Global investment in fintech startups is skyrocketing, reflecting a worrying trend for established financial services firms.
Customers are increasingly flocking to a new generation of companies that seek to redefine how consumers save and spend money.
From payments to loans to insurance, established brands are under assault from all directions, but that doesn’t mean they can’t stem the tide, solidify customer relationships and increase customer lifetime value.
Here are five ways they can do just that…
Pay attention to customer experience
It’s hard to increase customer lifetime value if you can’t retain your customers. On this front, poor customer experience has plagued many financial services brands.
From mobile banking apps that suck to appalling customer service, many financial services firms are guilty of giving customers reason to take their business elsewhere. Before financial services firms can increase customer lifetime value, they have to keep it from eroding.
Far too many financial services firms have been operating under the mistaken assumption that their customers will turn to them first when they have a need. But that is often not the case today.
When it comes to buying a home for instance, many consumers don’t head down to their local bank for a mortgage.
In an unbundled market where consumers are very comfortable using different providers to meet their financial services needs, financial institutions need to recognize that competition is virtually everywhere and have a deep understanding of what the competition is offering so that they can ensure their offerings are compelling.
Partner where appropriate
Due to issues like regulation, few financial services firms can be all things to all customers and in some segments of the market, large financial services firms simply can’t be competitive. But that doesn’t mean they should leave their customers to their own devices.
Forward-thinking financial services brands can establish themselves as trusted advisors to their customers by forging partnerships with other companies capable of delivering high quality products and services they don’t offer or can’t offer competitively.
Not only can these partnerships generate revenue, they can help financial services brands maintain broad relationships with their customers.
Embrace and use data
Collecting and using data can be one of the best ways for financial services firms to understand their customers and identify their needs.
Data-driven personalization is particularly important to large financial institutions, which often have a dizzying array of products and services that customers will never know about unless informed.
Predictive analytics can help institutions inform customers of the right products and services at the most opportune times.
For example, financial institutions can monitor balances and transaction activity to suggest products and services, like loans and insurance, when they’re most likely to be needed.
Provide data back to customers
Data is for sharing. The popularity of personal finance services like Mint, which was acquired by Intuit in 2009, demonstrates that just as millions of consumers enjoy tracking their activities using fitness trackers, millions of consumers find value in tracking their personal finances.
To keep customers engaged and in their fold, financial services brands should look for opportunities to take the data they collect and provide some of it back to their customers in innovative, meaningful ways.
For more insight, download our report: Digital Trends in the Financial Services and Insurance Sector.