Stanley LouwStanley LouwMay 25, 2018
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7min140

It’s no secret most businesses are playing catch up with their customers. Most organisations have a customer experience strategy in place, but our research reveals just 14% feel they are ahead of the market’s expectations. 

The banking sector in particular is struggling in this regard. Competition from disruptive brands like Atom Bank, Monzo, and N26 has drawn people away from traditional institutions and towards more user-friendly platforms that cater to the way they prefer to do their banking.

Customer retention has not traditionally been a major concern for established financial institutions, but this is quickly changing and they are now rushing to play catch up. These large companies won’t be able to reshape their entire operating model overnight, but they can adopt new technologies to help them regain their stronghold in a challenging market.

That is why many are exploring the possibilities of Artificial Intelligence (AI) to improve the customer experience. The Economist Intelligence Unit recently found that one fifth of global banks believe AI will help them boost their customer experience, and this proportion will only rise as new use cases for the technology are discovered. There are three ways in particular that organisations can take advantage of AI today:

Improving customer service – by allowing customers to interact with a chatbot or digital agent, banks can not only streamline their own operations but serve more people, more quickly. It’s important to not just replace agents with AI-powered software in these cases; instead, banks should augment existing service agents by allowing them to access relevant information and expedite answers quickly. A human-centred approach is and will always be essential.

Some financial institutions have found the best approach is to put a face on their AI-offering. Canada’s ATB Financial Bank worked with Avanade to introduce a four-foot robot concierge named “Pepper” in its branches. Pepper greets ATB’s customers, recommends products and services, poses for selfies, and even dances. The response has been incredibly positive, with foot traffic up across the business, and ATB is now looking to enhance Pepper with even more AI functionality.

Automating business processes – often, to better serve customers businesses need to look inwards first and find ways to work smarter. This is not about replacing workers with automated processes, but rather to use cognitive software to more quickly categorise requests and escalate complicated scenarios to the right people for the best possible decision-making.

One UK firm replaced its onerous paper forms with a simple, compliance-friendly online tool for independent financial advisors, but realised it needed a further technology leap to keep up with customers’ needs. The company used Blue Prism RPA to automate key back-end processes, cutting the time required to manage these so it could respond to customers more quickly and reliably.

Getting more from data and analytics –data has become the currency of business and the key to better understanding customers. With a workforce trained to understand this information, companies can then use machine-learning tools to drive new customer acquisition, retain existing customers, and increase customer value over time.

We are only just beginning to explore AI’s potential in delivering better customer service. According to one Accenture report, more than three-quarters of bankers believe AI will allow financial institutions to create simpler user interfaces and deliver a more human-like customer experience. Four out of five also predict that AI will revolutionise the way banks gather information and interact with customers, and three-quarters believe banks will deploy AI as their primary method for interacting with customers within three years.

The challenge for financial institutions will be to implement AI in a way that works. There is a great deal of hype around the technology, but companies shouldn’t invest in AI without a sound strategy and understanding of how it can help their business.

Crucially, they cannot focus on AI alone – successful technology implementations work when human and machines are managed together, and in the case of AI software this becomes doubly important. In the words of Jeanne Ross, principal research scientist at the MIT Centre for Information Systems Research, “Companies that view smart machines purely as a cost-cutting opportunity are likely to insert them in all the wrong places and all the wrong ways”.

A human-centred approach to AI is about augmentation, rather than replacement. Some simple tasks might be fully automated, but the end game for companies should be to help customer-facing teams serve people more quickly, more easily, and to a higher standard.

Change will not happen overnight, but as banks like ATB Financial have shown even simple tactics can have significant results in the short term. By building on some quick wins with a long-term AI strategy, established financial institutions can get back to building the strong connections with customers that set them apart in the first place.


Andrew FisherAndrew FisherApril 27, 2018
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4min607

Are millennials – or as they are also known, Generation Y – really that bad with money?

They are often labelled as being frivolous with cash and marketers try to capitalise on this. However, Manchester-based Freedom Finance has carried out a study which compares the real generational differences between millennials and baby boomers, and found that millennials really do have it tougher, despite being more cautious with their cash.

When looking into the millennial ‘credit crunch’ generation’s finances, almost one-in-three have less than £500 in the bank. That’s not even enough to cover one month’s rent according to figures around the average rent in England, which is £679. It’s not necessarily for a lack of trying though, as the survey also revealed that millennials are more likely to start saving at a younger age than both Generation X and baby boomers.

They are also more likely to start saving for practical things such as breakdown cover or home emergencies at a younger age, suggesting there is a disconnect between wages and the practicalities of modern life in the UK.

Savings and debt
Average age start saving regularly:

Baby Boomers = 51% become regular savers aged 30 or younger (Av age 31)

Generation X = 48% become regular savers aged 30 or younger (Av age 29)

Millennials/Generation Y = 64% become regular savers aged 30 or younger (Av age 27)

 

4 years difference
Average age start saving for practical things:

Baby Boomers = 42% become practical savers aged 30 or younger

(Av age 32)

Generation X = 40% become practical savers aged 30 or younger

(Av age 31)

Millennials/Generation Y = 52% become practical savers aged 30 or younger

(Av age 29)

 

3 years difference

All three generations agreed that their main reason for saving money through their lifetime was to buy a house. However, those who are buying, or who have just bought their first home, admitted saving for a deposit was a struggle. This is what the property landscape looks like across the generations:

The average house price today is 98 times more than it was in 1956 (£223,807 today vs £2,280 in 1956 according to gov.uk), yet wages have not increased at the same rate. This could be why the average age for first time buyers increases through the generations.

Home and living arrangements
Average age Brits move out/expect to move out:

Baby Boomers = 23 years old

Generation X = 25 years old

Millennials/Generation Y = 26 years old

 

3 years difference
Average age buying first home:

Baby Boomers = 27 years old

Generation X = 29 years old

Millennials/Generation Y = 31 years old

 

4 years difference

CXM Editorial TeamCXM Editorial TeamMarch 23, 2018
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4min597

The recent cold weather snap known as ‘the Beast from the East’ may have caused havoc to the UK’s transport system, but it provided a welcome increase in online sales, according to newly released figures.

UK online retail sales were up +13.1 percent year-on-year (YoY) in February, according to data from the IMRG Capgemini e-Retail Sales Index. With the Beast from the East hitting the UK in the last week of February, the cold weather saw shoppers turn online in their droves, driving a +3.5 percent lift in sales compared to the previous week. This continues 2018’s positive start, with overall year-on-year growth averaging 13.5 percent year-to-date.

Despite the strong sales however, the overall market conversion rate (the percentage of site visitors that complete a purchase) was 4.2 percent, down from 4.6 percent last year. The conversion rates for both multichannel and online retailers also came in lower than February 2017. However, the average basket value (ABV) rose by £11 in comparison to last February.

Meanwhile, smartphone growth remained strong at +38.5 percent on last year, but is certainly slowing when compared to the +57 percent growth of last year. Tablets, on the other hand, continued their now four-month long decline trend, decreasing -6.7 percent year-on-year, a record low for this device type.

Some sectors performed notably well this February. Health & Beauty grew by +33.85 percent year-on-year – its highest growth in the last five years. In addition, Clothing continues to show strong year-on-year growth, up +14.9 percent, with accessories and footwear the top performers within this at +22.3 percent and +20.4 percent respectively. Finally Gifts also grew by a strong +9 percent year-on-year, a significant improvement on last year’s -3.3 percent.

Bhavesh Unadkat, principal consultant in retail customer engagement at Capgemini, said:

“February’s sales patterns clearly demonstrate the power of extreme weather on shopping habits; as people avoid the high street in favour of cosier shopping from their well-heated living rooms. As the snowy weather continued well into March we anticipate a continuation of this trend in next month’s results. We’d also draw attention to the performance of the US retail market, which has just reported its third consecutive month of falling sales. As the US market is often seen as ahead of the UK’s this could foreshadow a similar trend in the coming months. Fortunately for internet retailers, the US reported +1 percent online sales growth.”

Justin Opie, managing director, IMRG, added:

“Over the course of many years, the overall conversion rate for online retailers crept up very slowly but this has stalled recently and has now actually been in decline for three consecutive months. This suggests that shoppers are spending more time browsing, potentially across a greater range of sites, before making a final purchase decision and that may well be true, but a clear influencing factor is a shift in the devices people are using for shopping. In Q4, 32 percent of online retail purchases were completed on smartphones (the rest were through desktops and tablets) – these devices tend to have lower conversion rates due to a variety of reasons, particularly how much more susceptible users are to being distracted when using them.”


Andrew TavenerAndrew TavenerMarch 20, 2018
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8min585

Online retailing has expanded rapidly; the growth of the internet and advancements in delivery capabilities have seen many small businesses take advantage of this, selling through online marketplaces to maximise their reach.

These global marketplaces are predicted to own 39 percent of the online retail market by 2020. On the surface, this approach is perfect for consumers who can easily shop from their favourite retailers all in one place. However, underneath, retailers are faced with the difficult and sizeable task of managing the deliveries and returns efficiently and at a low cost.

For while more marketplace exposure means more sales, it also equals more returns; made even more complex by the requirement to offer the return policies designed by the marketplaces. For example, Amazon now requires third-party sellers to accept “automatically authorised returns”.

This means retailers must accept returns without having any direct contact with the customer, exactly when many businesses try to resolve customer issues to preclude returns. There are, however, ways to improve the control of online returns in the face of changing customer expectations and marketplace practices, which are critical in this competitive environment.

Understanding how best to manage product returns to reduce costs and maximise efficiency is key. Here are four strategies online retailers can use to tighten the returns process:

Return policies must be a forethought

Marketplace policy changes give retailers the opportunity to rethink how they handle returns. According to recent research from Royal Mail, nearly half of shoppers (47 percent) said they would be unlikely to shop with a retailer again if it charged for returns, and 60 percent would be less likely to shop with them again following a difficult returns experience.

Clearly a well thought-out returns policy is critical to good customer relations. Sellers need to decide whether to offer one return policy – for example, Amazon’s – or different policies for each marketplace/channel or for various product offerings (for example: low-end versus high-end).

Some businesses set policies based on the most generous marketplace policy. If sellers choose an ‘Amazon-style’ return policy with instant returns and free shipping, this can be promoted up front as part of a company’s brand. Unmistakably, a simple online returns process helps drive sales and cement customer loyalty – and overlooking the impact of a poorly considered returns opportunity can be costly.

A free returns policy might not always work

Returns can have a big financial impact on profits. Depending on the industry, return rates can be very low or very high. Book and video returns can run two/three percent, while clothing and jewellery can run upwards of 30 percent. Companies should right-size return policies based on industry standards and actual return rates.

Businesses with healthy profit margins can build the cost of returns into a product’s price. Charging restocking fees or not accepting online returns is less common but, for certain products or industries, it makes financial sense. For example, companies selling new laptops might find a restocking fee may be the only way to support thin margins. Likewise, for clothing subscription services a restocking fee for returns makes sense, since the items are essentially specifically tailored for an individual.

Evaluating whether the return policy of a particular marketplace works is therefore a critical part of the business decision to sign up to the marketplace in the first instance.

Sellers should right-size returns automation based on business needs

Retailers with high return rates may need a great deal of automation. Small businesses with fewer returns can often manage them in-house using cloud-based shipping solutions that simplify printing, or electronically creating return postage labels that customers print themselves. Barcodes on labels quickly identify customer records and product numbers to speed the return process, cut down on errors, and save time.

Integrating with internal systems is important for large retail operations with high return volumes. Returned packages sitting on the warehouse floor cannot be effectively put back into stock without the right system in place. Connectivity must flow from the customer to the warehouse to the shipper into marketing, sales, and accounting.

For companies with few internal fulfilment resources, a third-party processing service can help. Merchants need to weigh the benefit versus the cost of using fulfilment and returns processing by marketplaces or third-parties. Another way to manage returns if there aren’t in-house resources is to monetise returns by sending returned merchandise directly to a reverse logistics partner that liquidates inventory.

Returns cut into profits so minimising them is important

Good customer service helps avoid unnecessary returns by solving a customer’s problem with support, rapidly replacing missing/damaged items, or making exchanges. However, heading off an unnecessary return is hard when marketplaces allow automated returns with no merchant contact.

To combat this, sellers should use ‘scan-based’ return labels when possible. With these labels, the retailer is only charged if the label is used. Some retailers report that 10 percent or more of the requested returns are never actually sent in, making scan based return labels an instant money saver.

Providing customers with current, accurate product information is also important. By connecting ecommerce marketplaces to internal order status, pricing, and inventory processes, customers know if a product is in stock and when it will ship. Detailed product descriptions and quality images help to avoid misunderstandings. Customer feedback/review functions provide even more information to support making the right choice.

Finally, it’s useful to track which products are returned and why. Develop a ‘reason for returns’ report by manufacturer and SKU. This allows vendors to troubleshoot and avoid future returns.

Changes in return policies by Amazon and other marketplaces are an opportunity for ecommerce businesses to take charge of returns. Online sellers can use this as a chance to create better customer communication and loyalty, whilst addressing how returns affect the bottom line and streamline logistics.

 


Andrew TavenerAndrew TavenerMarch 12, 2018
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6min484

During Christmas, £17billion worth of goods are said to have been bought online alone, with an expectation for £2.5billion worth of returns to come back.

With retailers and suppliers feeling increasing pressure to fine-tune their logistics and supply chain strategies in order to cope with these levels of orders, and a drastic growth in returns, retailers are under intense financial pressure to get shipments right. Every, single, time!

As a result, to get the level of performance they need from their suppliers, these retailers are increasingly turning to chargebacks. Chargebacks are fees that a retailer charges a supplier for errors as a result of not following business guidelines.

As such, they are a way for retailers to offset the additional expenses incurred if suppliers are non-compliant. Indeed, major retailers globally have been imposing much tighter controls on suppliers in the recent years to help speed up their supply chain. This squeeze on suppliers is seen in fees for late shipments, wrong bills of lading, incorrect labelling or invalid Advance Ship Notices, and many other seemingly small mistakes that can make a big impact. For some retailers, chargeback fines make up as much as 13 percent of their account revenue.

While compliance is a must, suppliers still fail to provide retailers with accurate, timely, and complete information for a number of reasons. These may include differing compliance requirements per retailer; the sheer number of protocols and systems that need to work together successfully; the number of retail trading partners a supplier deals with on a daily basis; and the overall varying IT capabilities of businesses. With all of these factors combined, there are seemingly an infinite amount of issues that can trigger a chargeback, especially during peak seasons or events.

Getting vendor compliance right will have a positive impact on the bottom line. For many suppliers the only true way to overcome the looming risk of chargebacks is to think long term and put an effective programme in place to manage against them. This should identify what triggered a chargeback, how it was calculated, and a way of indicating that a problem has occurred before the penalty is even received.

Here are seven best practices suppliers can build into a chargeback programme to successfully meet retail vendor compliance expectations:

Know the cost: Suppliers should be aware of the cost of chargebacks and ensure that chargebacks are properly detailed in their accounts to assess the true scale of the problem. In this case, what you don’t know can truly hurt you.

Grasp the details: Having insight into individual chargeback information that includes where and when a chargeback occurred and under what circumstances is critical for reducing the chargeback risk. Errors can be missing, incorrect, or non-scannable shipping labels; unauthorised product substitutions; incorrect shipping location or using the wrong shipping provider. Keeping detailed information on file will make it easier to catch small issues that could turn into something larger in the future.

Get the bigger picture: Use tools that can analyse and review larger chargeback trends at a dashboard level. While there is much to learn in the finer details, technology can help automate the process, helping you to find repetitive tendencies that may have previously gone unnoticed.

Understand retailers’ requirements: The truth is every retailer’s requirements are different. It is important to make sure you are clear on each and every one’s specific rules and act upon this knowledge by implementing systems that can keep pace with a broad range of retailer trading partner business rules.

Revisit requirements: It’s good practice to revisit requirements at least annually to keep chargebacks at a minimum over time and break the chargeback cycle. With chargebacks becoming more prominent, retailers’ requirements can change over time with little to no communication.

Chase up or refute chargebacks: Should a penalty be improperly applied, suppliers should arm themselves with information to support a change. The more detail you have, the better off you are in the event of a disagreement.

Invest in automation: Automation can help your business to seamlessly connect to trading partners, rapidly on board new retail customers, identify problems by exception and minimise the use of IT bandwidth. All of these items help to minimise chargebacks in one way or other.

As online shopping and return volumes grow, so do consumer expectations for products to be on the shelf or in the warehouse ready to ship at a moment’s notice. Chargebacks make for a strong incentive for suppliers to keep all the key aspects of their relationship with the retailer in check. However, even though chargebacks are common, there is no reason a supplier should suffer extensively from them.

Getting communication right can drive chargeback costs down, but when ‘perfect’ processing doesn’t go perfectly, knowing how, why, and where an issue occurred helps to proactively address discrepancies and minimise the time it takes to resolve them.


CXM Editorial TeamCXM Editorial TeamFebruary 20, 2018
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3min253

Online retail sales were up 13.9 percent year-on-year (YoY) in January, according to the latest figures from the IMRG Capgemini e-Retail Sales Index.

With rainfall above average in January, and the lowest January high street footfall recorded in five years, consumers turned to online shopping. Even the expected post-Christmas month-on-month decline in sales from December to January, which came in at -20.4 percent, was less than the five year average of -24.1 percent.

With January sales still an important market stimulus, the electricals sector performed well relative to recent trends, growing +4.4 percent YoY. Its performance sits starkly against last year’s 12 month average (Jan 17 – Dec 17) of -3.0 percent YoY and January 2017’s YoY growth figure of -8.5 percent.

Similarly, sales growth for the clothing sector was up +16.8 percent YoY, its strongest January growth since 2013. Footwear, menswear, and womenswear growth were broadly in line with the five year average, with YoY growth of +13.3 percent, +10.4 percent, and +6.9 percent respectively.

This solid start to the year was secured in spite of a dip in the overall market conversion rate to +4.3 percent from +4.5 percent last year, continuing the decreasing trend as customers browse more before purchasing. Sales via smartphones are also increasing at a lower rate than last year, at +39.3 percent YoY in January, while growth through tablets suffered a decrease in YoY growth of -10.0 percent.

Justin Opie, managing director of IMRG said:

“14 percent growth for January represents a strong start to the year, arguably even surprisingly so. The economic climate remains challenging, with inflation remaining at 3 percent and an interest rate rise anticipated over the next few months. The impact on retail was very apparent in January, with several very large retailers announcing store closures and job cuts – high street footfall also fell to a five-year low for January. Yet online appeared to benefit from that, with the index recording the lowest month-on-month decrease between December and January in five years. It may be that, as we enter 2018, we are seeing signs of an acceleration of the general move over to online, putting pressure on those retailers with large store portfolios to sharpen their focus on rolling out their digital strategy.””


Bhupender SinghBhupender SinghJanuary 31, 2018
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5min338

Banks are springing into action as the battle for the customer intensifies; according to the recent UK Customer Satisfaction Index, financial services firms have made significant improvements, in comparison to previous years.

Banks and non-traditional financial institutions are shifting their focus away from product offerings toward creating interconnected, simple, and personalised customer service.

However, financial institutions still lag behind retailers and travel providers when it comes to customer service. So, what exactly can they learn  in order to bag themselves a top spot when it comes to enhancing the customer journey?

The customer service delivery model is changing – branch closures and digital trends are changing the way customers bank and engage with their financial service providers. With new regulation and mounting competition from agile digital disrupters, banks are having to rethink how they interact with their customers at every step of the banking journey.

Boosting customer satisfaction is high on the agenda for traditional banks, which are under pressure to reinvent how they deliver to customers in the digital age. Cost pressures on profit margins are driving banks to shut down branches. Closing bank branches is an attractive option to manage cost pressures – the traditional branch can easily account for 40 to 60 percent of a bank’s total operating cost.

Despite the growing trend to shut down branches to manage cost pressures, recent studies find that most customers – including millennials – still prefer having a physical branch nearby. Agile banks are revamping the banking model for the digital banking era to grow and maintain their market share without traditional branch expansion. So, how can banks balance operational costs with innovation?

Traditional institutions are now in an optimal position to direct their attention towards long-term growth transformation strategies enabled by new innovations. These will be directed towards creating a technology-enabled, data-empowered system, which puts the customer at the heart of every business decision.

Banks are directing investment to their back-office to boost operational efficiency, reduce customer churn, and resolve customer enquires faster. Waiting in lengthy queues and being passed from one department to another is a key factor fuelling customer dissatisfaction when searching for the right customer service agent.

In regards to telephone banking, technology is now being used to recognise customers’ voices and predict the purpose of their call based on the status of their account. This enables individuals to be automatically forwarded to the correct department, streamlining the Customer Experience to avoid being passed from pillar to post.

The need for in-person service is very much alive, and in an increasingly digital business landscape, the branch network is central to fostering trust and providing financial advice to compliment other digital channels.

Banks are grappling with the future of physical branch locations, but to bridge the gap between in-person and digital, they are beginning to make moves towards utilising a mobile advisor workforce, which can be managed through a mobile app. Connecting roaming advisers to nearby customers, when and where they are needed, eliminates the costly outlay of a bank branch and gives customers the level of service they desire.

With the support of automation, staff are becoming more empowered to resolve complex issues, which in turn means that branches will not just sustain the banking experience for customers but will manage to revive it. One national UK bank used technology to reduce complaints by 25 percent and customer churn by 12 percent, by using data analytics to recognise customer needs in advance and resolve issues faster.

We are in a time of significant change, with challenger banks and specialist lenders increasing their gross lending and market share, and traditional providers seeing their share stagnate. However, it is not game over for banks – they have an established customer base to leverage and can use the opportunity to create a harmonious balance between the different channels available, to accommodate all customers to strive for success in the new banking landscape.


Parker FitzgeraldParker FitzgeraldJanuary 26, 2018
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3min282

Earlier this month, new regulations in retail banking and payments across the EU came into force, allowing thousands of companies that aren’t banks to gain access to financial data and payment accounts.

Many experts are predicting a digital revolution in banking, so what is changing? How quickly will it happen? And what does that really mean for consumers?

In essence, banks and other organisations such as Google, Amazon, and Facebook will provide new and innovative financial products and services. By 2020 we expect the digital transformation in banking to be in full flight, meaning consumer banking will fundamentally change.

Incumbent banks will be competing with thousands of other companies from across Europe. The large technology companies are likely to offer new ways to pay and we are already seeing new services emerge from the likes of Google. The path is also clear for much smaller, niche providers to move into consumer banking, as the regulation allows new entrants to interrogate financial data, move money and manage finances on behalf of consumers.

Whilst these new players must meet new regulations, including increased security and regulatory reporting, they won’t have the same level of regulatory scrutiny as banks.

Of course, the introduction of new regulations and the ensuing market disruption will bring with it some adverse consequences.

The risks and impacts associated with this regulatory change remain unclear. The responsibility for operational resilience, which has been at the heart of banking payment systems for generations, will be dispersed across thousands of organisations.

Large online retailers are likely to encourage customers to use online payments instead of cards to reduce their costs. If that happens, banks will see online payment volumes increase, potentially putting a strain on critical payment infrastructure.

There are also concerns across the banking community about their customers’ data security. Criminals could look to capitalise on the new open banking ecosystem to misappropriate funds and steal sensitive financial data.

All of this means that there is likely to be a period of operational instability as banks learn to manage increasingly large and unpredictable volumes, and protect their customers from new types of cyber-attack.

In summary, the new regulations mean many consumers will enjoy the benefits of new, exciting digital products and services. However, in 2018 it will be more important than ever for industry and consumers to be vigilant, by protecting their online bank account login information and personal financial data from cybercrime and fraud.


Joe GallagherJoe GallagherJanuary 24, 2018
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6min431

All banks should be aware of the importance of catering to the needs of the millennial generation, and while many are, there are significant misunderstandings around how to address these new consumers.

This tech-savvy cohort is set to dictate the direction of the banking industry, making up 21 percent of the UK population and representing a significant business opportunity for interested banks. But developing a clear idea of what a certain group of customers wants, and then coming up with strategies to meet these expectations, is by no means an easy task. It requires banks to develop a strong understanding of what motivates and matters to their customers.

After a decade of rapid technological change, and new directives like the Second Payment Services Directive (PSD2), banks need to take a step back and consider exactly what it is that millennials want and expect from their financial services. Recent research by NCR shows, that adopting the latest technology should be an important concern for banks, to which 93 percent of respondents agreed or strongly agreed.

But banks also need to keep an eye out for future trends as innovation is an expectation that 91 percent of respondents have of banks.

Millennials have lived through a huge shift in attitudes towards banks – having grown up through the 2007 financial crisis. According to the Millennial Disruption Index, 71 percent of US millennials would rather go to the dentist than listen to what banks are saying.

With the increasing prevalence of digital devices in every aspect of our lives, current prevailing thought is that many members of the millennial generation are happy to take a ‘hands-off’ approach to their finances, but want their bank to be ready to provide help and advice when they need it.

The NCR survey revealed that 90 percent of the survey participants aged 18 to 25 would be happy if their bank offered loyalty programs and reward schemes in partnership with retailers. Seventy percent would appreciate recommendations from their financial institution based on a combination of their banking history and ‘customers like me’ analysis.

What matters to millennials when it comes to banking?

When it comes to delivering a certain standard of service and customer experience, it is important that banks have the strongest possible understanding of what matters to certain demographics and how to reflect these concerns.

As far as millennials are concerned, it has been claimed that members of this generation would prefer not to micro-manage their money on a day-to-day basis. Instead, millennials are looking for innovative products and services that will help them to prepare for the challenges of cash flow, budgeting and savings with targeted and appropriate support and advice.

This is where the opportunity for banks emerges; with a customer base who are driven by experiences rather than materialism (according to a survey by Eventbrite), banks stand to gain by offering the right sorts of streamlined services for millennial customers targeted at the real problems that these customers are facing – be that saving for holidays or managing their Uber expenditure.

Successfully doing this will be integral for banks looking to build successful, enduring relationships with their millennial customers, and sweep away any cobwebs of distrust that may still linger.

Are you missing the millennial opportunity?

Banks that fall into the trap of prioritising sales and revenue generation through traditional models that proved successful with Baby Boomers or Generation X, run the risk of missing out on valuable opportunities to earn long-term consumer trust and loyalty. Instead, banks need to allocate focus to goals that are harder to quantify but could prove just as significant in the long term – such as customer experience and expectations – to drive a new generation of revenue as millennials become an even-larger segment of the consumer base.

The November 2016 issue of the Digital Banking Report, sub-titled The Millennial Mind, argued that millennials represent a “tremendous upside opportunity” for banks, but this generation reports the most problems with financial services and is the least likely of all age groups to have their problems resolved. Report author Jim Marous noted:

Millennials are the generation least likely to strongly agree that their bank knows them, looks out for them or rewards them. While partially caused by being a more demanding segment, they are also the most ignored by the industry.”

In our current era of increasing diversity and competition in the retail banking industry, it has never been more important for banks to make a special effort to engage with their customers, to find out what matters to them and to invest in delivering on those findings.

Using all of your consumer-facing touchpoints and channels of communication to build meaningful engagement with millennials could be vital to the development of long-term, mutually beneficial relationships with this key demographic.


Martin HäringMartin HäringJanuary 15, 2018
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8min252

Today’s customers are expecting more than ever from their favourite brands. With a proliferation of tech-savvy companies tuned into the digital economy, customers can have on-demand access to food, transport, and endless personalised services at the touch of a button. Why shouldn’t this be the case for their bank services too?

A recent survey conducted in the UK highlighted that incumbent banks still have a long way to go before they meet their customers’ expectations.

Further research shows that mobile and online banking are now gathering significant pace, with more than a third (38 percent) of consumers carrying out their banking via a mobile app on a regular basis, rising to 53 percent for the 18 to 34-year-old bracket.

Mobile banking 1.0 brought simple banking transactions to our fingertips. But banks can’t rest on their laurels – the death of the simple mobile banking app is not far away.

Customers are now expecting a much more joined-up, customer-centric approach. Step-in mobile banking 2.0 – the future personal finance management tool giving a single view of a customer’s finances, including bank account, student loan, credit card balance, mortgage applications, and more.

Changes to competition in the banking industry come into play this month, such as the move to open banking and the second Payment Services Directive (PSD2). These are set to drastically shake up how a bank interacts with its customers. So how can banks maintain mobile leadership and what should bank CMOs be doing to provide customers with more streamlined services?

The customer-centric bank

It can be easy for banks to lose track of what is most important to customers, and organise their business to focus on functions and product lines. This product-led mantra leads to a siloed approach to business growth, and neglects customer satisfaction.

When customers ‘feel’ a purely transactional relationship with their bank, it can be difficult for them to build a significant amount of trust. This means important customer relationships risk being resigned to the short-term.

It is the bank CMO’s responsibility to champion their customers’ needs, bringing these to the board and shaping business strategy to fulfil expectations. In this respect, the role of the CMO is gradually changing into that of a ‘Chief Customer Officer’ (CCO) with scope to foster a more customer-led culture, and an ethos around creating customers for life.

AI-driven experience

In the future, customers setting up a current account and accessing mobile banking applications may see integrated AI chatbots guide them through the process – with the chatbot asking them a few questions and requesting verification, such as a passport or identity card.

With this type of automation, account set-up time can be reduced to a matter of minutes. Customers can also have immediate access to their account, tailored to their preferences, with the bank fulfilling vital KYC (know your customer) and AML (anti money-laundering) requirements.

With the use of AI, banks can become more attuned to their customers’ needs and offer highly efficient processes. Optimisation of onboarding processes such as these, that previously would have taken multiple days, will also give vital time back to staff to deal with more strategic activities.

Artificial intelligence and machine learning technologies are not only enhancing processes such as customer onboarding, but are also helping to improve different aspects of customer interaction to improve the overall Customer Experience.

Banks today can receive hundreds of FAQs and enquiries through their call centres every day. By using AI-enabled chatbots to automate responses, customers could receive answers to their queries in a matter of minutes – and again, bank staff can be freed up to deal with more pressing issues. But banks mustn’t lose the human touch altogether. By giving the opportunity to connect with an agent via video link, customers can be assured there is always the option to speak to a human if required or preferred.

The power of data

Customers, along with data about their transactions, are the most valuable assets a bank possesses. With AI now helping to bring new-found data insights and analytics capabilities, bank CMOs can harness the power of this data – using it to serve up personalised services and recommendations to customers.

The simple mobile app alone is giving banks a window into customers’ accounts and needs. Customers using a mobile banking app will give their bank access to data such as their location, transaction history, salary, mortgage rates, holiday budgets, spending habits, and more.

With PSD2 coming into effect this month, this proliferation of data will only continue, as consumers begin to grant trusted third parties access to their banking data through open application program interfaces (APIs). Bank CMOs should be capitalising on this opportunity and connecting the dots between their customers’ transactional data, personal data, and social media data. Powerful AI algorithms can then identify when these customers will be most receptive to a service, allowing banks to provide unique products personalized to their needs.

The role of the CMO is changing

To build true customer-centricity in the long-term, the mindset of the modern-day bank needs to change. The CMO must act as the navigator on this journey, taking the leading role and highlighting the benefits of cognitive technologies such as AI to the Board.

In five years, the traditional role of the CMO certainly might not exist in the same guise as it does today. I predict the CMO’s role changing into that of a Chief Data Officer or Chief Customer Officer – someone who dives into advanced data analytics and prioritises the needs of the customer.

The customer is continuing to shape the way we interact with our banks in every way. Banks that fail to deliver true customer centricity in this fast-approaching competitive world, driven by open banking, surely won’t survive for very long.

 




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