Read The Introduction To “The Digital Tipping Point” Series HERE!

Customers increasingly expect more from their bank than just passive offers and generic accounts. Historically, when a customer’s situation required them to buy or to use a financial service, that customer had to stop what they were doing, access a provider-controlled channel, complete a provider-driven process, employ a provider-de ned solution, and then return to whatever they were doing. Today, customers expect providers to join the customer’s process as they engage in it, understand the customer’s situation as it unfolds, immediately connect the capability or advice the customer needs to move forward, and then monitor the impact— intervening to help the customer stay on track.

That transformative approach to using digital capability is impeded by a pervasive mind-set in which retail bankers equate “digital” with “channels” —specifically “digital” to mean channels that are “not branch” (Figure 7). As a result, the vast majority of the industry’s “digital” investment merely replicates tasks that are already available through a branch or relationship manager.

Figure 7

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To capitalize on ubiquitous digital access, banks must reconceive of digital not as alternative channels, but as a different-in-kind ability to understand and to intervene. Leading institutions are beginning to chart this course by addressing four specific challenges:

Challenge 1: Secure a voice in the 71% of the consumer decision process that now occurs outside of any bank’s distribution network— and therefore beyond any bank’s line of sight—by joining the customer’s learning network.

Action: Local customer networking

Due to (often nonspecific) compliance and risk concerns, most banks are hesitant to allow in-market sta to be active on their customers’ social networks. As a result, participating in customers’ networked learning remains the weakest link in the new sales environment.

Although extensive anecdotal evidence suggests that customers with no interest in an institutional view will react to input from a staff member they know, less than 20% of banks allow local staff to directly engage using social media. Surprisingly, those banks have suffered no adverse consequences. In contrast, roughly one-quarter of banks that prohibit local staff from using social media have suffered public consequences as staff engage anyway, using personal accounts. Ironically, prohibiting social media to limit risk appears to create more risk than does an organized program that encourages and enables use.

Those organized programs reach far beyond simply enabling Twitter or LinkedIn. As shown in (Figure 8) the front end monitors all networks the banker is authorized to use and employs a natural language filter to recognize the buying signals or relationship opportunities that naturally ow across social media. For example, rather than expensive systems that attempt to guess life events, the engine translates a post such as “Welcome Billy, 8 lbs. 5 oz.” into a CRM entry on the birth of a male baby and identifies a probable need to save for college.

Figure 8

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The content engine analyzes that social input in the context of the bank’s content library and campaigns to provide the staff member with an appropriate response to post or tweet, or a response template to populate. Tools on the advisor dashboard let them easily personalize a response. Capitalizing on the fact that users come to social media intending to spend time and consume content such as photos, updates, or blog views, these carefully crafted responses provide appropriate content to support a customer’s networked learning—effectively extending what our best sales people once did in-person. By screening every post, identifying which to respond to, and composing the response, this engine enables staff to engage heavily with minimal use of time. It also ensures that all posts and responses are compliant and consistent with the delicate ethos of social media.

The final required component is back-end tracking, including message logging and reporting, to ensure compliance, detail monitoring to enable coaching, and customer-specific communication plans to manage sequencing and avoid overload.

Several North American banks implementing one such program report 17%–20% of branch staff become highly proficient social media users. Expanding their ability to understand their customers’ lives and intervene in their networked learning enables those individuals to increase sales 15% to 40%, with much higher certainty of compliance than existed before the program began.

Challenge 2: Serve the most complex and valuable customers with the most highly skilled associates, and vice versa.

Response: Dynamic routing

For banks in desperate need of more sales, it is deeply troubling that a customer’s decision to enter a specific branch immediately puts the vast majority of a bank’s staff , tools, and products beyond that customer’s reach. “Dynamic routing” is one bank’s commitment to break that tyranny of location and serve every customer who enters a branch (or places a call) with “the best available resource”—regardless of where the customer or the resource are located (Figure 9).

Figure 9

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To find the best available staff for each interaction, the bank de ned every competency needed in retail banking, from taking a deposit to developing an investment plan, and developed training and certification for each competency. Across time, the bank phased out conventional base salary and replaced it with a set of monthly stipends, based on the value of each competency, and paid for each certification an employee maintains. The database of certified competencies is linked to the phone directory, so when any staff member logs on to a phone in the branch, an office, or the contact center, their competencies become available for other staff to access.

If an associate serving a customer in a branch lacks the skill or confidence to meet the need, that associate selects the required competency from a drop-down menu. The system selects the lowest-cost available associate with the required certification and opens a video link to a branch conference room. The customer is walked back to the “specialist’s office” for an immediate introduction. The branch associate remains engaged so that the customer experiences additional expertise rather than a hand-o .

Incentives are structured to motivate branch staff to seek help and certified staff to provide it. Bonuses are primarily driven by transaction-specific Net Promoter Score and sales lift. Staff set their own sales goal. The higher their goal the higher the percentage payout for exceeding that goal— motivating the best staff to shoot high and then engage effectively across all channels.

Sixty-four percent of surveyed customers report that dynamic routing provided the best advice interaction they ever had with a bank. Immediately understanding the customer’s need and intervening with the most qualified help yields better need identification and higher close rates, cutting cost per sale in half. Focusing the highest skilled staff on warm introductions improved specialist productivity 240%.

Challenge 3: Intervene to provide customers with high-impact support or capability in the moment, even as the frequency of personal interaction plummets.

Response: Task-to-insight to engagement tools

As customers interact less frequently with branch staff , even firms that conduct constant (expensive) analysis of banking activities find it difficult to discover customer needs in the context of the tasks that customers perform every day. In response, Grace Bank in Turkey capitalized on the ubiquitous use of mobile devices among its priority customers to deploy a presentation layer of mobile tools over its core products, which interact with those tasks (Figure 10).

FIgure 10

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Embracing the mobile ethic of narrow precision, each tool focuses on one specific task customers perform frequently. For example, by purchasing goods or services through integrating its digital wallet into every popular social media site, a bank can become the national focal point for discount seekers while embedding effortless commercial and person-to-person payments.

Grace Bank uses data from the customer activity that occurs across each tool to develop insights intended to help customers anticipate issues and get control of their financial situation. For example, on the purchase app, the customer can build a personal budget using insights gained from previous spending patterns. The tool tracks actual spending against monthly goals. It warns of potential overspending in the moment and analyzes patterns to o er advice on short-term behavior changes that could improve the odds the customer reaches their long-term goals.

By regularly offering the customer product-agnostic advice focused on his or her goals, the bank earns the right to also use data-driven insight to suggest products. It identifies needs and offer solutions in the context of whatever life-task the customer is trying to accomplish. For example, if the customer is making a purchase that will require them to liquidate savings or investments, the bank might immediately offer a short-term loan as an alternative. To integrate that offer into the purchase now being made, the application is positioned as a “one-click upgrade” and digital documentation is presented for Digipen signature.

Because the loan or saving product is embedded in the task-oriented tool, customers may not know which product is being activated to meet their need. Since their objective is to complete a task and the offered product is on the critical path to success, they do not need to know. And any emphasis on product choice would be purely provider centric.

In the first quarter following rollout, a mobile tool intended to understand customer purchase behavior and intervene with advice on purchasing or accumulating assets prompted 10% of users in the target segment to apply for a one-button loan and 19% to activate savings capability.

Challenge 4: Replace waning staff credibility with institutional credibility as an advisor who helps customers stay on track for their priority goals.

Response: Preemptive customer outcome inflection

Almost a decade after the global crisis, the typical consumer still believes banks are far more interested in making money than in serving customers. To redress that perception, and to earn loyalty, LP Financial1 monitors customer actions that leave a digital footprint to anticipate potential problems and o er a workable x. It intervenes to preempt potential service problems (e.g., when a customer buys an international plane ticket, the bank sends an interactive alert to ensure the customer’s card will not trigger a fraud warning and be denied at the foreign destination), potential payment problems (e.g., alerting the customer if their current spending and cash flow is jeopardizing their ability to make an upcoming scheduled payment), and, most importantly, to help customers make progress on their life to-dos (e.g., automating important tasks that customers avoid because they are difficult or unpleasant).

Figure 11

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Closely monitoring customers and actively intervening requires a revolutionary increase in intimacy. To ensure customers remain comfortable, LP Financial uses short-cycle test-and-learn not only to identify opportunities to help but also to monitor each customer’s reaction (Figure 11). Every combination of message content and delivery vehicle is analyzed in the context of subsequent customer behavior and product usage to understand how effectively the combination provoked the desired behavior and to instantly sense any indications of annoyance.

A second, equally well-received method for helping customers stay on track is to analytically compare the behavior of customers who fail to achieve a particular goal with the behavior of customers who succeed and then design products that encourage the most difficult but effective behaviors. For example, one bank built a simple solution for customers who are frustrated by their inability to save. The bank removes a pre- committed sum from every pay check and transfers it into a “hidden pocket” that is less visible and far harder to access and spend.

As with LP Financial, the bank’s deep understanding of customers—in this case, the specific behaviors that differentiate success and failure—are used both to build the solution and to underpin a highly intentional communication plan. Staff selling any behavior-modifying products are equipped to precisely articulate the intent and the features with terms that resonate with the customer frustration that the product is designed to address. That promotes sales, stimulates the customer to use the product effectively, and garners the bank extraordinary publicity for offering such unique products.

Stay Tuned The Next And Final Installment Of “The Digital Tipping Point” Series – Implication Four A New Call For Leadership