Due to their unique position of trust with consumers, banks have been quick to drive adoption of digital offerings like mobile banking and P2P payments. But because of ongoing and agile competition, they must constantly reposition their services for maximum customer retention.
Banks have always held a unique and personal position of trust with consumers. But as digital services proliferate across every sector, it will become easier for digital leaders in other arenas to roll out financial services capabilities — from Uber’s in-app payment feature to Facebook’s integration of P2P payments into Messenger this March. And since 70% of consumers would bank with a company they currently do business with but which does not currently offer banking services, it is absolutely critical for banks to continuously optimize their strategy for digital success.
To address their most immediate threats, banks must look beyond the financial services sector. Many digital incumbents already offer seamless, intuitive customer experiences, and the degree to which banking options are integrated into their current services is limited only by their desire to do so.
Countering Digital Disruption
However, banks still hold a unique advantage over these would-be competitors. More than any other institution in America, banks enjoy the overwhelming trust of consumers to securely manage their personal data. The level of detail customers provide gives banks abundant data for analytics. With this, financial institutions are able to continually redefine and re-implement their service offerings to best address the changing needs of consumers on both local and global levels.
But in order to leverage this data for digital success, banks must focus on:
1) Businesswide Collaboration
For data insights to be effective, financial institutions must present a cohesive brand identity across their enterprises. While they must employ core business principles consistently, their message must be flexible enough to bend to the needs of individual markets, audience segments, and regional channels.
To encourage collaboration, banks should eliminate data silos, deploy effective feedback mechanisms, and organize teams so that that they maximize transparency and integration between similar groups — like marketing and product design — at the regional and global levels.
2) Leverage Data Against Activities
Banks should evaluate their vast troves of consumer data to quantify and optimize the effectiveness of new and ongoing activities. Through data-driven feedback, banks can tweak their phased product launches and marketing campaign rollouts to reflect shifts in audience preferences and market conditions.
For example, the way a bank launches an e-payment system — and the functions that system will provide — can vary greatly to meet the needs of a particular market and its conditions. Some consumers may be wary of digital payment schemes, especially after the recent spate of high-profile data breaches. Banks can work backwards by first understanding which functions are most valued by specific user segments, then curating features to drive the highest rates of adoption within each market.
3) Explore Value-Adds
With brand loyalty growing more fickle, banks should strive to offer a value proposition that exceeds the sum of their financial services. Partnerships between organizations that target distinct but adjacent audience segments can offer access to new and coveted user groups for both, all while enhancing the user experience.
For example, Starwood Hotels recently partnered with Uber to offer Starwood Preferred Guest members the chance to earn Starpoints for every $1 spent with Uber. Both companies heavily cater to travelers, and because 72% of the cities where Uber operates features a Starwood location, customers have an enormous opportunity to enrich their experience and build loyalty with both brands.
Marks of Engagement
Harnessing the potential of digital is a strategy easier discussed than deployed. Many financial institutions have an enormous capacity to deliver internal results, but fall short of applying digitally-driven insights to optimize initiatives and operations for additional value. Mastering the delivery of agile and transformative digital services is critical to banks’ ongoing success, and the leaders of the next decade must learn how to consistently outperform tech-savvy counterparts in adjacent industries.