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The digital customer relationship in financial service

Customer trust and loyalty towards financial service providers is extremely low and is dropping further. Massive investment in systems, products and processes hasn’t transformed the relationship with customers into something more solid and long term. Customers who experience a better - often digital – relationship, in other sectors are forcing financial service providers to improve relations, or risk losing them to others.

Banks and insurance companies invest billions in customers

Financial institutions acknowledge the importance of customers by hiring senior managers to improve the customer relationship and building (digital) infrastructure to manage relationships. Closer examination shows that the bulk of the ‘customer investments’ goes into continued development of complex financial products, sophisticated back-office and CRM systems and web-enablement of existing services and processes.

Customer trust and loyalty is still dropping

Financial institutions lose loyalty as they push more transactions towards customers and at the same time raise transaction fees. Customers see no value for money – why pay huge fees if I’m doing it myself? Negative press about continued losses and support, in combination with big bonuses continue to erode trust in the sector.  This leaves room for different banks and new types of financial service providers to enter the market – using digital platforms to launch new services at lower cost.

Investments don’t translate into solid relationships

Investments in customers have not transformed into solid long-term relationships because of a strong focus on risk management, which doesn’t leave room for creating warmer customer relationships. Online and mobile services achieve relatively low adoption rates because of the huge underlying gap between real customer needs and the tendency to push overly complicated products and processes to customer self-service.

Digital relationships impact loyalty

Internet and mobile devices have changed the usage of online banking services and have completely changed customers’ daily lives granting mobility and instant, easy access to banking services. They’ve also changed customer relationships which have become more interactive, digital and less personal. While close contact, long term relationship and more personalized advice is critical. Customers become less loyal. Customer engagement, loyalty and satisfaction are under serious pressure.

Digital interactions can change the relationship

Financial service providers should create a digital relationship with their customers and go beyond supporting online/mobile transactions such as payments and transfers. Financial tools should help customers make decisions not just support transactions. Offering a personal experience – not just personalised transactions – requires tools that help customer save, invest, spend more wisely based on their personal situation and share options based on similar customers’ choices.

Do the basics right to bring the customer closer

The relationship with customers can be improved so much by helping them to make the right financial decision in a complex, fast paced market environment – staying in touch and being available when problems occur. The success of a digital relationship is based on making banking and insurance simple -not just the app or the screen design. This requires clear products, transparent fees, timely communication and pro-active instead of reactive support.

Big data doesn't equal knowing customers

New tools make it easy to analyse large amounts of unstructured customer data but cannot be more important than understanding the customer relationship. Banks know their customers and their behaviour but don’t know their needs. Business Intelligence may encourage product innovation but understanding customer data doesn’t equal knowing customers. Banks should communicate more direct and proactive to understand customers’ current situation and anticipate potential needs.

Capitalise on relevant services

Financial services have common decision points and interactions that can make customers feel insecure or lead to process failures.  Services that prevent these common painpoints or offer easy access to solutions have greater value for customers than offering specialised services that affect only a few. Businesses that focus on life-long relationships learn about customer needs in the different phases of the customer lifecycle and ensure they offer the right service from the beginning of the contract, all the way through the changes in situation and needs that happen over a lifetime.

Become customer friendly through digital services

Digital enables service providers to scale their service and make it feel personalised and relevant, while keeping it economically viable. Technology enables the service provider to engage customers at the right time, with the right offer in the right language based on an individual’s situation and the behaviour of other customers. The success of digital is based on keeping it simple enough to fit onto a mobile screen and knowing enough about your customers be relevant and timely.