Welcome to my inaugural blog. By way of introduction, I joined Accenture last year as the lead for the Consumer Insight & Growth practice for Financial Services in North America. Over more than thirty years in financial services, I’ve developed a passion for helping clients remove the barriers to next-level revenue growth and profitability. I’m particularly interested in the areas of customer experience, sales-force effectiveness, operating model transformation, digital and cost reduction, and I look forward to using this blog as a forum to share my thinking on these top-of-mind business issues.
Who isn’t talking about customer experience? From hospitality to retail, entire industries are shifting from a product to an experience focus. Retail banks may not be pioneers here, but they have a strong foundation to build on to provide superior experiences for customers. This is an enormous opportunity for banks to engage people in new ways that make a meaningful difference in their lives.
The results of our 2019 Financial Services study of 5,000 consumers from North America reveal why. Survey responses show that 86% of these consumers trust their bank to look after their data, and 80% trust the bank to protect their long-term financial well-being. Further, consumers trust their banks with their data—78% will share data for advice that fits their personal circumstances.1
Good for you. Good for me.
Banks can use this combination of trust and data as a springboard to deliver new value to customers. At the same time, they can realize new value too. It’s like Cuba Gooding Jr. told Tom Cruise in the movie Jerry Maguire: “Show me the money.” The goal is to create high-quality, cross-channel experiences that customers want and that deliver value to banks. Institutions that get it right set themselves up for the trifecta of improved revenue generation, cost reduction and ultimately profit expansion.
Because here’s the reality. The days when banking had an unchallenged place in the economy are over. The value chain is no longer closed. Open banking and customer expectations from other industry sectors are rapidly changing what it means to compete in banking. Today, 19% of US financial institutions are new entrants, and they have captured nearly 4% of total banking and payments revenues2—and are undoubtedly on the hunt for more.
Banks have been slow to evolve their business models to compete in this new landscape, held back by organizational silos, talent and technology gaps, and lack of alignment around incentives. Many banks stay in their lane. They over index on narrow, product-centric offers, while new entrants push convention and win market share. And while banks have a mass of customer and transactional data—a gold mine for developing hyper-relevant customer experiences—many are not harnessing it for insights. In other words, the enormous amount of client data that banks have collected is worthless because it is not being used to drive value for their clients and for themselves.
When everyone gets what they want
So what do banks need to do to monetize the customer experience? I think there are three fundamentals that they absolutely must get right:
1. Full view of customer profitability
Surprisingly, some of the world’s leading banks still do not have a stable customer profitability view. This is a troubling Achilles heel. Banks can’t even begin to monetize customer experience without understanding profitability at an individual customer level. It’s like throwing arrows at an invisible target.
A more granular view of customer profitability demands dynamic data management and analytical sophistication. This is key for banks to curate and prioritize their offers. While banks have the data and the tools to do this, they need to go one step further and act on data insights. This means making decisions around customer experience offerings based on what they learn about customers—especially the most profitable ones. Put simply, tools and data are not the end. That’s a false paradigm. My mantra here—and it should become banks’ too—is this: data, insight, action.
2. Broader value proposition
People are essentially begging for more from their banks. In fact, our survey reveals that financial services consumers in North America want integrated propositions that address core needs—services that embed banks into people’s lives. The results reveal that 42% of consumers are interested in a home care package, and 34% are interested in an end-to-end home buying service.3 Having this expanded trusted channel to orchestrate all the disparate and confusing aspects of the homebuying process— including selecting a real estate broker, securing a mortgage, selecting a contractor for renovations, buying material at a cost effective price, and moving in—would be a tremendous new value proposition for consumers.
Banks could realize new value as well by accessing untapped revenue pools. For example, Accenture analyzed the total revenue in play for Canadian first-time homebuyers. The money they spend on a mortgage is only about 10% of what they spend on their home in the first three years. Today, this revenue is sitting in lawyers’ fees, moving costs, renovation expenses and more.4 Tomorrow, some of this revenue could shift to banks that pivot from selling mortgages to selling home buying experiences.
3. Pricing right for value
Pricing drives consumer behavior and growth for retail banks. While it can be a delicate balancing act, my experience suggests that consumers are largely open to paying a premium if they get a premium in return. Of course, banks still need to manage pricing effectively. There is always the risk of creating customer experiences that fall flat because they do not align with consumers’ comfort levels and expectations around price.
This is why banks need a razor-sharp understanding of consumers so that they can respond to them in real time with relevant pricing and offers. This kind of customer-centric pricing pays off. Customers happily get what they pay for, and banks drive growth. In fact, 36% of high performing banks (those with average annual growth rate above 5% and annual margin growth above 10%) plan to use a pricing structure that crosses the bank’s lines of business compared to 19% of lower performing banks.6
A win-win situation
The more that banks look at customer experience through the lens of a mutual exchange of value between themselves and customers, the better positioned they are to both delight customers and compete. Watch this space for my next blog, where I’ll discuss another aspect of today’s rapidly changing retail banking landscape.
1 Accenture, “2019 Accenture NA Financial Services Consumer Study,” https://www.accenture.com/us-en/insights/banking/north-america-consumer-survey-2019
2 Accenture, “Banks’ Revenue at Risk Due to Unprecedented Competitive Pressure Resulting from Digital Disruption, Accenture Study Finds,” October 17, 2018 at https://newsroom.accenture.com/news/banks-revenue-growth-at-risk-due-to-unprecedented-competitive-pressure-resulting-from-digital-disruption-accenture-study-finds.htm
3 Accenture, “2019 Accenture NA Financial Services Consumer Study,” https://www.accenture.com/us-en/insights/banking/north-america-consumer-survey-2019
4 Banking in the Digital Economy, Alan McIntyre, Accenture Global Banking Practice Leader, Banking Growth Forum, 2018, at https://www.accenture.com/us-en/insights/banking/perspectives-products-promises-nomis-mcinty
5 Accenture, “2019 Accenture NA Financial Services Consumer Study,” https://www.accenture.com/us-en/insights/banking/north-america-consumer-survey-2019
6 Accenture and Nomis, “2018 Retail Bank Pricing Survey,” https://www.accenture.com/us-en/insights/banking/profitability-customer-centric-pricing-nomis