There’s a danger that writing a blog focused on the current Coronavirus outbreak could be seen as a cynical marketing ploy. But I’m going to do it anyway as what we’re experiencing right now is unprecedented, and will have implications long after this outbreak is contained.
Every day, more businesses and public institutions are facing short-term closures, and more governments are recommending social-distancing and self-isolation strategies. But despite these challenges, people are trying to maintain some degree of normality. And access to their money – and guidance from their banks – is something that people not only expect, it’s something that they need.
While the focus must be on addressing the health and well-being of everyone, the measures that all countries are taking to contain and, hopefully, stop this pandemic are also hitting millions of people in another ways – their livelihoods. Between February 23 and 24, the affect of the Coronavirus wiped $1.7 trillion off the US stock exchange – that’s our investments, savings and pensions.
According to Reuters, over 50 million tourism jobs worldwide are at risk – with estimates for the US workforce alone standing at 15 million. I’m not necessarily talking about job losses here. In the short term, it’s the uncertainty of not knowing what’s going to happen to your paycheck. As people are sent home – either because the business has temporarily closed or to work from home – they are unsure of their financial situation or even whether they can access their financial services in the same way as they did before.
We’ve seen banks like JP Morgan Chase and Capital One stress online and mobile banking alternatives. There’s no doubt that providing digital, rather than physical-based, financial services is going to be a big part of the solution but does digital by itself go far enough? At a time when the needs of every individual customer are so unique and have to be addressed in that way, can you deliver that type of highly customized digital customer experience?
What’s a ‘personal Yoda’ and why will your customers need one?
When discussing personalization last year, BCG stated that: “To be sure, personalization in banking is not primarily about selling. It’s about providing service, information, and advice, often on a daily basis or even several times a day. Such interactions, as opposed to infrequent sales communications, form the crux of the customer’s banking experience.”
It’s easy to see how that statement can be applied to our current situation. When people are faced with uncertain financial futures, they don’t need to be sold to. They need to have a trusted advisor to help through difficult and complex decisions – decisions they may have to take quickly and regularly as their own situation changes.
In effect, the financial service firm – whether bank, investment house or insurance brokerage – has to move from provider to intelligent and trusted advisor. You need to be a personal Yoda, able to give targeted and accurate advice whenever your customer requires. In addition, you should also look to provide a sense of calm to alleviate the growing emotional stress caused by financial uncertainty. And, that really means having the systems in place to allow this level of personal service.
Are you ready?
But, how many financial institutions are there today? Ron Shevlin, Director of Cornerstone Advisors and Forbes contributor recently told the Financial Brand: “Nearly every financial institution I’ve surveyed or spoken to says that ‘personalization’ is important to their customer relationship building efforts. But when it comes to ‘personalizing’ a product – like offering flexible payment terms on mortgage payments, or allowing someone to ‘skip a payment’ – it’s ‘oh no, we can’t do that’.”
However damaging to your short-term business model, it appears that facilities such as payment holidays, flexible payment terms and customized loan agreements will all play a part in addressing customer need. What’s changed is the calculation around what represents a valuable long-term customer relationship. In many cases, short-term profitability has to be replaced with lifetime value – but that only matters if you can retain your customer.
The 2019 Retail Banking Report from Bain & Co. found that traditional banks were experiencing ‘rampant’ leakage of customers to BigTech, Fintech and specialist start-ups. People may take this time to re-evaluate the service they get from ALL companies, and while this Coronavirus outbreak shouldn’t be the only reason for banks to offer more personalised service to customers, but it can be a trigger to start doing so.
I think the significance of these statistics is that extended periods of isolation at home, where people are using digital and mobile channels for their financial services needs, gives your customers time to evaluate the services they are receiving. Some banks are already responding and offering relief to customers during COVID-19 by offering relief to customers.
The financial services companies that can best protect their business through a crisis like the current Coronavirus pandemic will be those that can quickly and effectively evolve their digital experiences to meet individual customer needs. For others, it’s likely to expose the gaps in their digital strategies that must be quickly addressed.
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