Banks, advisors and investment firms failing to find the big ‘windows’ of client needs

Clients and compliance are pushing financials to find them

There is an onslaught of ways financials  are actively rethinking how they engage and add relevance to their customers throughout their financial journey. When, where and how are financial firms aptly finding the ‘windows’ of relevance in their customers financial lives? The windows that I’m referring to are the few times that call for a financial firm to offer a solution to a need. While there are many immediate needs, payments being a large one, key products are largely focused on major life events: college loan, mortgage, equity lines, retirement, insurance, etc. How should banks proceed?

One way is being at the forefront of communications and interaction with their clients. The ABA’s (American Bankers Association) banking channel survey found 26% of consumers use mobile for banking and collectively 73% of all consumers use digital channels (internet, mobile & ATM) versus the branch. The idea of relationship banking, while still important, is only one facet of what is needed.

This highlights why the data-driven, omni-channel, branchless, kiosks, advisor models are all being examined and re-thought to support client-centric digitalization strategies. Certainly, there are lots of ways that these channels can help, but are they adding up to find the major windows or financial moments in a person’s financial path? I don’t think the industry is remotely close to unifying these touchpoints to make this happen. There is a gross mismatch between client behaviors and synching those with financial marketing and sales efforts.

Further challenges, for banks, are coming from regulations such as the General Data Protection Regulation (GDPR) and Revised Payment Service Directive (PSD2) in the European Union, which are ushering in new data access policies. These mandates are rewriting the exclusive control financial institutions have on their customers’ financial data. This opens the door for fintechs and larger digital natives (Google, Facebook) to offer financial services. Additionally, these tech companies have exponentially more depth into a consumer’s behavioral profile and life journey – Facebook doesn’t have to guess when you’re likely having a baby or looking to remodel your home.

Let’s look at one window. It’s now been 3 years since my 10-year opened his first bank account. We laud his savings progress and he looks forward to the bank’s youth account incentives (achieving higher balances could land you a McDonalds gift card) and birthdays rewards (another $5 deposited as a gift.) One looks at this as a great customer-centric offering that helps – and it is. However, my view is that before, during and after events were missed. During the process of opening the account, I was never asked about my own bank account – no teasers or incentives have come in the mail or email as they should know I do not bank with them. I’ve also got a little over seven years to get college savings in order. Let’s not forget my son may also need a car during high school, which may require some lending assistance.

The net is a youth program, additional net new accounts/deposits, financial planning/college 501 solution, and a future car loan perhaps. That’s three to four products that I don’t even know if the bank offers or I’ve been asked about, not once. And we frequent the branch to make their deposits, which is an extremely uncommon destination for us or, as the numbers suggest, anyone these days. This represents one of many extremely common stories across the consumer financial market. The customer journey and lifecycle are all but dependent on the consumer making the outreach into a very confusing landscape of options. Digitally native retailers are good examples of firms that are moving rapidly toward making sure that the most appropriate offering is served to you – removing barriers that exist between you, your life and what you may need or seek.

The payments and credit industries are good financial segments working hard to remove the friction to exchange funds for anything you need. They are also using the data to inform other stakeholders, such as merchant clients who can determine the best windows of opportunity to offer deals/incentives. Yes, they deal in a much more real-time, data heavy environment, and my example is really about these slow windows that open and close on a bank. Though, the ‘crumbs make the loaf’ and the combination or larger product insights with recent transactional histories tell a more complete story or offer the signals before these larger windows open. The best examples are from retail. A classic example is Target’s ability to understand consumption patterns that signal when a major event is near. They were too good in fact, if we remember the 2012 case of how Target figured out a teen girl was pregnant before her father did. They can see the larger windows on the horizon, whereas banks seem void of any future digital data crystal ball.

These windows are critical to growing a client relationship. A recent Bain article highlighted how consumers in the UK change their primary bank only once every 15 to 20 years on average, based on data from the UK’s Competition and Markets Authority. Yet, while an individual will own 8-12 financial products, only a quarter of those are with the same bank. It is no secret of the profit impacts in financial services to cross-selling at the right time.

Getting there requires the assistance of more data-rich repositories, access, analytics and automation features to assist the customer facing teller, lending agent or bank/branch marketing manager. When, where, and what to emphasize isn’t exactly rocket science for the basket of major consumer financial product staples. Sifting and stitching together the views to see those windows is.