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

Traditionally, if consumers consolidated business (the traditional proxy for loyalty), they normally did so for the ease of banking at a single location. But a networked consumer can now have a far easier one-stop shop experience and enjoy best-in-breed solutions for every need, by managing multiple providers on a single device. Not only is ease now unaffected by the number of providers used, but it is also taken for granted. As a result, digital customers are 60% less likely to consolidate all of their products
at a single institution and 30% less likely than non-digital customers to purchase their next product from any incumbent (Figure 5).

Figure 5
With convenience—the means—now a given, customers are seeking the end—providers that most effectively help them achieve specific life goals. Customers who perceive that their financial provider effectively helps them take pivotal steps toward success are 50% more loyal (measured as cross-sales and up-sales) than those who do not.

Retail banks that recognize the importance of “moments of truth” are investing heavily to improve financial planning and to ease product purchase. Yet customers believe that the biggest barrier to achieving their goals is not the absence of a good planning document or of a new product, but rather their own daily behavior.

It is painful to change habits and difficult to understand how everyday actions will impact long-term outcomes while in the process of deciding on those actions. So customers value firms that use new digital capability to routinely intervene and help them stay on track (Figure 6) either by automating important tasks that are so difficult or unpleasant that they foster procrastination, or by showing the customer how everyday decisions will impact goal attainment.

Figure 6
An astonishing 64% of the difference in how well customers perceive their bank creating value in pivotal steps is explained by the customer’s perception of how well their bank helps them stay on track. Unfortunately, although customers believe that help staying on track is the most important contribution a bank can make to their financial well-being, they also perceive it as the average bank’s weakest area of performance. And although two-thirds of customers believe their bank is effective at helping them buy bank products, less than half believe their bank helps them stay on track.

Read The Next Installment Of “The Digital Tipping Point” Series – Implication Three: A New-in-Kind Relationship!