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Think premium | ABA banking journal

By Anthony Ianniciello

HHave you ever thought about why you’re willing to spend $5 on a latte at Starbucks when you could get a great cup of coffee at McDonalds for less than half the price? One word: experience.

The coffee beans themselves can vary a bit in quality, but for the most part they are a commodity. The real difference is in the coffee-making experience and where the consumer gets the coffee. Once it becomes a commodity, you get to the point where you’re willing to pay Starbucks $5 for the experience: the couch, the music, whatever goes with the brand.

The concept put in place by B. Joseph Pine II and James H. Gilmore in The experience economy is even more applicable today than when they wrote it in 1999. As things get more commonplace, people are willing to pay more for experiments. Think Apple.

This is the key to how financial institutions can differentiate themselves from their competitors.

Financial services are highly commoditized and bank customers often seek the same set of services, so the main differentiation has to come from experiences. In reality, Forrester US Customer Experience Index 2021 found that companies that focused on improving the customer experience during the pandemic “increased revenue, profit, employee engagement, and retained customers at more than twice the rate of other companies.” The index also revealed that the customers of the companies with the highest scores are “2.4 times more likely to stay with them, 2.7 times more likely to spend more with them and 10 times more likely to recommend them. Best of all, loyal customers will pay up to 200% more for a favorite brand.

Once it’s relatively easy to pay for an experience like a concert or a meal, we move to the next level, where people are looking for transformation. Take Peloton for example. It’s no longer the experience of riding a bike that’s appealing, it’s the transformation of who you are, to look better or live a healthier lifestyle, that consumers are willing to pay for.

When we think about how banks can grow and serve their communities, it’s about understanding the transformations their customers want. They want to start families, buy houses, start a second career. A lot of the things people want to do with their money is actually to get from where they are to where they want to be.

Remove a page from streaming

Banks can bring together a picture of their customer with data that examines behavior and moments of reflection in the customer’s financial journey. We then personalize those experiences for the user so that we go with them. If you can offer this point of reflection to someone throughout their normal journey, especially in finance, they will begin to think differently about their goals, and that is how you will build customer loyalty. It’s you who help them assess where they want to go and get there, and that’s how you deliver experiences that become transformational.

We can understand these traits using behavioral analysis. We start with a bank balance; it’s data. Next, we display the balance for the last 60 days; which allows cash flow analysis. But instead of asking the customer to come up with a budget, which conceptualizes the data, we look at their behavior and present the budget to them, much like Netflix and other streaming companies use behavioral data to deliver targeted content to consumers. Then we have behavioral traits to operate on and we can anonymize the data to create buckets of groups similar to each other.

We can also use behavioral analysis to offer specific financial products that will bring transformation. For example, we may use data to identify someone who may be financially vulnerable and help them become more financially stable.

Another example is the concept of a young professional whose income is growing rapidly but who is not managing her new wealth effectively. How does the bank serve this person and provide them with budgeting, saving, and investing tools so that their net worth can grow? It depends on reviewing their deposits, spending, transactions, and aggregated accounts (giving them the ability to connect to external accounts) so you can step in to help them on their transformation journey. .

Once we identify where the customer is and what she needs, we want to organize what she sees when she logs into her account. Just as social media algorithms show users what is deemed most important to them, we need apps to prioritize what the bank customer wants to see (even if they don’t know what it is). ).

So it’s not just about logging in to check balances. When a financially vulnerable customer logs on, for example, they can be shown a budgeting tool or a payment tool that allows them to skip a mortgage payment without affecting their credit rating.

It is important to remember that almost 80% of connections are made on a mobile device, so it is essential to use the screen space efficiently. Take a customer who runs a food truck or a clothing stand at a farmers market. What can the bank do to help these customers without waiting for them to communicate about what they do and what they need?

He can consider the user experience perspective and then prioritize real estate to match what customers want when he has the opportunity to communicate with his client. So the next time they log in, instead of prioritizing an ad, prioritize the app, the workflow, the navigation, and how everything works around what you know on the behavior of these users.

You want customers to walk away thinking, “I didn’t even know I needed this!” And just like with that Starbucks latte, they’ll be happy to pay more for the product because of the experience.

As Vice President of Digital Banking Product Management in Q2, which the ABA approved for digital banking, Anthony Ianniciello is responsible for leading the product, engineering and design teams responsible for delivering consumer and mobile banking products.