James Eardley, Global Director in SAP Hybris Industry Marketing, offered advice on the daunting task of engaging customers in the financial and insurance industries.
“In banking and insurance, customer engagement is an uphill battle,” stated Eardley at the outset of his thought leadership presentation at the 2017 Financial Services Forum: Marketing & Technology Innovation, held on September 7 in Boston. “I interact with my bank several times a week, but I’m not engaged. It’s just a transactional activity. Insurance is even worse.”
Eardley posted figures indicating 99.94% of online ads are ignored, and there’s only a 3.57% email click-through rate and a 0.62% all-digital-channel response rate. “Banking and insurance are different from other industries in that they’re not an end in themselves. They’re a means to an end. Most customers see little or no difference between one institution and another, and because these are regulated businesses, there’s not a lot you can do to differentiate yourself,” Eardley pointed out.
He then asked this fundamental question: “What makes a good financial institution different from a bad one?” He responded, “Good financial institutions deliver high-value ideas to customers on how to reach their goals, and they make those ideas happen for their customers quickly and simply.”
“Good financial institutions deliver high-value ideas to customers on how to reach their goals, and they make those ideas happen for their customers quickly and simply.”
In the past, the branch agent or advisor interacted with the customer. He or she proposed ideas—advice and solutions that were personalized and contextual. The agent/advisor then served as the guide to help the customer arrive at the solution. “This worked because agents and advisors knew their customers and their industry. Importantly, it wasn’t just about sales,” Eardley emphasized. “In the digital age, it’s all about sales.”
He continued, “Digitalization changed everything. The consumer has a lot more power than they ever had before. Customer engagement is more difficult in a digital world. Given the long gaps between sales, banks must find ways to add value to the customer relationship when they’re not selling,” stated Eardley.
“We commissioned Finextra to do research to determine what customers value beyond sales. This research included interviews with bankers, thought leaders, and end customers. We found only about half of customers feel engaged by their banks, and only 36% believe the bank is their advocate. Importantly, customers want a banker to act as a banker—as a personal banker and financial advisor,” he said.
“When we asked banks about their personalization efforts, we got some mixed messages: 94% of banks said they seek to position themselves as a trusted advisor, while, at the same time, 50% of banks surveyed said they didn’t put the customer first,” noted Eardley.
“Ninety-four percent of banks said they seek to position themselves as a trusted advisor, while, at the same time, 50% of banks surveyed said they didn’t put the customer first.”
"Regarding challenges that banks face, we found that over 80% identify legacy systems as an obstacle—no surprise there. In addition, 82% have trouble finding ways to engage customers. However, 90% are finding it hard to compete with Fintechs based on the experience they can deliver. That’s a lot,” said Eardley, “but this comes back to bankers needing to be bankers. Bankers are fundamentally smarter than Fintechs in banking.”
The main findings from the research were:
• The value banks can bring is in areas adjacent to their traditional business.
• The value lies in convenience and simplicity.
Turning to insurance, Eardley said this industry is the worst when it comes to customer engagement. “When we asked about factors that influence consumer choice when purchasing property and casualty insurance, we found that, although price was by far the largest factor, there are opportunities to add value on a more continuous basis. Reducing customer risk is the greatest source of value engagement. Minimizing the impact when a claim occurs and providing convenience (i.e., apps for phones) and rewards are other sources of value engagement. Customers will pay for value engagement—at a rate of about 5%, we discovered. Reducing a customer’s risk should be the focus of initial value engagement offerings, and value engagement is part of a wider repositioning strategy.”
In summary, Eardley stated, “You want your customers to turn to you rather than the Internet when they have a financial or insurance need. If you can’t do that, you’re doomed. You’ll be commoditized out of existence.”
“You want your customers to turn to you rather than the Internet when they have a financial or insurance need. If you can’t do that, you’re doomed. You’ll be commoditized out of existence.”
ABOUT JAMES EARDLEY:
James is a Global Director in SAP Hybris Industry Marketing and is responsible for demand generation in the Insurance and Banking industries. In that role, he serves as an industry expert responsible for keeping abreast of business and IT trends and how they relate to front office activities. He has written and commissioned several thought leadership white papers focused on the business challenges of the digital marketplace and the importance of meaningful customer engagement.
Originally from the industry, James has over twenty years’ practical experience in Financial Services, where he held product and program management positions at a number of financial institutions including Merrill Lynch, Colonial Funds, FleetBoston, and Bank of America.
Besides his extensive industry experience, James has more than ten years’ experience in Product Management and Marketing roles for leading global financial service software providers.
He holds an MBA from the Carroll School of Management at Boston College University.
James lives on Boston’s North Shore and likes to spend his free time sailing and skiing with his family.