Help Customers Achieve Financial Goals Using Automation
In the Mercator Advisory Group research report titled The Six Million Dollar Customer: Using
Technology to Build a Profitable Customer Base, Ben Jackson identified why banks need to proactively grow the
assets of account holders and he provided a recipe financial institutions can
follow to achieve that goal. A critical aspect of that recipe is to build
consumer engagement models that help account holders overcome a common flaw in
human behavior, which is that people fail to take actions they fully
acknowledge are critical to their financial lives. In large part, solving this
problem will require a new approach in the ways that financial institutions
engage the account holder—discovering the right balance between consumer
privacy, customer personalization, and personal automation tools that—once
established and left unchanged—will achieve the account holder’s identified
financial goals. Of course, not all customers will overcome their prewired
behavioral proclivities, but the goal of the bank is to engage all account
holders in order to deliver products and approaches that will drive personal
financial achievement to the widest possible audience. In the new world of
mobile engagement, remaining passive will enable smarter financial institutions
to steal your customers at each life event in which your institution fails to
provide financial support.
The report, A
Digital Future Compels the Use of Technology to Automate Achieving Financial
Goals, reinforces the findings presented in The Six Million Dollar Customer report utilizing new consumer data.
Analysis of this data suggests that implementing the “recipes” identified in
the report will help reverse the extremely low trust ratings that consumers
give to their financial institutions. Although we recognize that financial
institutions are surrounded by regulatory constructs that drive risk-averse
behavior, this report outlines a technological approach for deploying solutions
that will proactively help account holders identify and achieve their financial
goals. The approach is similar to innovative new healthcare models.
The prevailing concept in current healthcare delivery is
“patient engagement,” a top objective for all stakeholders in the business of
providing healthcare and paying for healthcare. We live in a time when
technology and communications have enabled never before seen capabilities in
delivering focused diagnosis and treatment plans. Patient monitoring is being
accomplished through personal devices and wearable technology. Public health
government agencies, healthcare providers, and healthcare payers (insurers)
that adopt the patient engagement concept benefit from increased patient
cooperation. However, the insight these organizations gain and their resulting
recommendations to patients mean next to nothing unless patients accept and
follow the individualized plans designed to improve their health. Some medical
conditions are self-inflicted, and some are the result of the accidents of
life, but finding ways to effectively keep the patient on track toward improved
health is the objective.
In a similar way, government agencies such as the U.S.
Consumer Financial Protection Bureau encourage financial institutions and
financial service providers to take a more collaborative role in helping their
customers to adhere to course to achieve their financial goals.
Critical to improving the banking customer’s personal
financial management is the right engagement model associated with the product
being offered or recommendation being made. The
report, mentioned previously, provides an engagement model with features
designed to protect the institution and the consumer from consumer privacy
concerns while deepening the relationship at the pace the customer finds
comfortable and including multiple opportunities for the customer to opt out.
Just as people often establish a longstanding relationship
with a family doctor (now called a primary care physician), a bank or credit
union can serve as a consumer’s primary financial institution and initial point
of contact for attaining personal financial goals. The analogy can be expanded
to the more active role that healthcare providers are adopting in managing
patient health and wellness. Banks will have increased access to third-party
information about segments of the customer base and individual information to
make proactive suggestions and develop products that automate attainment of
common goals.
The idea that a bank can cost effectively assist all account
holders to improve their financial lives may viewed with some skepticism by
some readers, but as our colleague Ben Jackson paraphrased in the Six Million Dollar Customer report
“Ladies and gentlemen, we can build them. We have the technology.” Mercator
Advisory Group primary research indicates that consumers in the United States
expect banks to help them plan their financial future. We suggest that
financial institutions that fail to engage consumers around their financial
needs will be further marginalized by mobile suppliers and alternative
financial services companies that are engaging smartphone owners across all
aspects of life, even when asleep. Your organization’s own management team has
experienced how smartphones have changed their lives; now they need to
understand that the institution doesn’t embrace the technologies that underpin
the mobile experience and utilize the data it generates, it will become
irrelevant to its customers.