By John Fleming
Businesses in every industry are becoming digital operations and banking is no exception. The amount of data held by the average bank is enormous, from the average salary of a public sector worker right through to specific information such as how much women aged 25 are spending on holidays in May, theoretically banks have a wealth of insight into their customers.
The unique opportunity for financial marketing
The information available at their fingertips, coupled with the trust and loyalty customers have to them, gives banks the opportunity to revolutionise their customer marketing efforts.Research from Webtrends found that more than a quarter of consumers would open emails sent by banks and financial institutions (27% stated they open emails from these organisations). The way customers interact with financial brands is changing to span both offline and online channels, which offer very different engagement experiences. Customers connect with their banks at their branch, but may also be having additional experiences with the brand on social media, smartphone apps and the company’s website. With so many touch-points available to customers, it can be difficult to track their data and turn it into genuine customer insights.
To use customer data to the greatest effect, financial marketers have to understand how it plays to their needs. The staggering amount of data available, coupled with the time and resources it takes analyse and act on it, can make data-driven marketing seem a daunting task at first. But this need not be the case.
How banks can make their data work for them
Rather than simply measuring activity on a bank’s website, marketing departments are now looking to find a holistic view of customer acquisition, engagement and retention across all digital channels to provide invaluable insight into campaign planning.
The data that is generated by customers simply using their banks provides insight on both a macro and micro level. Big data can identify trends to inform campaigns, e.g. professionals aged 25-35 in the UK are often in the market for a first-time buyer mortgage. By drilling down into an individual’s habits, it’s now also possible to tailor effective marketing to customers on a personal level.
Flags such as age, gender and income level, can be set up to alert a financial marketer that a customer is likely to be going through a certain ‘life event’, so they can be targeted with products that may resonate with them at that stage of their life. To increase the effectiveness of the marketing, banks can look at the person on an individual level and deliver a highly targeted experience – increasing the likelihood of conversion rates through timely and relevant offerings.
This also saves costs. Instead of mass-mailing credit offers to customers who may not be looking for a credit card, marketers can instead target relevant offers to customers. The less targeted and less relevant your marketing is, the more your promotions are going to be ignored; it’s simply not a good use of marketing spend. Adapting your focus to lifestyle marketing – major life events such as customers buying a house or setting up accounts for their college-age children – is the most powerful way to market to customers.
These real-time triggers can be used to further encourage sales. When a customer starts to look at personal loan information,marketers can respond immediately with relevant information and offers. Leading banks are using insights into what customers are doing at the exact moment of engagement – such as which offer or link they just clicked on, along with knowledge of what they’ve done in the past – such as their historical usage data and/or offline actions stored on a CRM solution, to deliver tailored cross-sell or up-sell offers while the customer is still on the site.
Going the extra mile to keep customers
Customer relationships are at the heart of banking, but in this digital age, that no longer means only face-to-face interactions. Fundamentals such as deposits, loan origination and wealth management all have moved online, changing the customer relationship dynamic.
Digital channels can support and nurture these relationships. Banks should regularly test their online content to find what’s most compelling and what drives the highest conversion with whom. It’s essential to put the customer database to use and target relevant content to the correct customer segments. Every customer interaction with their bank either build reputation or chip away at it. To succeed, banks need to deliver a consistent, valuable experience, no matter how customers ask for it, across all marketing efforts, all channels and throughout the customer life cycle.
For example, did a customer researching student loans start browsing interest rates via their mobile phone on the bus before researching their options in more detail on a computer at home? Did they start the process online and finish at the branch? The best way to personalise marketing to this customer is to get data from all digital properties and interactions to fully understand their intentions and experiences, which can be used to inform and guide an integrated marketing strategy.
Solutions should combine technology and expertise to reveal what customers want, and deliver personally valuable content across any digital channel, at any point in their journey. Fortunately, these tools now exist and are becoming more robust. For instance, by marrying historically separate online and offline data, bank marketers are able to join web data and sales to fully understand customer behaviors. It’s now possible, with true detailed segmentation, to answer questions such as which marketing campaigns attract customers with higher average savings balances. The ability to see every click at the customer level allows banks to know whether customers start an application process from links on the homepage or a particular product page, as well as know response rates to marketing content, again at an individual customer level.
Once you establish your brand as one that provides a personalized experience during every interaction, be it in a branch, or online in any combination of smartphone, tablet and computer, you’ll generate more customer loyalty – and more conversions.
John Fleming runs EMEA and APAC marketing for Webtrends and is a seasoned multi-faceted marketing director. He is responsible for devising marketing strategies for the region, delivering marketing campaigns to generate revenue as well helping to develop the Webtrends vision.
With over 15 years as a senior marketer, John is also a technologist with a keen interest in understanding how new technologies can be used within marketing. With a proven track record of growing marketing, John understands that marketers need to be key leaders in a business. “Marketing has earned its seat on the board. Marketing is now a much more strategic role, which spans all areas of the business and helps drive overall business success.”
John has worked within large organizations such as Sun Microsystems, Motorola and 3M, is an active member of the CMO council, has written many white papers on the role of marketing and technology, and has spoken at numerous high profile events.
For more than 20 years, Webtrends has helped companies make sense of their customer data to drive digital marketing success. By combining innovative technology with our team of trusted and creative advisors, our solutions are designed to provide actionable insights, increase customer engagement and boost revenue.
We partner with companies at all levels of digital maturity and offer solutions in measurement and optimization. We work closely with approximately 2,000 global brands including Microsoft, KLM Royal Dutch Airlines, Kimberly-Clark, HSBC, Marks & Spencer, npower, BMW, Toyota, The Telegraph, Lastminute.com and many more.
Open Banking: the perfect pandemic tool – Equifax comments
With COVID-19 related financial fallout set to dominate the credit landscape in 2021, Dan Weaver, Open Banking Expert at Equifax UK, believes Open Banking solutions can provide lenders clarity in a sea of uncertainty:
“With lockdown once again in place across the UK, it’s clear 2021 will be a year of extreme financial flux. While the vaccine roll-out programme will provide an economic boost and eventual easing of restrictions, forbearance measures, such as mortgage holidays and the government furlough scheme, will be wound down. This will lead to income shocks for many, and the potential for a nationwide surge in personal debt.
“With the third anniversary of its implementation today (13 January), Open Banking is entering a new mature phase of its development. The initiative’s credentials are now widely established, offering creditors the perfect pandemic tool to assess the most accurate picture of an individual’s finances.
“Consider someone who has just returned to the workforce after being made redundant or placed on furlough. Traditional credit bureau or legacy data alone would not always provide potential lenders with the most up-to-date information on their current financial circumstances and ability to repay credit at the point of application. Open Banking platforms, through customer consent, pull live data directly from the user’s bank account, allowing creditors to make an informed, responsible and fair decision about their current affordability on the most recent data available – a game-changing factor amid such widespread financial upheaval and rapid change in people’s circumstances.
“Open Banking is a tool for our times and it’s vital more credit providers, not just big banks and finance but utilities, insurance, auto and telcos companies, accelerate its adoption. Throughout our society and economy in the past year, we’ve witnessed feats of great innovation, executed at rapid speed. In 2021, we need to apply this transformational energy to the Open Banking landscape, slashing the time it takes for creditors to test protocol and fully set up their solutions.
“Three years after its arrival, we’re seeing Open Banking platforms improve digital, real-time income verification rates by more than 25% * – which is no mean feat. If an industry-wide, mass acceleration strategy was successfully achieved in 2021, it would prove extremely valuable and timely, and lead to better customer and creditor outcomes throughout the credit space.”
Over a quarter of Brits now have an account with a digital-only bank
The number of Brits with a digital-only bank account has gone up by a percentage increase of 16%
Almost 1 in 6 Brits (17%) plan to open a digital bank account over the next 5 years
The top reason for opening an account was the convenience of banking online for the third year running
However, 16% of traditional banking customers who aren’t planning to switch said their bank had been helpful during the COVID pandemic
Currently over a quarter of Brits (27%) say they have at least one bank account with a digital-only bank, according to personal finance comparison site finder.com.
This is a percentage increase of 16% from last year when 23% of Brits said they had an account with a digital bank. It is also over 3 times the amount of Brits who had one in January 2019 (9%).
Finder’s 2019 research found that 24% of Brits intended to have a digital-only account by 2024. However with 27% now having an account, Brits have gone digital 3 years earlier than expected.
A further 17% of Brits intend to join them over the next 5 years, with 11% planning to do so over the next year. This could mean that 44% of Brits could have an account with a digital bank by 2026. If this percentage were applied to the UK adult population, it would equal almost 23 million people.
The top reason for opening an account continues to be convenience that digital-only banks provide, for the third year running (26%). The second most common reason was that users needed an additional account and setting up a digital account seemed to be the easiest option (20%). Customers also wanted to transfer money more easily (19%), making this the third biggest priority.
People wanting a trendy card is still driving signups as well, with 1 in 10 (10%) existing, or future, customers citing this as a reason to get an account.
Despite the increase in digital-only banking customers, the numbers who aren’t considering one have actually risen. Last year, 23% of respondents said they aren’t considering a digital-only bank account, but this has risen substantially to 42% in the latest survey.
This is likely a result of increased customer loyalty, 58% of those without a digital bank account said they felt as though their incumbent bank had treated them well and therefore had no desire to open a digital bank account. Additionally, 16% felt as though their incumbent bank had performed particularly well during the pandemic.
Over a third (36%) of those without a digital bank account said they had not decided to bank with digital providers because they preferred to be able to speak to someone in branch.
Digital banks are still most popular with younger generations, 46% of gen Z say they currently have a digital bank account, with a further 28% intending to get one over the next 5 years. This would mean that by 2026 just under three quarters of gen Z (73%) could have a digital bank account.
To see the research in full visit: https://www.finder.com/uk/digital-banking-adoption
Commenting on the findings, Matt Boyle, banking specialist at finder.com said:
“This research shows that digital-only banks are here to stay, with the number of users in the UK rising for 3 years straight. On top of this, Starling and Revolut announced this year that they have made a profit for the first time, really demonstrating that digital banks are starting to become a serious part of the banking furniture.
“The pandemic has also played a role in the rapid digitalisation of the banking industry, with those who had never experienced online banking having no other choice but to take their finances online. It seems that Brits are starting to realise the convenience that can come with digital banking and this is reflected in our research.”
Finder commissioned Censuswide on 6 to 8 January 2021 to carry out a nationally representative survey of adults aged 18+. A total of 1,671 people were questioned throughout Great Britain, with representative quotas for gender, age and region
The Impact of the Digital Economy on the Banking and Payments Sector
By Gerhard Oosthuizen, CTO Entersekt.
New banking regulations, digital consumers, the eradication of passwords, contactless technology – these are just some of the trends that will shape financial services and payments in 2021, writes Entersekt CTO, Gerhard Oosthuizen.
Since the outbreak of COVID-19, traditional businesses have been compelled to further undergo the digital transformation to meet the needs of a consumer base largely confined to their homes. Indeed, we estimate that there has been a 30% growth in the digital space. With this acceleration towards a digital world, banking, transacting and payment trends have and will continue to be redefined into 2021.
We have witnessed a rising number of digital first timers. That is, people signing up for online banking and e-commerce, whilst progressively shifting away from traditional channels. Businesses that have previously depended on walk-in stores and having a physical presence have also had to recognise that online transactions are now the new norm, and to adjust accordingly.
Whereas in the past, registering a customer for a service could take place in a shop, a booth or a branch, today it has become more important than ever to have a remote digital registration option available as well. Even working behaviour has changed considerably, with many businesses accommodating for remote working in the long term.
This is what sets the scene for 2021 – people expect to work from home as well as carry out their transactions from home.
Banking and Payment Trends in 2021
The use of contactless technology is undeniably growing, but on top of more people tapping with their cards, we are also seeing much more engagement with QR payments. A technology already frequently employed in Asia, we know QR codes can work. It would enable consumers to authenticate themselves when making a transaction without needing a PIN pad. More importantly, it allows consumers to gain complete control of their transactions from their own device and have an overall richer experience. Recognising this, we anticipate noteworthy developments in QR and NFC-enabled tap and go payments over the next year.
In light of FIDO (Fast Identity Online) and the ever-expanding network of FIDO-compliant solutions, we also expect the emergence of entirely passwordless systems. Organisations will likely begin enlisting customers by way of biometric authentication through devices and digital identities that already exist, such as banking apps. Long gone will be the days of having to remember numerous passwords, only to forget and reset them again. That is the idea anyway.
In 2021, there will probably be a pronounced adoption of delegated authentication as well, whereby
merchants as opposed to traditional issuing banks will take the reins of authenticating e-commerce payments. In this way, consumers will be offered a greatly improved online shopping experience with a simple and intuitive checkout that acts as an extension of the retail brand.
The Challenge of PSD2
While each of these transitions will undoubtedly introduce growing pains, PSD2 will be among the most challenging. Europe is already going through PSD2 now, implementing a number of regulations that is opening up competition in banking and electronic payment services. However, on the 1st of January 2021, these regulations will take a legal effect. At the end of the first quarter, so too will another set of regulations concerning 3-D authentication of card-not-present payments. Europe is simply not prepared to make this leap into “open banking”. As such, banks will face a tough year of struggles with regulators and competition from non-traditional quarters.
In fact, the process towards becoming PSD2-compliant is often arduous for banks and recoups hardly any additional revenue. Many banks see it as a competitive disadvantage as they are being forced to open up their systems and processes for the likes of Google, Facebook, Apple and many smaller niche fintech operations. Their valuable client data risks being taken by a challenger and used to on-board their accountholders.
Regardless of the commercial opportunities that open banking may provide, fraudsters will also endeavour to take advantage of this change and the weaknesses that will appear as systems open. With money moving faster, the faster it can be stolen too. We will likely see some reaction to this in 2021 as fraud returns to being a top priority for banks. Yet, whether through regulatory pressure or by market forces, open banking will become the new normal – and the world needs to prepare for this. Hopefully, many lessons will be learned from Europe’s experiences in 2021.
Next year is going to be about change – and managing that change without alienating already unsettled consumers. Organisations that have customer experience top of mind will emerge as winners, but they must nonetheless expect additional pressure from regulators, new competition, ever more digitally-demanding consumers, and no slowdown in technological innovation.
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