offer transparency at each step, and then pay with little effort. Google automatically unifies web and consumer information, such as recognizing airline reservations in email and then setting reminders in calendars. Apple products readily connect so that devices, content, and services seamlessly integrate. Netflix and Amazon effectively predicts products people may want.
Banks need to similarly engage consumers. Traditionally, banking centered on branches designed to project trustworthiness. The arrival of the web and smart phones led to multichannel banking, where consumers could access transactions within many channels. Banks often cobbled together a variety of vendor tools specific to each channel, resulting in inconsistent and complex experiences. Many, or even most, banks and building societies remain at this level of maturity.
Multichannel offerings are often designed solely for workflows within one channel. This earlier generation of technology often lacks simple design. Consumers experience multiple logins, many clicks, differing look and feel across services, complex voiceline (VRU) menus, and gaps in functionality within some channels such as bill payment available on the web but not a mobile app.
Banks also need to consider how their platforms fit into consumers’ broader financial experiences. Retirement and pension services, insurance, brokerage accounts, household budgets, and taxes are typically managed outside of bank channels even though each are integral to a consumer’s financial picture. This disconnect is exacerbated for small business owners and professional services providers, where cash management and tax strategy require a combined personal and business perspective.
Omnichannel banking
Omnichannel banking, when executed effectively, brings the same simplicity, integration, and proactive assistance provided by leading digitally native businesses. Omnichannel banking provides consistent experiences so that a consumer journey begun in any channel can coherently progress across other channels. Consumers should experience a friction-free path where the bank understands what the consumer wants to do regardless of which channel the consumer uses.
Security is critical: several studies show consumers cite security as a nearly equal priority with functionality. Banking leaders are moving beyond two-factor authentication, which can impede a friction-free experience, to biometric authentication such as analyzing how consumers hold devices in their hands. Within a bank, a key emerging technique is micro-segmentation, which uses cryptography to create secure virtual networks where a user or application can only see permissioned applications and data.
An integrated banking experience requires similarly integrated data. Banking transactions are ultimately performed by core systems that incorporate decades of business logic and where changes mean operational and potentially regulatory risk. Transactional data needs to be aggregated into consistent views of consumers, households, and segments. Most banks have achieved this step.
Effectively engaging consumers requires going further: tracking a broad range of consumer behaviors outside of transactions, such as responses to marketing campaigns; and incorporating demographic information, such as presence of children or estimated disposable income, from third party data providers.
Bringing together a broad view of consumer behaviors and attributes enables the third key to providing banking experiences competitive with digital leaders: recognizing intent and proactively helping customers achieve their goals. This can require taking a broad view of consumers’ actions. For example, is a withdrawal from a retirement savings account just a transaction?
Or does it indicate that the consumer is funding a child’s college education, or purchasing a home? Banks can grow revenues through cross sell while winning loyalty by actively helping consumers achieve their intended journeys. Three components are needed:
1. Integrated data unifying internal and external data about consumers, households, and segments.
2. Predictive models that recognize patterns in behaviors and attributes indicating consumer intent.
3. Workflows triggered by intent including actions both within the bank’s channels, such as notifications in mobile apps or notes in teller systems, and external digital marketing such as web display ads and email campaigns.
New expectations
Consumers are starting to expect banks to go beyond just providing transactions. Surveys consistently show consumers want banks to help them save money, provide alerts, and offer tools to understand spending. This trend will continue well beyond these basic steps with banks increasingly tailoring products specifically to households, offering advice, and connecting via APIs to activities of everyday life.
The frontier in banking consumer engagement is proactively helping consumers and households optimize cash flow and balance sheets. Banks will increasingly compete not solely on providing products or customizing experiences, but on additional new value they bring to help people, families, and businesses achieve their financial goals. For example, banks can identify when households have difficulty making payments and then match appropriate offers such as providing their cars to ride sharing services, or tailoring terms on a reverse mortgage. We can also expect wealth management and tax services to increasingly merge with retail banking.
Branches will remain relevant-even important. However, their roles are changing. Banking channel studies show consumers continue to rely on person-to-person communication to open accounts, while small business owners go to branches for treasury and cash management services. Branches are shifting from providing transactions to higher value advisory services.
Branches should be viewed as part of the omnichannel experience. Digital native leaders like Apple, or even vertical brands with strong digital engagement, like Burberry or Nike, often evoke positive emotions. This can differ from the experience of standing in line waiting for a teller. Branch design and experience should also include accomplishing tasks more easily than through alternatives or competitors, connecting with other services needed for a given task, and anticipate how to actively help a branch visitor accomplish goals.
Consumer expectations are increasingly defined by experiences with digitally native businesses such as ride sharing and content streaming. These businesses win engagement because they make it easy for people to achieve a task, and integrate seamlessly internally and externally with services that together form consumer journeys. Importantly, leaders in digital engagement take a broad view of intent to actively help people achieve their goals. Banks can and must similarly engage consumers.
