With each new Fintech that arrives on the scene, the battle that banks face to bring new customers on board is becoming ever fiercer. Previously the main selling point of a banks had been on the specific financial product that a customer is looking to buy but that is no longer the case. In such a crowded market, products themselves are simply not enough of a differentiator for customers – what they are really buying is a strong and meaningful relationship with a bank. This means that the customer acquisition process has had to be redefined, ensuring the experience relevant, personalised and transparent so that banks can inspire trust in potential purchasers. Banks need to know their customers, set realistic expectations and be transparent about their processes in order to deliver the experience that will set them apart from the crowd.
Getting to know one another
The first step in customer acquisition is understanding each person as individual rather than just a number on a spreadsheet. Just as importantly, it’s the first of the process where the customer gets to know the bank. A successful acquisition journey is one of mutual trust, not a one-sided data extraction exercise. To be a successful journey, the focus needs to be on building customer trust through careful design and reliable feedback loops so that everyone is clear about what is happening at all times.
If this step is designed properly, not only does it help improve conversion rates but also allows banks to filter out unsuitable candidates early on in the process. As much as 10% of customer acquisition costs can be consumed by customers dropping out of the application process once expensive steps like credit checking have begun. If people understand what products they are applying for and whether such products are suitable early on, the cheaper the cost of acquisition becomes. Furthermore, even if candidates are unsuitable, a bank that has taken the time to understand them well can re-direct them towards other products which might be a better fit, thereby retaining their business.
Unfortunately, the customer acquisition journey will always have some dropouts. That is inevitable but by carefully managing customer expectations, the number of dropouts can be significantly reduced. This is because whenever there is an unwanted drop-out, regardless of the underlying cause, the problem is a contradiction between the customer experience and the expectations that have been set. If customers are led to believe they can have reliable, omni-channel and frictionless banking yet have to endure multiple information gathering steps, mistimed channel shifts or even poor help experiences, they lose trust and end up walking away. Therefore everything from the omni-channel experience to requests for supplementary documents must be designed with the customer experience in mind and rigorously tested to ensure it delivers.
It sounds simple but it’s crucial because, for the customer, the process is invisible. They don’t see the back-end checks that happen. All they see is the end-to-end time it takes to complete their application and if it takes longer than they are willing to accept, they will walk away. Yet in many banks the customer experience teams aren’t involved with a range of key steps in the acquisition process such as KYC or legal review. When this happens customer-centricity goes out the window and the experience can divide sharply from the smooth process the customer has been promised.
Trust requires transparency
Finally, the biggest lesson for any firm, regardless of industry, is that anything which undermines customer trust in the experience is hugely damaging to the acquisition journey. Happily, one of the most common reasons for this loss of trust is also one of the most easily fixable – a lack of transparency. Customers simply want to know where they are in the process, what’s happening to their application and how long it will take to get access to the product. Customers are more than willing to wait for a good product if it’s clear from the beginning how long it will take, what the process is and if they feel they can trust you. Conversely customers are more than happy to buy an arguably worse product if it’s rapidly accessible, and the application process is clear and straightforward. In either case, transparency drives trust which drives customer uptake, a lack of transparency damages both.
None of the above principles are wildly innovative or should come as a surprise to anyone working in the field of customer acquisition but the emphasis being placed on resolving these areas and improving the customer experience is very rapidly accelerating. Companies need to make sure they are keeping pace with the competition by constantly measuring, analysing and improving their customer experience processes. By really digging into their data, seeing each potential customer as a person and not just a statistics, banks can identify the weak points in their onboarding journey and reducing the number of unwanted dropouts, substantially increasing their profit per customer while also building better, longer-lasting relationships with each and every one.
Ed Fowler, Head of Customer Experience and Digital transformation, Virtusa