Consumer expectations have been heavily influenced by digital giants such as Apple and Amazon. The question that banks need to ask is whether their customers would describe their bank experience as being similarly tailored to their needs.
The answer for most banks is “not yet.” In a recent study by Cognizant’s Center for the Future of Work, only 23% of banks rated their customer experience as “good” or “excellent.” But more than 65% expect it to reach those levels within three years. The pressure is on.
That’s where “metadata” comes in. Metadata can be found in the swirl of data we call Code Halos, or the digital information customers leave behind after interacting and transacting online – whether with banks, online retailers or on social media, or with an Internet Protocol-instrumented device. Knowing how to extract value from this data is key to creating a winning customer experience.
What Exactly Is Customer Experience?
For banking organizations, customer experience is much more than a flashy mobile app or sticky website. It includes four main ingredients:
User experience (UX). An intuitive, simple and exciting digital interaction that personalizes account information and customer service.
Next best action (NBA). Relevant and timely advice that adds value to the customer’s contextual experience. NBA helps banks win new accounts, delight existing customers, increase wallet share and decrease attrition.
Omnichannel. Service delivery across physical and digital channels without loss of context and continuity. Channel consistency results in more effective engagement with customers.
Process digitization. Flawless connection of the digital front-end experience to back-end people, processes and systems.
To create this experience, banks must foster design thinking, a UI/UX strategy, segmentation personas, journey mapping, analytics, mobile availability and rapid coding. The critical capability underlying all these activities is the collection and analysis of the customer’s Code Halo. The resulting insights can enable memorable experiences that lead to tangible ROI. Overall, 62% of executives we surveyed report that data-mining efforts have already generated measurable ROI for their organizations.
Although many banks lag behind digital pioneers, they also already possess enviable customer information, including demographics, income, expenses, car and home values. By analyzing customers’ transactional behavior, including timing and location, banks can determine whether a particular customer is cautious (a saver) or extravagant (a second Caribbean holiday in a year).
For example, if a customer’s digital footprint indicates an impending car purchase, banks can make a timely offer of a car loan at an attractive rate. Despite the availability and advantages of this data, banks show a surprising lack of interest. Only 57% of banking executives in our study identify demographic data as valuable or highly valuable, and fewer than half find value in customers’ likes and interests (43%) or browsing history (41%).
Today, many banks view customer transactions are being no more than, for instance, $100 credited to an account on Sept. 26 at 10:50 AM. In a Code Halo world, however, the totality of the customer’s digital experience is often as important as the transaction itself. By understanding the metadata associated with a transaction, banks can craft more personalized offers. In the case of the $100 credit, the metadata might reveal that the credit was a transfer to a son’s account, and it occurred one day before the son’s birthday and shortly after the purchase of two tickets on a New York-bound train. In light of this, the bank might suggest birthday gift ideas or Yankee tickets, again based on the account’s past purchase history.
For more evidence, consider these proven examples of banks using metadata to upgrade their digital experience.
A Midwestern regional bank improved its lead conversion rate by more than 100% when it used analytics to enable a single customer view across all channels.
A large multinational bank boosted prospects’ conversion rates seven times by taking a more intelligence-based approach to its marketing campaigns. Instead of building campaigns based on internal customer data, it merged internal and external data sets and then applied advanced analytics to better identify and qualify its target customers.
When a large British bank built a “propensity to save” model to predict customer interest in savings products and increase cross-selling, the pilot produced a tenfold increase in its branch sales and 200% growth in its conversion rate over a two-month period.
A regional bank reaped a host of benefits by enhancing its marketing practices with predictive analytics. In fact, more efficiently allocated marketing resources generated a 600% return on investment. More accurate target offers boosted high-value customers’ response rates by 3.1%. The bank also saved 20% on mailing costs and 17% in printing costs due to more refined targeting.
In 2012, 80% of Turkey-based Garanti bank’s transactions took place online, fulfilling the bank’s goal to be always-on and always available to its highly connected customer base.
Four Steps to a Digital Customer Experience
By following four steps, forward-thinking banks can improve their customer experience by putting their data to intelligent use.
Develop a plan.
Begin by aligning your bank’s brand position, strategic plans and customer demographics with your desired strategy. Choose capabilities to meet that strategy. Base your timeline on competitive threats or available investments. To maximize buy-in, carefully consider the business case of the plan.
Start with existing information.
It’s easy to feel overwhelmed by the increasing amount of data and expectations associated with it. A successful strategy starts with the customer information your organization already has. For example, one bank improved its online experience and revenue per product after launching a program that knowingly promoted products on its homepage to qualified customers.
Apply insights to all touchpoints.
To create a stellar customer experience, your organization will need to integrate customer insights with other capabilities, such as a winning user experience design, customer profiling, journey mapping and content management. All told, your customer experience is only as strong as its weakest link.
Evolve to differentiate.
While there’s no operating manual for customer experience, yours should be personal and unique to your brand. What works for your competitors may not work for you. If it does, then your experience will have become a commodity. To achieve differentiation, plan for multiple cycles of testing and learning with small client bases before scaling to your entire client base
In today’s consumer-empowered marketplace, relevant advice and contextualized offers have become the norm. Rather than leaving these to chance, banks can mine existing customer data to improve the customer experience, both physical and digital, and deliver more contextually relevant offers and curated services. Responsible use of metadata is a great first step for creating a personalized banking experience that not only resonates with markets of one but also delivers sustainable business value to both the bank and its customers.