With the recent upheaval in the financial sector, consumers have changed the way they borrow, spend and save. In a quest for better customer service, more competitive rates and less fee gouging, many have moved from larger institutions to smaller community banks, credit unions and online banking.
What does this mean for larger and mid-sized financial institutions? They must consider how the integration of marketing, predictive modeling and decisioning can improve customer service while maintaining a profitable business model.
Here are four recommendations to help accomplish this:
Most financial institutions – large and small - have recognized the importance of making customer service their highest priority. The following examples depict a variety of innovative ways banks are answering market demands, but these innovations are only part of the equation.
JP Morgan Chase was the first traditional bank to offer its customers an iPad online banking application, stressing the importance of customers being able to bank whenever, wherever and however they want.
Wells Fargo recently instituted an option for customers to receive receipts for ATM transactions electronically, either by e-mail or within their online banking message center. The paperless receipts provide complete transaction data in real-time and a security benefit by notifying customers if someone else withdrew money from their account and identifies the specific ATM location.
Farmington, Mich.-based Community Choice Credit Union installed ATMs known as “Personal Tellers” that are equipped with video-conferencing technology that enables full-service teller transaction processing after hours.
Mango Financial Inc., based in Austin, Texas, has placed an entirely new twist on traditional banking by appealing to unbanked consumers through services that meet their immediate financial needs. Mango uses a paid-membership model designed to encourage customers to use the new institution over the long term and leverages mobile phone technology to enhance its appeal. Services include prepaid cards, bill pay and money transfers without the typical banking or check-cashing atmosphere.
The rest of the equation includes comprehensive measures to bridge the gap between profitability and preeminent customer service. The lenders of tomorrow are responding by sharpening tools to make them more customer-centric, maximizing every consumer interaction and connecting back office functions with what is happening in the front office.
Lenders still need to sell products and turn a profit but they recognize the need to balance that with a great customer experience and the right product offers while incorporating proper risk management to prevent increased collections on the back end.
First, a framework and infrastructure are needed to provide instant approvals, predictive modeling on the fly (to define quickly which products are most likely to be accepted) and tailored conversations that drive higher acceptance rates. If you want to get more products into consumers’ hands quickly, these things are essential.
You’ll need flexible technology that facilitates integration of back-end credit risk evaluation capabilities with front-end sales enablement along with real-time, intelligent sales diagnostics and decisioning. The end result provides consumers with the right product at the right time through their preferred channel, promoting a win-win situation. Banks make more sales while managing risk appropriately and customers are satisfied that their needs are being met.
Second, consider using a central offer repository which allows each channel to know exactly what offers have been extended to each customer. Few financial institutions have implemented this practice, but those that have experience a substantial increase in acceptance rates.
A repository gives banks the capacity to provide the same offer that a customer received in the mail when they come in the branch or visit online. In addition, this approach avoids annoying consumers with the same offer every time they interact with their bank, giving the impression that their institution doesn’t know them.
Intelligent use of customer data through an offer repository provides the capability to make offers where the customer is most comfortable and most likely to accept.
Third, supplement product offers with instant individual prescreens. This will allow you to acquire new customers and increase wallet share with current customers because the offers are immediate and relevant. An additional bonus is that it drives cost savings as the bank can prescreen consumers for different products through any point of interaction and across all lines of business instead of sending out mass mailings that provide minimal return.
Finally, the same strategies also may be expanded beyond account opening to assist with servicing and collection efforts. Analytics and modeling can be employed to determine which delinquent accounts should be sold and those where collection efforts are likely to be successful.
This advanced use of decisioning and analytics enhances the process for developing the situational scripting used to guide difficult collection conversations. In addition, the methodology used to keep customers from getting bombarded with the same product offers every time they come in the bank can be used to keep them from receiving multiple collection calls.
As institutions are taking an increasingly enterprise view of customers and enhancing the experience delivered to their customers, the need for a seamless process across products and channels has become paramount.
Banks need to pull together actionable data based on the priorities of the bank and the customer to predict product needs. Contacts with customers that weren’t being leveraged as opportunities in the past can now be supported by the ability to work across channels with greater knowledge about individual needs and preferences.
Maximizing every client interaction is one of the best ways for banks to protect themselves from credit risk and intervene before a given customer’s situation becomes a crisis.
After-hours access, paperless real-time receipts and non-traditional, innovative approaches to business help achieve an exceptional customer experience, but when banks combine their marketing, modeling and decisioning processes, this brings exponential value.
The good news is that most institutions already have some of these processes in place; they just aren’t synchronized to provide the maximum return. Institutions that become more tactical in terms of predictive modeling and analytics will close the gap between connection and delivery.
Eric Lindeen is director of marketing at Zoot Enterprises.