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Sana Carlton, Managing Director,Banking and Finance Sector at Millward Brown

The financial services providers growing their value in the tough global market are not necessarily the ones telling consumers how trustworthy and relevant they are. They’re the brands putting the customer experience at the centre of everything they do.

Consumers have different expectations of financial brands today, and interact with them in new ways, in particular the millennial generation. Raised in a digital world, they’re open to making payments through social networks or buying a loan from a new name found on an online comparison site. They want convenience, but they also want a relationship with the company that provides their current account or payment service. This has made the brand experience – the way a provider delivers its services and engages its customers –as important as what it offers.

Millward Brown’s BrandZ research shows that growth in brand value is driven by consumer perceptions that a brand is innovating in ways that will improve their lives. Consumers need to feel and see the innovation in every aspect of the brand experience; regardless of whether they’re interacting with it on the high street, online or on a mobile device. When they do, this builds brand love. ‘Love’ isn’t a word traditionally used much in the context of finance, but providers need to start thinking in this way because this is what builds predisposition to buy the service or product.

So far, established banks and financial services providers are behind the curve on creating the convenient, secure, and straightforward experience consumers demand. It’s the disruptors – new challenger banks such as Mondo in the UK, fintech start-ups, and brands from other sectors such as Apple, Tesco and Amazon – that are blazing the trail.

They’re using technology to create meaningful functionality that appeals to and builds stronger relationships with target audiences. This could be by improving existing products, launching a savings account with a higher interest rate for instance, or providing new credit options such as micro lending.

Frictionless finance

The provision of innovative, seamless mobile banking services plays a critical part in enhancing the customer experience. Online and mobile platforms are shaking things up in this area, particularly with the simpler and more straightforward transactions that used to be handled by traditional banks.

PayPal, for instance, has made the purchase process as easy as it could possibly be by eliminating the need for shoppers to input their card or bank details.In Africa, which lacked a solid banking infrastructure, telecoms companies have stepped in to offer mobile payment services and savings products. Retailer Alibaba’s AliPay is now one of the main ways people make purchases in China, where the difficulty of transacting business at traditional banks has also inspired social media providers to get in on the act. Internet portal Tencent has made it possible to send money through its popular WeChat messaging platform, for example.

Mainstream banks should aim to get in first with digital services and utilities before they’re ‘picked off’ by fintech companies. Regulations and licensing requirements may create a high barrier to entry for now, but this won’t keep the challengers at bay forever. Banks have an opportunity to leverage the vast amounts of customer data they hold to create highly relevant new products and services that meet consumers’ evolving needs.

Big data, big advantage

Millennials, who are less receptive to marketing, expect to be approached in a relevant and non-intrusive manner.Successful providers of financial services are harnessing big data and social media to personalise marketing based on consumers’ lifestyle changes or recent search.They use data analytics to understand what customers are looking for, and engage them with appropriate products, deals and communications at just the right time.

Retail and ecommerce brands are perfectly placed to do this – they have the rich data, and they have the infrastructure already in place to respond, sending targeted messages and ads to consumers based on their life stage. If someone is buying baby clothes online, for example, they could be offered life insurance or a car loan, which are often purchased around the same time as the arrival of a new baby.

One mainstream bank that excels in this area is South Africa’s Absa Bank, currently a division of Barclays Africa. It is using historical transactional data to drive a predictive service that alerts customers when they’re at risk of overdrawing their account, based on their specific habits and payment obligations, and offers personalised options such as speaking to an advisor. In the pilot almost a third of alerts sent resulted in product applications, while 60% of customers took action to better manage their finances.

Cultivate brand identity

Consumers have a lot of banking choice. Brands that can create a point of differentiation and develop a distinct ‘character’ will stand out amongst their rivals. To appeal to and cultivate the younger customers that are the key to future growth, a financial services provider must demonstrate through the experience it delivers that it understands and shares young customers’ aspirations and values, as well as hiring younger talent that they can relate to.

Fintech start-ups, which have the latest technology at their fingertips and the agility to respond fast to changing needs, often have the upper hand here. They feel exciting and innovative to work for, whereas banks’ reputation problems can hinder their ability to win the war for talent.

Traditional banks should respond to the challenge by replacing outdated infrastructure, gaining technology and creative expertise through the acquisition of fintech companies, and initiating programmes that match millennial goals and values.J.P. Morgan, for instance, allows young workers to spend a portion of their time helping non-profit organisations. In the UK, Barclays has developed its online LifeSkills resource to help young people gain the practical knowledge needed for success in the workplace.

Local focus

To be chosen by the customera financial provider’s brand experience also needs to be relevant and consistent at a local level. Smaller local challengers are successfully taking market share from mainstream banks by providing the functionality and value that consumers seek. Proximity to their target audiences means they understand the market better, and can respond more quickly and in highly meaningful ways.

Identifying and embracing a local cause isan effective way of connecting with consumers. In response to increased urbanisation and poor public transport in Brazil, for example, the bank Itaú launched an integrated bicycle hire system that is available across the big cities, making everyday life easier for people who live there.Global financial brands must keep a close eye on local competitors; those that don’t will be left behind.

Currently, traditional financial services players are losing the battle for consumers’ love, and this has had an impact on their brand value: global banks lost 11% of their combined value over the last year, according to BrandZ data, and regional banks 12%.

Banks can hardly be blamed for their lack of agility. They’re under a great deal more scrutiny than their fintech, ecommerce, telecoms, retail and social media rivals, and are bogged down in a branch-based structure. Legacy infrastructure makes it difficult to take the technical leaps necessary to meet customers’ needs. Rather than feeling threatened, however, mainstream banks should grasp the opportunity to improve the customer experience by increasing their attention to brand building, and fully harnessing the customer data they hold.

Many are already making successful strides in the right direction. In the UK, Santander has successfully fought back against start-ups with a strategy that involves offering very relevant discounts to persuade people to switch accounts. RBC, Canada’s largest bank, has responded well to the disruptor challenge with the instruction of mobile banking services, including mobile wallets, that are used by two million customers each month.

Improving the brand experience is worth the effort. Alongside rebuilding trust and relevance with consumers, strong brands that people love deliver better value to shareholders. They’re also more resilient, able to sustain their value and reputation in the face of sector turbulence – whether that involves a crisis, disruption or a change in consumer behaviour. That’s something which should be a priority for every bank.