Karen Wheeler, Vice President and Country Manager UK, at Affinion
In retail banking, customer retention is increasingly challenging. There is no shortage of competitors vying for customers and the internet has meant that traditional limiting factors such as branch location are no longer an issue. Switching bonuses are rife and if someone has a poor experience or encounter with their bank, insurance or credit card company, they can simply switch providers at any time. The BAI Banking Outlook suggests that 70 per cent of consumers could be convinced to switch their financial services provider if a superior digital alternative was on offer, demonstrating that retail banks are at risk of losing significant business.
Our Connected Customer research has shown that emotion plays at least as large a role as logic in purchasing decisions, so if customers can be emotionally engaged they are more likely to stay with a company and become advocates, recommending the brand to their friends.
The big question therefore is how to create an engaging brand experience – 89 per cent of marketing decision makers believe that emerging technologies play a critical role in this but they struggle to know which ones to implement. There is a lot of buzz around new technologies but cutting through this and identifying which tech trends to employ and which to ignore is far from easy.
We believe that some of the new technologies on the horizon really do have the power to help traditional organisations keep up with the disruptors and enhance their customer experience. Here’s our shortlist:
- Internet of Things (IoT) –IoT technology makes it possible to engage with digital-savvy consumers in a relevant, contextual and meaningful way by linking up people, processes and connected devices. IoT platforms provide immediate, actionable insights so businesses can respond to customer needs in real time, while providing behavioural intelligence which can be used to create superior customer experiences in the future.
According to Big Data Analytics, more than 40 per cent of financial companies are already experimenting with Big Data and IoT. For example, digital sensors can be placed in bank branches and ATMs to analyse consumer behaviour and report unexpected customer problems and service issues. It can help them decide which branches to keep open or to close based upon foot traffic and optimise the placement of ATMs using location data.
Beacon technology has been adopted by Barclays in its branches to alert staff members when a disabled customer enters a branch so they can assist them. Similarly, Citibank customers have been able to use their verified iPhones and Apple Watches as digital “keys” to enter ATM lobbies after hours without their debit or credit card. When IoT technology is coupled with geofencing, banks can determine customers’ locations to send them personalised alerts and offers to their mobile devices.
In the future, there is huge potential for remote devices such as Amazon’s Alexa and wearables to conduct many more banking services such as balance checks and transaction history.
- Cognitive computing–Machine-learning algorithms can mine data, recognise patterns and use natural language processing, effectively mimicking the way the human brain works. These platforms can then be deployed to support any customer service channel – for example, helping live agents during calls or interacting with customers directly through chatbots on digital channels.
- Virtual engagement – Virtual reality and augmented reality (AR) play an integral role in bringing products, solutions and services to life via digital platforms in the hands of customers. It can enhance the customer journey and buying process by offering consumers a more natural, immersive and connected experience.
The Commonwealth Bank of Australia and Halifax now offer “home finder” apps that use AR to allow users to look at data on houses for sale as they pass them. Another example of the banking sector using AR technology is the National Bank of Oman which now allows customers to locate a nearby ATM or branch as well as find offers and deals while walking around a shopping mall or down the street anywhere in Oman.
- Hyper-personalisation–Consumers are constantly generating data and this can be leveraged by financial organisations to show they really understand their customers. Rather than flooding customers with a barrage of poorly timed, irrelevant offers and messages, businesses can use sophisticated algorithms and predictive models to analyse transaction data, behavioural insights, previous interactions and preferences to create marketing that connects with customers when it matters most.
Monzo is a good example of a challenger bank changing the personalisation game. It analyses customer transaction data, enabling it to offer financial advice based on regular spending habits. If a customer’s energy bill increases, Monzo can suggest moving to a cheaper supplier or will identify other ways to save money to provide a real value-add for their customers.
- Data security– As a consequence of the new GDPR regulations and some serious security breaches that have hit the headlines, customers are much more aware of their rights and how organisations should use their sensitive data. Failure to protect a customer’s data can result in lost business and significant financial penalties. As well as ensuring robust data security, businesses must also ensure that interactions with customers over digital channels are secure and trusted. To help with this, many financial services companies are bringing in functions such as biometric security which uses the unique characteristics of a person,such as voice, retina patterns and fingerprints.
Innovative technology is only worth pursuing if it really adds value for the end-user. We believe these five digital trends have the potential to completely transform customer experience for the better if used in the right context. To find out more about how technology can transform customer engagement, read our 5 Tech Trends Shaping the Future of Customer Engagement eBook here.