PRECIOUS BANKING MOMENTS
Manolis Koumantaros and Victoria Stephens suggest ways to re-embrace lost customers
Few sectors have experienced as much disruption as banking has over the last decade or so. The trusted partner personified by a high street presence and the friendly bank manager have given way to an uneasy hybrid of digital and telephone services.
Recession, digitisation and high street closures have changed people’s perceived relationship with banks from trusted partner to service provider. Banks have suffered from their lack of customer centricity, focussing on sales rather than forging the long-term relationships of old. At first, banks continued to focus on their most profitable and top priority segments but alienated younger customers who felt their needs were being neglected.
Relationships became antagonistic with hidden charges and cumbersome online banking not being able to keep pace with the rapacious demands of ‘digital natives.’ Younger people are starting to switch to new, smart and personalised digital services.
The older generation too felt betrayed. As their high street branches closed, and were replaced by disappointing telephone banking and confusing online portals, they felt overwhelmed and under supported. New digital payment technologies felt unsafe or alien, making this generation unwilling or unable to embrace them.
ONLINE BANKING Driven by technological advancements, a new and dynamic world of online banking has emerged. Digital players have pounced on the opportunities created, and are reinventing services and payment systems.
Agile digital banks and online payment tools with low overheads provide streamlined services designed to meet specific needs in real time. Such amenities are bolstered by eliminating transaction costs and charges from which established banks have traditionally drawn profits.
But not everyone is convinced.
Although the adoption of these new services has been driven largely by the younger generation, it is the older consumers with buying power and savings who present the greatest opportunity for banks to capitalise on through this disruption.
So how can banks leverage their positions of trust and evolve existing portfolios of payments? How can they create new moments that allay fears and broaden their share of wallets?
They can do so by tapping into moments of tension, and helping older customers understand and use digital payments, as well as enjoy the benefits on offer.
SIZZLING REWARDS Many of us have credit cards with rewards schemes but how many of those rewards do we really want? A dinner at a restaurant chain 30 kilometres from your house is unlikely to be an incentive whereas 20 percent off your favourite local restaurant might warrant a change of dining plans.
By capitalising on the data available from a user’s regular spending habits, banks seeking to incentivise new and sometimes radical digital services could create some very attractive rewards schemes. Targeting those moments when a user might be likely to sample the service and tailoring the reward to their needs could help older customers take their first steps into unknown territory.
Shopkick is a location based rewards system that covers all major retailers in the US in partnership with MasterCard. The service enables you to pay conveniently on an app, which generates points through an extensive and well-targeted rewards scheme. The service builds brand loyalty by creating consistent positive moments between favourite retailers and customers.
REAL TIME UPDATES Many older people mistrust digital transactions altogether. Headlines focussed on identity theft or phishing create fear and a sense that the process is unsafe.
Real time updates on spending can help reassure nervous users that their money is being well managed and offer the comfort that issues can be identified quickly.
Furthermore, ‘in the moment’ trust building could translate into long-term relationships with brand loyal older generations. If they trust you to help them manage their spending, they’re more likely to trust the advice you give them on products in those significant life moments going forward.
Alignment of interest builds trust in digital payment services and broadens appeal. The mass market adoption of M-Pesa in Sub-Saharan Africa for example, taps into moments where caution and a lack of savviness are usurped by convenience and necessity. Real time digital transactions tracked via an app are more often a smarter and quicker way to pay than reaching into our wallets.
A new breed of ‘digital challenger’ banks is taking the market by storm.
Services from Monzo and Revolut are free of charge, and come with accompanying smartphone apps. They offer perks like free cash withdrawals abroad, competitive exchange rates, and real time transparency on spending (via a simple smartphone app) to surprise, delight and build trust in the moment by keeping users constantly updated on their spending.
Although Monzo’s target audience is younger, the opportunity to replicate its functionality for an older clientele is clear.
OFFERS OF INTEREST A key difference between younger and older generations is how they view novelty in the financial services industry. Youngsters embrace it whilst older generations view it with suspicion and often do not see the value addition of digital payments.
Adding new functionality to existing social networks allows payment providers direct access to those moments when people might want to repay or gift money. A discussion via a messaging app about dining out could be supplemented by the opportunity to repay others for that meal. Congratulations on a birthday could be complemented by a cash gift.
For example, WeChat’s peer-to-peer (P2P) payments in China offer red packets, which is its P2P payment offering. WeChat is used by approximately 55 percent of China’s population and over 2.3 billion red packets were sent on Chinese New Year in 2016.
SIMPLE AND SECURE The digital online payment space has been created and shaped by disruptors, and banks will play a key role in making them mainstream. Older people present a key opportunity for banks to harness the power of the moment and align people’s needs with new technology.
To effectively target consumers across their payment moments, providers should go back to basics and continue to offer simple, dependable and secure payments while enhancing the value of their offering. Banks must create synergies between transaction moments and user experiences that are second to none in order to get through to the sceptics.