Financial Services Transform To Appeal To The Customer Of The Future
The rise of the Millennial demographic, combined with the mobile disruption of business, was the initial driver of financial companies investing in digital tools. Now, many companies are looking beyond to an omnichannel future as Generation Z grows up and its elders continue to demand more from the customer experience.
by Mercedes M. Cardona
Posted on 08-11-2018
This article is part of our August series about the state of financial services. Click here for more.
When BNY Mellon wanted to refresh its brand, it looked to the past. It went back to its founding father—by way of Broadway.
The financial services company was founded as The Bank of New York by Alexander Hamilton (yes, that Hamilton), so it leaned into the musical’s blockbuster success with online history quizzes, live-tweeted the Tony Awards in Hamilton’s voice, and engaged in other digital communications as part of its branding, said Aniko DeLaney, BNY Mellon’s global head of corporate marketing.
The Broadway show was a “happy accident,” DeLaney said at the recent ANA B2B Masters of Marketing conference. “It’s good to get lucky, but what really drove this concept was our desire to change the way our brand is viewed.”
Embracing Digital Disruption And The Modern-Day Consumer
Like an increasing number of financial services companies, BNY Mellon was driven to embrace digital channels to bring the brand up to date for a new generation. It changed its social media policy from a “really punitive” approach to one that encouraged sharing by employees and executives, DeLaney said. The campaign has energized the sales staff and has made it easier to recruit new staffers to work at the venerable bank.
Most financial services companies can’t count on having a happy accident, though. The rise of the Millennial demographic, combined with the mobile disruption of business, was the initial driver of financial companies investing in digital tools. Now many companies are looking beyond to an omnichannel future as Generation Z grows up and its elders continue to demand more from the customer experience.
“All digital, no brick and mortar–we think it’s an advantage,” said Dustin Cohn, head of marketing at e-bank Marcus by Goldman Sachs, at the recent Forrester CX Forum. “We rely on the digital customer experience to build the brand.”
The digital natives of Generation Z may never see the inside of a bank branch or speak to an insurance agent. They may not deal with a legacy organization at all, in fact. A number of new e-finance companies are independent startups or separate offshoots of legacy organizations, such as Marcus by Goldman Sachs (the consumer e-bank launched by the investment bank) and insurer Esurance (whose parent is Allstate). Whether by acquisition or by design, the digital financial institutions are building brands of their own.
The Rise Of Digitally Native Brands
Younger consumers don’t want to buy the same brands their parents bought, and some brands have responded by taking on a “house of brands” approach, said Russel Winer, professor of marketing at the Stern School of Business at New York University. Others may take a “branded house approach” where the “fintech” unit may be co-branded with the parent to leverage the legacy’s brand equity.
“It’s a trade-off,” Winer told CMO.com. “The decision to use a new digitally native brand, which has to be built from scratch, can be worth it if the perceptions of the legacy brand aren’t strong in the target groups.”
Allstate decided to keep Esurance’s brand after acquiring what had been an independent online insurer in 2011 in order to avoid confusion between online customers and Allstate’s agent channel, said Mark Pitchford, chief sales and marketing officer. Esurance already had a strong brand name in the marketplace, and each served different audiences, he told CMO.com.
“This was really an opportunity to reinforce that and be clear about the value we provided to our customers,” Pitchford said. “That was really about being digital-first and always innovative and meeting the needs of the digital native customers as they grow and change over time.”
Starting from scratch “is a tremendous advantage” in terms of building a customer-centric experience, said Michael Cerda, chief product officer at Marcus by Goldman Sachs. “I didn’t join this effort because I was excited about a loan or a savings account or any specific financial product. It was about solving a consumer problem,” he told attendees at the Forrester CX event.
When Goldman Sachs was preparing to launch Marcus in 2016, it had no name for the new unit and no decision on how closely to align it with its parent, Cohn said. The marketers surveyed more than 10,000 customers to build the brand and product offering, he said.
“The idea was we could meet a lot of customers and meet the market with today’s products, what customers wanted today, instead of the legacy things from 20 or 40 years ago,” said Darin Cline, managing director of operations at Marcus by Goldman Sachs, also at the Forrester event.
“There was a relevancy issue” using the Goldman Sachs name, Cohn said. People associated it with wealthy individuals; meanwhile, Marcus was an unknown quantity.
“You have this really interesting dilemma between wanting to leverage the firm’s reputation and the firm’s heritage with also signaling it was something new and different for consumers,” Cohn said. Marcus humanizes the brand, and research found that adding “by Goldman Sachs” to the name improved purchase intent and trust ratings significantly, he said. (Marcus relates to Marcus Goldman, one of the firm’s founders.)
Many of the executives running these new companies aren’t necessarily financial types; some come from technology and even retail marketing. Cerda came to Goldman from being chief experience officer at event promoter Live Nation, and he worked at Facebook, video platform Vevo, and MySpace before; Cohn had previously been CMO at Jockey International.
“It’s part of our secret sauce,” said Cohn, who also worked as an agency executive and a marketer at Pepsico earlier in his career. The background of the Marcus staff is split evenly between hires from banking, Goldman Sachs transfers, and recruits from other industries. “We’ve been able to combine that very diverse experience and apply best practices from diverse experiences,” he said.
Cerda noted that background is an advantage; when Goldman Sachs approached them both to join Marcus, “they specifically wanted folks to think about it anew, fresh, from a customer perspective.” Cohn added that Harit Talwar, head of Marcus by Goldman Sachs, made it clear he didn’t want someone from financial services in his specific role. “He really wants us to look through different lenses … like a consumer would,” he said.
Newfound Focus On Customer Experience
The focus on consumer experience is paramount because the new entrants’ mission is often based on consumers who claim to be tired of dealing with traditional financial institutions and to have lost trust in them. The recent Edelman Trust Barometer study found trust in the financial services sector among the worldwide public had been steadily improving over the past five years, then stalled. Among the informed public in the U.S., trust levels declined 20% from 2017 to 2018.
In choosing a financial services company, 83% of consumers said a good user experience is important, and 79% pointed to having the latest technology, the Edelman study found. So it stands to reason why Allstate’s new ad campaign, which is replacing its “Insurance for the Modern World” positioning, will focus on the “Surprisingly Painless” user experience. The previous campaign was technology-focused, but the current one merges both aspects.
“We’ve always been an innovative disruptor in the insurance industry, so we’re leaning into that,” Pitchford said. “We continue to shift our experience, [making it] more mobile. We have a virtual assistant because that is the expectation of the emerging segments.”
He noted the company’s customer base skews younger than the average insurance company, so it designs its products to appeal to them, such as renter’s insurance or coverage for car sharing. “We continue to make sure that we’re designing experiences so that the growing and emerging generation would choose us for their insurance needs,” he told CMO.com.
Indeed, keeping up with technology is proving to be table stakes for insurers, especially as more digitally native “insuretech” companies launch. A study by Tata Consulting Services found insurers spent an average $124 million on artificial intelligence systems in 2017, the highest per-company average of the 13 industries it surveyed.
Chatbots for customer service are popular, with apps built on message platforms serving as virtual insurance agents. Many even take on the voice and persona of their marketing identity, such as Progressive’s pitchwoman, Flo. In addition, home insurer Lemonade recently claimed it had broken a record for the fastest claim settled when its AI Jim chatbot handled a renter’s insurance claim in three seconds. The chatbot received the claim via text, ran it through 18 antifraud algorithms, approved it, and wired the payment to the customer’s bank.
A study by CapGemini and financial trade group Efma found tech-driven startups are disrupting the insurance market. Mobile apps, customer-service chatbots, and other uses of artificial intelligence now manage what used to be claims paperwork. While those technologies are more often used by digital-native insurers—such as auto insurer Tractable and Lemonade—the practices are being exported to legacy companies, as well.
“The continued reliance of consumers on digital technologies that support mobile apps, social networking, on-demand services, and the like makes it clear that the mass market has entered a new phase,” said Efma secretary general Vincent Bastid, in a press statement. “The insurance industry serves the masses and must adapt to the new terms of engagement.”
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