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Consumer Habits Are Shaping the Future of Banking

  • by Steve DuPerrieu, CSI Vice President of Channels and Analytics
  • Apr 12, 2018

How do financial institutions effectively prepare for the future when they don’t know exactly what the future looks like?

While industry analysts may not be able to paint an exact portrait of the future, they can use data to identify trends in evolving customer behavior. Alyson Clarke, a principal analyst from Forrester, says her research indicates customers are more empowered than ever, giving rise to a new era that the firm calls the “Age of the Customer.”

“Customers, because of their connectivity through smartphones and other devices, hold the balance of power in the relationship now,” Clarke says. “The institution no longer determines where a customer can interact with them or where they can get information.”

Know These Key Consumer Trends

Forrester has uncovered trends in five key areas that elaborate on the current wave of customer empowerment:

  • Willingness to Experiment: Customers of all ages are showing an increasing appetite to try new technologies and new things, which is speeding up new technology adoption rates.
  • Device Usage: The number of devices connected to the Internet outside of computers and smartphones, such as smart homes, is growing considerably.
  • Digital/Physical Integration: Customers want to combine digital and physical experiences. Even businesses that were born digitally, like Amazon or Warby Parker, are starting to branch out into physical locations because of their importance in connecting with customers.
  • Information Savviness: Retail customers are consuming information from businesses at a much faster rate. They want to know prices, features, etc., without having to jump through hoops.
  • Self-efficacy: Customers want to make sure they are going to benefit from business relationships. For example, they want to know that a financial institution can improve their financial life just as much as wanting to know that institution’s products, features and prices.

According to Clarke, many financial institutions aren’t ready to meet customers’ new expectations, and digital disruptors like Amazon Alexa and Google Home are beginning to drive a wedge between them and their customers.

“Digital disruptors are starting to curate services and drive compelling experiences for customers that are pushing institutions further into the background and making them invisible,” Clarke says. “This makes it easier for customers to eventually leave if they are not seeing value above the products.”

Dealing With Changing Customer Expectations

Institutions that excel at customer experience are growing at a much faster rate than their peers—and their success is fueled by five distinct strategies:

  1. Develop Customer-obsessed DNA: Stop thinking about where your customers are now, but what their needs will be in the future. Your institution can accomplish this by turning big data into actionable insight, as well as forming collaborative, cross-functional teams that are focused on your customers and their needs.
  2. Follow Your Customers: Customers are more likely to be found in their homes, on Facebook or many other digital platforms that aren’t your mobile app. Conversational interfaces like Apple’s Siri and Facebook Messenger will enable more personalized experiences. Your institution will need to assess how your products and services fit into these conversational platforms to serve customers—no matter where they are.
  3. Blend Human and Digital Interactions: Believe it or not, prospects and customers still seek human interaction in many situations, so self-service isn’t always the answer. Try blending human interaction with digital enhancements. For example, integrating live chat with your mobile app to personalize customer interactions.
  4. Use Data to Personalize Customer Experiences: Personalization is an experience that uses customer data and understanding to frame, guide, extend and enhance interactions. Use data to help your customers uncover a financial need before they even know they have one.
  5. Collaborate to Create New Value for Customers and Your Business: Shifting your mindset from technology-first to customer-first will prepare your institution for the future, no matter what new technology is on the horizon. Institutions that think about offering an experience that goes far beyond buying a product have customers who will stick around. 

Steve DuPerrieu is vice president of channels and analytics for CSI. In his role, he provides leadership for CSI’s delivery channel strategy, which includes digital banking, payment services, business and analytics software, and branch/retail delivery solutions. Steve is also a board member for the Association for Financial Technology (AFT).