New technologies have changed—and continue to change—customers’ shopping patterns. The retail industry has entered a new age, shifting attention from features and benefits to customer experiences as a whole. The convergence of digital and physical shopping, plus the emergence of artificial intelligence (AI) and machine learning technology, means retailers can provide consumers with an enhanced journey to buy what they want, when they want, and how they want it.
The same transformation is affecting the financial services industry. Clients—especially “digital native” millennials—expect their bank to interact with them at all times and across all channels, for whatever product they want to buy. Empowered by information they find online and their experiences with other businesses, clients’ expectations are soaring.
The retail and banking industries share many similarities, especially in the battle for customer engagement and loyalty. Here are three important retail approaches the financial services industry can apply to their own operations:
1.Create a sense of belonging and trigger customer aspirations
By connecting to customers through stories instead of solely focusing on product features, retailers are finding new ways to bond with clients.
For instance, the clothing brand Carhartt has created a website with its products embedded into stories about artists and inspirational people. Customers shop while simultaneously being engaged by compelling and aspirational stories.
The financial services industry, more than any other, represents a repository for customers’ dreams. Money is the fuel for choice and freedom, and banks should inspire and motivate their clients to make financial decisions that help them lead a better life. Think of this as “emotional banking”: banks as brands with a human touch, managing clients’ emotions as part of the overall experience. Banks can now also use smart analytics to identify upcoming changes in their customers’ lives, ones that will impact their financial situation. With these analytics, they can facilitate digital empathy by fostering more meaningful and emotional communication and interactions, which will create trust, loyalty, and customer satisfaction.
2. Provide personalized offerings
Banks should focus on personalization and on truly understanding their customers to create meaningful interactions with them.
In order to compete with the eyewear “titans,” Warby Parker identified different ways to engage with customers. It concentrated on the emotional and social aspects related to buying a pair of glasses and helped customers pair the right glasses with the right clothing.
In order to offer personalized products, banks need to adopt a data-first approach and leverage AI and machine learning technology. Banks can then create personal and relevant interactions while delivering individually tailored experiences quickly and accurately.
3. Remove friction
Creating journeys that put customers at the core requires a deep understanding of customers’ pain points as well as exploration outside of a company’s own industry. For example, leveraging an ecosystem of partners can provide customers with additional or complementary products and services that help deliver a five-star experience.
Shell and Jaguar recently launched the first in-car payment system. The Shell app is integrated into the car’s touchscreen, so customers can pay for fuel with a cashless payment method. The app can also direct drivers to the closest Shell station along their route.
As we enter the age of open banking, banks should find ways to partner with other companies or service providers, in order to become financial services marketplaces.
Innovative orchestration and automation technologies will also help banks speed up their response time when dealing with customer requests, enabling employees to complete tasks faster and more accurately.