Memo to bank management: Make it easy for your customers or risk losing them

PUBLISHED : Friday, 19 August, 2016, 10:48am
UPDATED : Friday, 19 August, 2016, 10:12pm

These days, banks are understandably focused on processes, regulations and organisational structure but they need to also pay attention to the changing needs of customers.

Competitors are providing simplified mobile-friendly interfaces that aggregate services from banks or third parties and help the bank’s customers to visualise their finances in rich, engaging ways.

In China, for example, payment options ranging from AliPay to Fenqile, a micro-loan site that literally means “happy instalments”, and Qufenqi, an electronics retailer that lets buyers pay in monthly instalments, are transforming how consumers pay for products.

Bank management needs to remember that whoever owns the interface ultimately owns the customer. Accenture research shows that globally there are millennials (ages 18-34) who don’t even have banks on their radar. The disparity between what customers want and what banks offer is increasingly apparent, as the new breed of financial players are entering the market with simple experiences that are mobile, intuitive and even fun.

That means the new battleground is about re-engaging customers.

How can management do this?

Start by changing how you think and talk about money. Accenture/Fjord research shows that people think about money in four distinct ways; they want to manage it, track it, get it and spend it. And banks need to address customers in these four simple ways too. They need to help customers manage, track, accrue and spend. They need to keep it simple.

The problem is – there is a disconnect. Banks think about their products; people think about how they are treated. Management thinks about how to ensure profits, customers don’t care (unless they are shareholders). Banks think about economic value; people think about personal value.

Furthermore, long-established segmentation strategies are no longer useful. Consumers’ decision-making processes are messy and complicated. Focusing on simple demographics like age, marital status and income does not reveal useful insights. To design services of the future, banks must look at how people behave and what’s important to them when dealing with their money.

They need to take “a mindset segmentation approach” to their customers. This treats everyday customers more like a wealth management firm interacts with high-net-worth individuals: it tries to figure out what customers want to achieve. It’s more personal and tailored.

The Accenture/Fjord research shows four types of customers:

Achievers: People who define success by budgeting for clear, often tangible goals. This helps them feel in control and prepared for the future.

Balancers: People who define success by getting the best deal in each transaction, maximising rewards and staying on their financial plan so they don’t have to worry.

Experiencers: People who define success by enjoying the present. They seek delight in how they choose to spend money and are optimistic about the future.

Explorers: People who define success by saving money and making trade-offs so they can be happy and live comfortably.

All of these customers have different expectations for how their banks will treat them. If bank managers want to retain customers they are going to have to do deeper dives into understanding who their customers are and what they want. A one-size-fits-all approach to banking won’t cut it anymore.

Albert Chan leads Accenture’s financial services business in China