If you had a crystal ball to peer into the minds of consumers, what would you look for? If you work for a community financial institution, two might pop into your mind:
- How soon will they need a mortgage, retirement fund, or insurance?
- What product feature or benefit do they secretly wish for?
Every year millions of marketing dollars are spent on the first question, with moderate success. But the markets for most existing products are well established. Fortunately, those are products you have on offer already and can supply at a moment’s notice.
The real opportunity for growth is hiding in the second question. The answer would allow you to beat your competition to the punch and release a brand-new product, or category-defining service. That’s why investors are throwing billions at fintech startups. In fact, an entire industry has risen up seeking to answer that question as quickly as possible.
The banking relationship is one rooted in trust and examining that tenet yields insight into what consumers are looking for in a financial product; confidence.
Consumers Confidence Starts with Data Security
Accenture recently ran a global survey that covered 32,000 consumers in 18 markets. One of their chief findings resonates with the recent response to Facebook’s data scandal, “Consumers are willing to share more of their personal data with their banks, but there is a clear trade-off—they understand the value of their data and expect to receive benefits for sharing it, in the form of offers, reduced interest rates, recognition and other rewards.” (source)
Critical to this exchange is developing transparency around the exchange. Consumers want to know exactly which data is being obtained, how it is being used, and what benefit they can expect to gain from the exchange. The Facebook scandal was shocking to consumers because they weren't aware of how much data was being stored and were disappointed to hear how readily available for use it was to third parties.
Consumer Confidence is Built Through Partnerships
In this American Banker article on PFM, “Javelin estimates that 21% of U.S. consumers (or 49.3 million adult users) mix and match PFM software from online banking, desktop software and outside websites like Mint.com, while only 8% of consumers (or 18.9 million U.S. adults) use bank or credit union PFM to date.” (source)
67% of Millennials reported wanting help creating and monitoring a budget (and 31% of those over 55 want it too). This could indicate that financial institutions are better served by partnering with or promoting existing PFM services, rather than developing their own, or using white-label options.
The data also indicated that presenting consumers with a pie chart of their spending habits is not enough. Earning the confidence of consumers requires providing insights and recommendations on their holistic financial situation. Consumers want you to replace their indecision with your financial expertise and prove that you have an interest in their financial success.
Helping Them Save Money Creates Loyalty
Slick technology and convenience are important, but when it comes down to it, consumers are looking for more of one thing: money. Accenture found “that digital personalized financial advice is a key opportunity for banks. Customers are extremely interested in products and services from their bank that save them money (82%) and a strong majority (72%) feel that this would increase their loyalty.”
There are lots of opportunities to help save consumers money:
- Avoiding unnecessary fees
- Increase savings balances
- Increase investment and retirement account growth
- Offer discounts on local services, or recreation
- Offer rewards for basic banking activities
In fact, rewards are a proven way to acquire and retain new consumers, in a 2016 study, 8 out of 10 Millennials said they would switch institutions for better rewards.
Predicting the next breakout fintech development isn’t a viable option for most institutions, but it turns out that consumers’ needs are within reach of most community financial institutions.