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Banks Need a ‘Customer Journey Strategy’ to Stay Relevant

By Ben Jackson
August 19, 2015
in Analysts Coverage
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Arbitration - Gold text on black background - 3D rendered royalty free stock picture. This image can be used for an online website banner ad or a print postcard.

A banking customer journey strategy can help financial institutions move beyond product-focused marketing and deliver services based on customers’ actual financial needs. Rather than simply identifying the next product to sell, banks can use the customer data they already possess to better understand where individuals are in their financial lives and provide relevant solutions at the appropriate time.

This approach also encourages banks to view each customer relationship over the long term. By connecting products, data, and technology rather than managing them in separate silos, financial institutions can help customers work toward broader financial goals while potentially building deeper and more profitable relationships.

Banks need to develop a “Customer Journey Strategy” that helps deliver financial services to their customers based on the customers’ needs and timing, according to an article in BAI Banking Strategies.

The “next best offer” is not what customers want in today’s hyper-connected, always-on world. Instead, they want relevant and timely advice and solutions tailored to their actual needs. They also expect something in return when they provide financial companies with their data.
Given that banks today capture and store an enormous amount of customer data, they should align this data with their overall understanding of their customers’ needs. This can be encapsulated in a “customer journey strategy,” which involves understanding the long- and short-term journeys (think individual path) a customer is on, and architecting how you, the financial provider, can engage to add value when it makes sense.

This article focuses primarily on lending, which is of course most banks’ bread and butter, but the concept can be applied much more broadly. Financial institutions do need to think about how they can help customers achieve all of their financial goals and build portfolios for customers that will increase the customers’ wealth, and hence their value to the bank.

Mercator has explored this concept in its report: The Six Million Dollar Customer: Using Technology to Build a Profitable Customer Base. The key for financial institutions is to think of every customer as having the potential to become a profitable one and use technology to implement tools, products, and strategies that tie the various products together rather than separating them into silos.

Developing a banking customer journey strategy requires financial institutions to think beyond individual transactions and products. Customer data can provide insight into changing financial needs, but its value depends on how effectively banks translate that information into timely and relevant services.

Technology can help connect lending, deposits, payments, investments, and other financial products around the needs of the individual customer. By taking a more holistic approach to the relationship, banks can create greater value for customers while improving engagement and long-term profitability.

Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Service Group

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