Finance and insurance aren’t like other industries. Barriers to entry are higher, regulations are more onerous, and the costs associated with missteps are much steeper. Fortunately for financial and insurance brands, they have a powerful asset in their corner: more access to customer data than many other industries.
They have likely already performed intake upon acquiring a new customer that logged major stats like age, education, occupation, income, and more. Plus, they generate significant transactional data from the movement of funds and behavioral data from visitor interactions on company-controlled channels, such as their website, social media pages, and apps.
The next step for financial brands is ensuring that data is not siloed within any one department or area of the business so that it can be holistically analyzed to identify trends and customer preferences.
The regulatory requirements and sensitive nature of the data they collect can complicate that process some, but there are a range of secure and encrypted Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) solutions dedicated just to finance for ensuring compliance while still protecting the free flow of information to authorized channels.
However they are collected and organized, those insights are invaluable when it comes time to personalize outreach in a manner that is optimized to produce a desired outcome, such as increasing sign ups for a new service or adherence to regulatory mandates.
Additionally, they provide an overview that changes in near real time. The financial stability of the customers (and even entire markets) that these brands interact with and serve, rise and fall by the day, week, and year — adaptive, digitally-empowered, data-rich brands can track those fluctuations and adjust their marketing and outreach to match them.
“Data insights are invaluable when it comes time to personalize outreach in a manner that is optimized to produce a desired outcome, such as increasing sign ups for a new service or adherence to regulatory mandates.”
The most advanced are also using predictive analytics to not just follow the trends but anticipate them, generating a competitive advantage that their more flat-footed rivals can’t match.
Machine learning and artificial intelligence platforms are no longer exclusive to the world’s biggest enterprises. Even small and medium-sized businesses can access these tools affordably and use them to analyze historical conversion data, identify their best and worst customers (and those that perhaps would welcome a well-timed offer or piece of guidance), and optimize their touchpoints to reduce friction and encourage a stronger and more lasting commercial relationship.
The Amazon Effect Comes for Finance
Despite the customer experience revolution happening all around them, banking, finance, and insurance moves at a far slower pace than many other industries.
Owing to the higher stakes for errors and the more problematic compliance issues, many brands have been reluctant to pivot from tried and true strategies and procedures of the past. But that reticence, though predicated on the important goal of building a stable and relatively predictable operation, is increasingly out of step with the pace and quality of service that modern consumers expect — regardless of industry.
Strictly speaking, the Amazon Effect, the disruptive force that next gen ecommerce has had on the retail market, may not directly touch on financial and insurance service providers, but try telling that to the customers. They don’t seem to care whether the brands they patronize and partner with have Amazon’s scale and resources, they want that level of service delivery across the board.
“Many brands have been reluctant to pivot from tried and true strategies and procedures of the past.”
Amazon made shopping a fast, easy, personalized, and incredibly responsive event, in other words, an experience, not a chore. The most innovative and fastest growing brands in the finance space are taking that lesson to heart by endeavoring to learn more about their customers, reducing complexity wherever they can in their own services, and applying modern technologies to optimize their marketing and branding and increase their engagement and satisfaction metrics.
The first signs of the Customer Experience (CX) economy starting to affect financial brands are already emerging, such as banks that are converting branches into coffee shop-style hubs of business and insurance companies developing apps for their customers to make claims mobile.
Or take the Apple Card, for example. Whereas PCs have long been valued for their customizability, Apple’s main selling point for years has been “It just works.” Their customers didn’t have to know what was happening under the hood. Everything that could be auto-configured was and the computer did most things for them.
That same ethos started a minor revolution in credit cards in 2019 with the launch of the Apple Card, which could be applied for on an iPhone with just four screens to review and three pieces of information to submit. The whole process takes under a minute in cases. Once a system like that hits the market, all legacy processes immediately look a lot older and less attractive.
That fact is borne out by recent Retail Banking Trends and Priorities studies published by the Digital Banking Report. For the last seven years, financial institutions have said their absolute top priority is “improving the customer experience.”
“The fastest growing brands in the finance space are learning more about their customers, reducing complexity wherever they can in their own services, and applying modern technologies to optimize their marketing and branding.”
They understand all too well that customer and even client and partner loyalty is not what it used to be. The switching costs have dropped, the options have multiplied, and more and more individuals and organizations are willing to abandon long standing relationships with their banks, financial planners, and insurance companies to test out something that looks more appealing, more modern, and more tailored to how they work today.
Setting the Right Tone
Right now, the amount of financial insecurity in the marketplace is both incredibly high and unusually inconsistent. Some groups have taken a major hit during the pandemic, but others have done remarkably well.
“For the last seven years, financial institutions have said their absolute top priority is ‘improving the customer experience.'”
It’s vital that financial and insurance brands know the position of the people and groups they are interacting with are coming from, and avoid actions or comments that could be perceived as insensitive or out of touch with their current circumstance. That means not trying to upsell individuals struggling to make ends meet, but rather reaching out with support and tools to get them back on track. Even promoting increased spending with incentives and promotions, a staple of financial marketing, can come off as tone-deaf in that situation.
Bear in mind, however, that no matter how in sync a brand is with its customers’ mindset and economic realities, that bond won’t excuse lapses in the experience. The customers want both: brands that act empathically and responsibly, while still performing at consistently high levels that routinely meet or exceed their expectations and even delight them.
Digital transformation was well underway before the pandemic hit, but it has acted as an accelerator. What might have taken five years to accomplish occurred in less than one, and now that the steepest part of the learning curve has been surmounted and the majority of finance and insurance brands have made their pivot to a digital-first and CX-focused mindset; there’s no going back.
Hanlon is deeply experienced in helping a wide range of financial and insurance brands connect with their customers and stakeholders. Get in touch to learn how we can elevate your brand.