Does your bank own its customers?

 In Customer Acquisition and Retention, Customer Experience

The Internet has changed the way we shop, pay our bills, communicate, and so much more. Its impact on the supply chain is undeniable. The mobile movement is changing the game again. There is a battle to own the customer interface and financial institutions understand what is at stake—customers.

Tom Goodwin, SVP of strategy and innovation at Havas Media recently wrote about the disruption caused by customer interface owners:

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.

How are banks responding? At an industry conference, a leader in digital financial services stated that they are trying to disrupt themselves before someone else does. They understand it is only a matter of time before the “Uber of banking” arrives and they want to figure it out first. Some may argue that it is already here in BankMobile. The company has eliminated branches and leveraged technology to offer fee-free banking through a mobile app. The founders claim that 1,000 new accounts are opened monthly. I would argue they understand their target market but it isn’t necessarily the bank for everyone.

The good news is that banks are well positioned to compete, even if they don’t always own the customer interface. They already have something more valuable, an enviable amount of data about their customers.

Data is important for many reasons—marketing, assessing credit risk, and mitigating fraud. In the digital age data adds yet another dimension; understanding the persona of your customers. Mobile users bring a unique digital profile and set of behaviors to every situation, rendering classic segmentation based solely upon socio-demographics ineffective. Nearly everyone has access to mobile devices and social media; they seek immediacy with all types of interactions and now have a voice to share their experiences (good or bad) in an instant.

People also have differing sophistication levels with their devices and varying privacy concerns. For example, I use Uber but turn off my location after my ride is complete. I conduct most of my banking online from my PC, but never on my phone. On the flip side, I have friends who download all kinds of apps and constantly upgrade their phones in search of the coolest features and fastest devices. Understanding where consumers fall on the continuum of capability and trust is crucial to optimize the mobile experience for banks’ customers.

Mobile is both an acquisition and retention play. To attract new customers, banks might need to offer a better digital banking experience than their competitors. But to keep customers they need to understand their digital persona. Do they want a mobile wallet, remote deposit capture, or fully automated online account opening? How about banking from a wearable device? Maybe they simply want text alerts of account balances, auto bill pay, or online statements.

There is a temptation to target millennials where mobile banking is concerned. News flash—millennials aren’t the only ones interested in a great digital experience and there are differing opinions about focusing on marketing to this generation. USAA has customers in their 90s who prefer biometric authentication to conduct their online banking. Additionally, USAA members tend to have higher expectations for technology and that understanding is critical to the bank’s road map for delivering that experience. This movement clearly isn’t about age, but knowing your customer.

Having grown up in an era of green screen computers with floppy disk drives and no Internet, things have certainly come a long way. There were digital personas back then just as there are today and individuals have varying degrees of technological savvy and preferences. Banks that use their data to both predict and proactively deliver personal customer experiences won’t need to worry about who owns the customer interface, but rather whose business they want to own and how they are going to keep it.

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