It is already very clear that customers place a high value on a bank’s ability to embed themselves into their personal lives. In a recent survey of more than 275,000 consumers conducted by KPMG International, we found overwhelming evidence that a company’s ability to deliver a personalised experience is directly related to their brand loyalty. Customers consistently ranked banks with great personalisation capabilities as best in class.
The leaders in our survey were those that recognised that personalisation isn’t just about driving increased sales to existing customers. It’s about building relationships and becoming embedded into the lives of your customers. It’s about knowing what your customers need and finding ways to solve their problems (often before they know they even have a problem). It’s about being there for your customers – regardless of whether that interaction results in the sale of a product or defined service.
That is why a handful of the world’s leading banks are starting to shift their focus towards understanding customer ‘life events’ or ‘life stages’. In some cases, these may be the purchase of a new car or house, the birth of a new baby or the start of a new job. In other cases, they may simply be life stages – entry into retirement, for example.
The point is that – if you really think about it – financial services underpin everything we aspire for as individuals. Each life event or life stage brings different challenges, opportunities and financial needs. Those banks that are able to predict these life events and then deliver solutions that demonstrate a deep understanding of the individual customer will be the most successful in the future – not those still blindly selling products to demographic segments.
So what is holding banks back from achieving true personalisation at scale? Many banking executives will tell you it’s their siloed data and legacy systems that are stopping them from taking a more holistic view of their customers. And that, in turn, is holding them back from delivering true personalisation.
While legacy systems and data can certainly be an inhibitor to personalisation, there is strong evidence to suggest they need not be barriers. Consider, for example, how some ‘newco’ banks are winning customers and delivering personalised experiences despite the fact they use their parent’s legacy systems (First Direct, a UK challenger bank, is frequently ranked as best in class ahead of its parent HSBC even though they use largely the same technology stack1.
More often than not, it’s legacy culture (not legacy systems) that is stopping banks from making real progress on their personalisation journey.
Our view suggests that, more often than not, it’s legacy culture (not legacy systems) that is stopping banks from making real progress on their personalisation journey. The reality is that most banks are still tightly structured around products and services. In most banks, it’s the product teams that drive most decision-making, not the customer teams. And this is making it nearly impossible for banks to get a truly holistic view of their customers.
Reorganising the bank around the customer will take leadership. It will require a dramatic shift in organisational culture and structure. And it will require banks to think carefully about what activities are empowering the customer view and what activities are not. In some cases, this may mean shifting the balance of power within the organisation. For example, we recently worked with one bank where, time and again, efforts to improve personalisation were being slowed by the compliance function; the organisation placed compliance under their Chief Customer Officer and have seen dramatic improvements in their customer experience scores ever since (without increasing their compliance risk).
Yet getting a holistic view of customers will take more than just strong desire and better org structures. It will also require banks to take different approaches to understanding their customers – mining data for new signals, for example, or partnering with tech players who can broaden their appeal and data reach. As this recent article by our colleagues at KPMG International suggests, the shift towards regulated Open Data and Open Banking will create significant opportunities for banks to become better acquainted with their customers.
Banks will also need to get better at using the data they uncover to truly understand the circumstances and life events of their customers. That will take more agile platforms, better analytics and better collaboration over data so that products and solutions can be quickly modified and adapted as customer needs and desires evolve.
Perhaps most importantly, bank execs will need to think much more holistically about what role they plan on playing in the lives of their customers. How can they use their insight, capabilities and knowledge to help customers live their best lives? Can they predict which products and services customers will need through their journey? And do they know enough about their customers to properly understand their unique life events?
The leading banks have already answered these questions and are making clear progress towards a very different type of personalisation. When USAA, a US-based financial services firm, noted that their customers (largely made up of US military and family) were becoming frustrated with the amount of time required to purchase a new car, they developed an entire service area focused on helping speed up the process.
Barclays, a UK-based bank, offers customers courses to improve their computer literacy which, in turn, is helping improve digital engagement. Some banks in the emerging markets are starting to act as consumer-goods distributors, allowing them to solve customer pain points and provide peripheral products such as insurance and loans.
The point is that there is a big difference between personalising a communication channel and becoming embedded in the personal lives of your customers. The former is only skin deep; the latter requires fundamental change to the way the bank operates.
Our view suggests that the most successful banks of the future (indeed, the most successful banks today) are those that are investing into creating a truly personal relationship with their customers.
For more trends reshaping the banking experience, contact us or visit home.kpmg/reshapebanking