How financial services can respond to evolving consumer behavior
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Understanding the nuances and variations in how consumers choose to use online channels is important in the rush to digitize financial services. There are however some commonalities which all financial services brands should consider:
Despite significant investment from banks in digital and customer systems, 35 percent of Indian consumers still feel that their bank does not know or understand them and more than a third (35 percent) do not feel they receive a high level of personal service. Indeed 39 percent cited banks’ inability to handle complaints well as a reason for not feeling loyal.
Personalized and consistent communications, rewards and service regardless of how customers choose to interact with a bank is important for the affluent middle class globally.
Our research has found that customer engagement improves by a third among individuals who ‘feel understood’ by their bank and a further third for those who say they receive a seamless multichannel service – whether in person, by phone or via digital channels.
Recognition and reward:
Our research found that not being rewarded for loyalty is the biggest frustration for affluent middle class consumers, cited by two thirds of respondents globally, ahead of poor interest rates and charging unnecessary fees.
Many banks offer standardized, purely transactional loyalty programs which rely on traditional points-based rewards and lack the emotional appeal to build loyalty. Optimizing digital channels to modernize how customers are recognized and rewarded is the key.
Choice of reward is important in boosting loyalty:
We are seeing companies in other sectors offer a wide range of rewards and options for consumers to choose what value they derive from a brand relationship. This could include a breadth of offering from concert tickets to unique, money can’t buy experiences, which appeal to the changing motivations of mass affluent consumers.
Some banks still tend to think of rewards which relate to other financial services or points-based programs. Experientialists “live for the moment” and expect brands to offer unique experiences to maintain their interest. Meanwhile the Prudent Planners appreciate rewards which they can share, which offer longer term gain and which can also be extended to their family.
The younger generation in particular displays emotional motivations that are altruistic and believe that brands should take action to show wider social responsibility. Offering charitable redemption offers appeal to this audience.
A well put together and effectively delivered digital experience has real potential to offer immediate rewards to valued customers and a common perception is that many current loyalty programs make it hard to earn enough points to access the best returns and that redemption processes are too complex.
Giving customers greater flexibility in how they access rewards will enhance the experience and differentiation of a program. For example, enabling consumers to pay with cash, points or a combination of both and offering mobile wallet style services allows for accessible and convenient redemption.
Many financial services brands do not have a platform which enables this degree of flexibility and rethinking systems to offer this approach can greatly improve engagement and loyalty.
Social media and mobile services encourage an ‘always-on’ attitude and mean consumers continually expect fresh content from reward programs. There is an opportunity for card providers to offer real-time, tailored promotions and redemption at the moment of purchase online and in store.
This boosts customer loyalty and offers brands the opportunity to build greater connections with their customers. In return, financial service providers can track spend, understand who their best customers are, and motivate behavioral change. This can be jointly funded by merchants who benefit from increased footfall.
Customers realize value from frequent use of their bank card, and the perceived value of the loyalty program is greatly increased. Smartphones, apps and digital experiences are highly valued by "Mid-Life Modernists" and offering promotions and price comparisons via mobile devices, particularly those that can benefit a whole family, is an effective way to engage with them.
If financial services brands address the points above, there is a real opportunity for the mass affluent consumers to become powerful brand advocates. Our study found that the affluent middle class is willing to reward organizations that cater for their personal motivations, and financial firms can cater to these at various points of customer interaction as long as there is value exchange for customer participation.
Nearly three-quarters (72 percent) are willing to make a repeat purchase from a brand they feel loyal to, 70 percent would recommend that brand to friends and family and 53 percent will choose a particular brand even if it is more expensive – directly impacting the bottom line and driving customer loyalty.