Digital innovation is transforming financial services into a more quick-paced, customer-oriented industry. Consumers worldwide are rapidly accepting and adopting the use of robo-advisors and other automated services for their banking, insurance and investment needs. In their 2017 Global Distribution and Marketing Consumer Study, Accenture Consulting surveyed nearly 33,000 banking, insurance and investing customers spanning 18 global markets, which revealed a key byproduct of this transformation: the emergence of three distinct consumer personas that will shape the way financial organizations think about customer service.
Nomads: These consumers roam the digital landscape for the latest innovations and prefer not to settle down with traditional financial firms: 85 percent prefer to use fully automated banking services and eagerly await new frictionless delivery models. Their willingness to try and use new services is rivaled only by their willingness to switch over when a better innovation comes along.
Hunters: These are the consumers most likely to search for the best price, but they still prefer to use traditional firms. Their main objective is to achieve the best value for quality. For insurance needs, 100 percent of surveyed hunters felt competitive pricing was essential. Forty percent of hunters desire human advisors for their banking questions, and 33 percent would prefer to talk to a human for investment advice.
Quality Seekers: These consumers will pay more for high quality, high-touch, responsive service and security. Quality overrides price, which keeps them loyal to traditional banks and firms. Quality seekers appreciate the services they receive from brick-and-mortar branches and direct phone access with a live person.
Personalization Versus Customization
There are key distinctions between personalization and customization that can influence a customer’s decision to embrace or switch services. The differences can be illustrated with everyday examples from our daily routine, like showering.
When you take a shower, you probably have to adjust the nozzle a few times to get that “just right” temperature. Everyone knows the routine: Turn on water, turn the nozzle left for hot water and get burned, then turn the nozzle right for cold water and freeze, turn it a little left, then a little more right and repeat until the water is just right, and until your body acclimates to the temperature. This is how customization feels: rigid, explicit, high-touch and tedious.
Now imagine if your shower was “just right” the moment you turned on the water, with no additional tinkering required. The shower integrates complex machine learning algorithms that dynamically adjust the water temperature to contour to your body, making the water the optimal temperature the moment it flows from the shower head. This is how personalization feels: innate, implicit, frictionless and effortless.
Galvanizing the Positive User Experience Through Personalization
The “just right” tipping point is the “holy grail” moment that captures the essence of personalization. It’s the moment that intuitively converts a consumer into a customer. This end goal is what banks strive to reach across all three consumer personas — but not without difficulty. Banks have a solid foothold with hunters and quality seekers, who have grown up with traditional banks and advisors.
The most traditional group are the quality seekers, who value the high level of service they receive from brick-and-mortar branches and phone access with live customer service associates. This segment is composed of a mix of the Generation X and the 74.9 million baby boomer demographic. They have an established history growing up with traditional firms and are thus slow adapters to digital innovation, which banks don’t mind. In order to enhance the user experience, personalization must feel authentic, not cosmetic and shallow. It must also feel seamless, such as geolocation that works in the background to ensure data security.
The Coming Wave of Nomads
If banks successfully integrate technology into their customer strategy, the nomads and future nomads could be their largest growth driver moving forward. Nomads are composed mostly of tech-savvy millennials. The future lies with the 70 million Generation Z demographic that have started to come of age in 2016. This group was born into the digital era. Having Generation X parents who lived through the turmoil of the financial/real estate crisis and are burdened by student loans, this generation tends to be more critical of traditional financial institutions. They’re heavily connected by social media. They’re also cost-conscious and independent, which by nature shuns commitment. To better compete, banks can introduce their own branded robo-advisors, integrate mobile app-based personal financial management features and offer personalized incentives. To gain an early foothold on this young demographic, banks can take a cue from the new wave of disruptive FinTech startups that utilize social media data to develop new metrics and products.
Gaining their loyalty and commitment of nomads and future nomads will be the biggest challenge for traditional banks. However, it’s essential for them to dynamically morph their delivery models to stay on the forefront of digital innovation to capture and retain this mushrooming segment of potential customers.
Due to security concerns, customer confidence in FinTech remains low despite growing usage. Here’s what firms can do to ensure a positive user experience when using non-traditional financial services.