Banking

Deep consumer insights – the key to successful financial services

A butterfly made from one dollar notes, used to illustrate an article about consumer insights.
Written by Roger Peverelli

Financial services companies can become better at understanding consumers by utilizing deep consumer insights, says Roger Peverelli.

In financial services, most ideas traditionally originate from what is technically possible. With the power shift to consumers, outside-in is the inevitable model of the future. Financial services companies will have to become much better at understanding consumers. The chance of success increases dramatically when the idea is built on deep consumer insights.

A consumer insight is a true discovery about consumers that enables us to really connect to their lives. It’s a discovery on purpose, since finding such consumer insights goes much further than the usual consumer research. Consumer insights are rooted in consumer trends. In our book ‘Reinventing Financial Services: What Consumers Expect from Future Banks and Insurers’, we identified the six key consumer trends that set the stage for the future of finance. It’s essential that innovation taps into these trends to hit the perfect note.

1. Consumers’ relationship with financial institutions has changed – Trust is still under pressure. Our research shows that touchpoint performance, the ease of doing day-to-day business, are the most important elements in building or reinforcing trust. Trust cannot be restored simply by talking about it in advertising. It’s won back by excelling in the daily provision of services. Innovation should create service excellence on top of operational excellence.

2. Consumers are calling for transparency and simplicity – Transparency is the single most important factor in corporate reputation. Choice and information overload drives the call for simplicity. Our experience in the worldwide implementation of transparency and simplicity in financial institutions is that this goes beyond the products. It requires, for instance, major adaptations to business models. Differentiation is more difficult when all products are transparent and simple. Therefore, the focus of innovation should shift to creating ‘simple experiences’: services and customer journeys that are simple, engaging and distinctive.

3. Consumers become more and more self-directed – Self-directed consumers value their independence and rely firmly on their own judgment, although they also value expert advice and listen to peers. They do not necessarily want self-service. They want to be in control, they want to be empowered. Offer guidance with the aid of tools to support customers in managing their financial situation. Such tools for empowerment will become a core part of the company’s service identity, and therefore important proof points of the brand.

4. Consumers rely on the wisdom of crowds – People prefer the unbiased opinions of their fellow citizens and consumers to the beautifully wrapped messages of companies. Social media are perfectly fitted for co-creating, piloting, testing and learning. However, the innovation challenge is to leverage the wisdom of crowds as an integral part of the offering, for example by allowing peer to peer comparison and support.

5. Consumers are revaluing values – Across the globe, consumers are longing more than ever for institutions that care. In essence, ‘ethics’ is all about doing business decently: honest, open and fair. Recommend only those products you would buy yourself. Treat customers the way you would like to be treated the moment you change your company outfit for consumer clothes. This provides new points of departure for innovation in financial services.

6. Consumers prefer to feel close – Consumers crave for identity and community, authenticity, being recognized and treated as a person. It’s about added value and the human dimension. ‘Closeness’ is more than ‘physical proximity’. The innovation challenge is to reflect ‘close’ across channels. The rise of smartphones and tablets adds another dimension. The smartphone is an essential part of everyday life, the only thing you always carry with you, the last thing you check before you go to sleep. Reviewing the context in which financial services are used will yield consumer insights and opportunities to help in specific instances. For insurers, it would be situations that put consumers at risk, while for a bank it would be the moment a consumer spends money. Mobile apps make financial services a part of the consumer’s life right where it matters the most.

About the author

Roger Peverelli

Roger Peverelli is a partner at consultancy VODW, specializing in customer-focused strategies in financial services. He is also co-author of 'Reinventing Financial Services. What consumers expect from future banks and insurers'.

3 Comments

  • I would say that for a community bank or any other small bank, it is even more important to recognize the value of building relationships online.

    With the advent of the mobile phone and digital currency becoming more and more viable in the form of mobile payments and NFC, the value of the branch is declining.

    Smaller banks need to build a relationship with their customers by making sure they are reachable, and by establishing truly human relationships with their clients outside the boundaries of the traditional branch setting. A failure to do this would spell a quick death in the new world.

  • Large traditional banks still make relatively high costs to earn a profit from consumers (if at all). Apart from that, many banking boards focus on other topics, such as increased regulatory requirements and the redemption of state support. I therefore don’t see how deep consumer insights could make a difference, without matching those with deep (per bank specific) organisational insights. Only then you can really make a difference for a bank and its consumers.

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