My Vya colleagues and I recently returned from our first BAI Beacon conference (Oct. 9-11 in Orlando), and I have to say, there was a freshness about it that is often lacking at financial services industry events. The format was energizing, the content thought provoking. Here are some of the top ah-ha moments and inventive aspects we experienced.
Let’s start with the format. The event took place in a large convention space called the “BAI Beacon Campus.” Presentations ran simultaneously on multiple stages throughout the campus, with vendor engagement stations located within the campus. Keynotes occurred on a main stage just off the campus. This created an invigorating hub of information exchange and learning. High marks to BAI for reimagining the conference experience.
BAI RESEARCH: MILLENNIALS, CROSS-SELLING & THE CUSTOMER EXPERIENCE
BAI shared results from its most recent 2018 BAI Banking Outlook*. Among the research findings, there were two big surprises that jumped out at me – one regarding Millennial attitudes about sharing personal information, and the other regarding cross-selling and the customer experience.
First, it appears personal data privacy and security has become a priority, even among Millennials who are less willing than in the past to share personal information. According to BAI’s 2018 research, only 29% of Millennials are willing to share personal information, down from 46% in 2017.
The data prompted a number of conversations with fellow attendees, several of whom noted that we need to become even more targeted when considering the Millennial demographic. The oldest Millennials turn 37 in 2018, while the youngest are 22. This means, the oldest Millennials have entered new life stages – they’re getting married, having children, purchasing homes. Their behavior will be different than the youngest of their generation. Read more about segmenting the Millennial cohort in this Pew Research post: Defining generations: Where Millennials end and post-Millennials begin.
The customer data theme was touched upon by keynote speaker Andreas Weigend, Founder of the Social Data Lab and Former Chief Scientist at Amazon, who challenged the audience by asking, “Do your customers understand the value they get when they give you data?”
The answer is, perhaps not. When BAI asked bankers about using customer data to better serve customers, 50% said they only do so sometimes; 34% always; 13% infrequently; and 3% never.
BAI’s research also revealed that cross-selling may hurt if you don’t focus on a good customer experience (infographic). Customers who were recently cross-sold accounts have lower Net Promoter Scores (31) compared with those who were not cross-sold (36). The reason? According to the researchers, it’s hard for customers to open accounts, which makes them reluctant to consider additional services. Of 13 accounts tested for ease of opening, where 10 is the easiest, all 13 scored below 6.5, and 5 types of accounts scored below a 6. BAI’s research suggests that if you make the process easier, 77% of Millennials and 25% of Boomers would open additional accounts online or with a mobile app.
IMAGINING BEYOND CLICHÉS & STEREOTYPES
Several speakers challenged attendees to recognize their own organization’s clichéd approaches as well as industry stereotypes that may be holding them back from differentiating their products and services.
Keynote speaker Luke Williams, Professor of Innovation at NYU Stern School of Business, and Founder and Executive Director of the W.R. Berkley Innovation Labs, challenged attendees to consider, what are your interaction clichés? Your product clichés? Thinking about BAI’s research findings about cross-selling, perhaps difficulty opening accounts could be a banking interaction cliché.
Likewise, in his talk on delivering an exceptional customer experience, Mike Reardon, Senior Facilitator for the Disney Institute, suggested, ”Service differentiation occurs when you rupture a widely held industry stereotype.”
Reardon further explained that whatever interrupts the customer experience, even though it may not be your fault, you have to own it as your issue. He shared an example of how Disney has a process for helping guests find their cars if they forget their parking section, even though guests are reminded repeatedly to take note of their section.
TRADITIONAL BANKS & SEPARATELY BRANDED DIGITAL-ONLY UNITS
Keynote speaker Kat Cole, COO and President, North America for FOCUS Brands, talked about the courage needed to drive change. Cole suggested, “Challenging market dynamics, like the tide receding, exposes problems that have been there all along, exposes complacency.” She advised, “As a leader, you need to see the truth, be humble enough to accept it and courageous enough to act on it.”
Cole offered three tactics for driving change when there are emotional barriers: 1) Confront reality; 2) Stay close to the customer; and 3) Internally, find the coalition of the willing.
Her recommendations likely ring true for those traditional banks who are challenging market dynamics as well as long-held internal strategies with separately branded digital-only banking units, like Finn by Chase or Greenhouse by Wells Fargo.
But there are many who still need convincing when it comes to separately branded digital-only initiatives. In one conference session, the audience of bankers was polled, “Do you think it is a good strategy for a traditional bank to have a separately branded internet (direct) bank as well?” The majority of attendees said no (64%), with 36% saying yes.
Perhaps separately branded digital-only banking units can address some of the current customer experience challenges. A Bankrate.com article on this subject suggests, rather than diluting the brand, this strategy can protect the existing bank brand while trying out a new channel. It can also address goals, like generating additional deposits. These separately branded units can also serve as a good testing ground for new products and services while offering better deals to customers.
At the conference, attendees suggested it’s easier from a technology standpoint to build a new platform rather than integrate into existing systems. Likewise, from a culture standpoint, these startup-like units can move faster with some distance from the traditional bank.
Of course, launching a new brand typically brings additional complications in terms of managing marketing assets, messaging and ensuring brand compliance. But these considerations are no obstacle for those looking to free their organizations from the constraints of their legacy brands.
Time will tell if these separately branded digital-only units can help traditional banks maintain a competitive position against digital pure-plays and other market forces. What’s refreshing is the innovative thinking that is driving this and other strategies for staying close to the customer and shaping the next generation of banking services.
Back at the office, we have much to consider from what we heard from the BAI Beacon stage and in hallway conversations with fellow attendees. These ideas are fresh in our minds as we turn our focus to strategic plans for 2019 and beyond.
*Source: Most recent 2018 BAI Banking Outlook - a quarterly research study consisting of consumers who have opened an account in the past year and financial services leaders from organizations ranging in size from community banks to large mega banks.