“Customer-centric” has been a buzzword in financial services for decades. The reality is that it has usually been an aspiration, and rarely a destination. The damage done by this has been limited thanks to reasonably robust quant surveys and customer segmentation models, but that’s now changing.
What we see today is a rapidly changing landscape where customers are evolving more quickly than ever – and where companies are failing to adjust. The financial services industry is rife with examples: the advice market’s furious debate on the merits of robo-advice versus face-to-face omits any serious consideration of customers’ preference, due in no small part to an absence of understanding of those preferences. Meanwhile, banks preparing for PSD2 are still in many cases considering access to their customer data their exclusive right – without considering what the customer themselves might want to do with it.
Compounding the problem, consumers today are fundamentally different to the consumers of ten years ago. The ability of the average person to share their views to a wide audience has increased exponentially. The ability to publish, engage and share at any time has had an effect on us as individuals, shaping how we evaluate the importance of our own opinion and our willingness to share it.
The conclusion? The attitudes and segmentation of people is significantly less predictable than it once was, and many FS businesses are ill-prepared.
Until recently, a mix of data gathering and ‘conventional wisdom’ about customers gave organisations confidence that they knew their markets. The problem with this, of course, is that conventional wisdom tends to let us down.
The alternative – tearing up the rule book and starting again- is usually considered far too scary for organisations steeped in market segmentation lore and vast reservoirs of survey data. There’s an eagerness to stick to the traditional broad groupings of customers, a shorthand for understanding an extremely complex set of motivations and behaviours across a wide range of demographics. But to do so is to suggest that what happens in the macro does not occur in the micro. This type of dangerous thinking has the potential to delude organisations into continuing to build propositions and products for customer groups that are inaccurate or non-existent.
Addressing the problem has so recently often relied on tracking and analysing consumers’ activity online – but with standard segmentations rapidly diminishing in usefulness, it’s an inadequate solution. The real answer is simpler – organisations need to start talking to their customers again. Really talking to them – face to face.
Brands continuing to rely on ageing preconceptions are in danger of becoming irrelevant. This is particularly true of the financial services industry, with its traditional, slow moving banks and insurers. To retain their position, leading firms must abandon preconceptions and aggregate data, and instead take a radical approach to gaining a genuine understanding of their customers.
We’re in a time of flux. Those who will succeed are the ones who accept that a fundamental shift is taking place, and invest in understanding its impact on their clients. It’s time to get out there and meet them.
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