Karen Wheeler, Vice President and Country Manager UK, at Affinion
In the financial services industry, churn rates are staggeringly high, with some companies as large as 25-30 per cent. Retaining customers is particularly challenging for organisations like credit card companies, insurance agencies, credit unions and banks that can’t offer fixed contracts. In the banking industry, there’s no shortage of options for customers who are no longer limited by location but can shop around online and choose whichever bank or organisation attracts their attention.
With growing competition from challenger banks, new technologies can help some of the traditional players enhance their customer experience and keep up with the disruptors. However, while 89 per cent of marketing decision makers believe that emerging technologies play a critical role in developing an engaging brand experience, they struggle to identify which ones to implement. Instead they are confused about whether the latest innovations will actually serve to increase customer engagement.
We believe there are five new tech trends which will help financial institutions to strengthen their customer engagement in 2019:
- Internet of Things (IoT) – this technology is a disruptive force across all organisations in all sectors. According to Gartner, by 2020 there will be 26 billion connected devices. Cisco predicts there will be 50 billion, Intel suggests 200 billion, while the IDC says 212 billion. Whichever is right – these are phenomenal numbers, and furthermore, in terms of business opportunities, we’re just scratching the surface. Only 0.06 per cent of all devices that could potentially leverage IoT are doing so, while of the businesses who are using IoT, 94 per cent have already seen a return on their investments.
So, what will this mean for the financial services industry? IoT technology makes it possible to connect with digital-savvy consumers in a relevant, contextual and meaningful way by linking up people, processes and things. IoT platforms provide immediate, actionable insights so businesses can respond to customer needs in real time, and also provide behavioural insights which can be used to create superior customer experiences in the future. For example, digital sensors can be placed in bank branches and ATMs to analyse consumer behaviour and report unexpected customer problems and service issues.
By using the data collected from sources like mobile apps, banks can launch better and more targeted service offerings. Some are now exploring how remote devices like Amazon’s Alexa and wearables can conduct more banking services, starting with simple actions like balance check and transaction history.
- Automated financial analysis – self-learning algorithms can mine data, recognise patterns and use natural language processing, allowing them to discover significant insights, patterns and relationships across data. This can then be deployed to support any customer service channel – for example, helping live agents during calls or interacting with customers directly through chatbots on digital channels. This increased efficiency should improve the quality of the customer service experience.
- Virtual engagement – virtual reality (VR) and augmented reality (AR) play an integral role in bringing products, solutions and services from digital platforms into the hands of customers. It can enhance the customer journey and buying process by offering consumers a more natural, immersive and connected experience.
The Commonwealth Bank of Australia and Halifax now offer “home finder” apps that use AR technology to allow users look at data on houses for sale as they pass them. Another example of the banking sector using AR technology is the National Bank of Oman which now allows customers to locate a nearby ATM or branch as well as find offers and deals while walking around a shopping mall or down the street anywhere in Oman.
- Hyper-personalisation – The rate of data creation is ever increasing, in the last two years alone, 90 per cent of the data in the world was created. This vast amount of data provides huge opportunities for marketers to ensure every interaction is as personal and beneficial for the customer as possible. Financial organisations must go beyond simple details such as age, income, or balances, and show that they really understand their customers by personalising marketing to match past purchase behaviour, social interactions and lifestyle preferences. Rather than flooding customers with a barrage of poorly timed, irrelevant offers and messages, businesses are now readily using sophisticated algorithms and predictive models to analyse transaction data, behavioural insights, previous interactions and preferences to better market their products to customers when it matters most.
Monzo is a good example of a bank changing the personalisation game. The challenger analyses customer transaction data, enabling it to offer financial advice based on regular spending habits. If a customer’s energy bill increases, Monzo can suggest moving to a cheaper supplier or will identify other ways to save money to provide a real value-add for their customers.
- Data security – more than ever before, organisations must show that they understand their responsibility to protect customers’ sensitive data, and the failure to do this would result in lost customers and revenue. As well as ensuring robust data security of their systems, businesses must also ensure that interactions with customers over digital channels are secure and trusted. As a consequence, many financial service companies are bringing in biometric security which uses the unique characteristics of a person, such as voice and retina pattern or fingerprint.
These five digital trends have the potential to completely transform the customer experience if implemented thoughtfully. Innovative technology is only worth pursuing if it can provide a true value-add to the end-user and isn’t just a gimmick. To find out more about how technology is set to transform customer engagement in 2019, read our 5 Tech Trends Shaping the Future of Customer Engagement eBook here.