Are Sacred Cows in Financial Services Still Sacred?
Every industry has those “sacred cows” that hold back progress and innovation. Sacred cows are those beliefs that are so entrenched, no one even bothers to question them. Without examining your entrenched beliefs, it is difficult to view your business through a different lens and change your paradigms. The problem is that – in times of rapid change – these sacred cows can quickly become outdated. And outdated beliefs can make it difficult to adapt to, much less take advantage of, changing consumer behaviors and motivations.
As we all know, the financial services industry is facing rapid and dynamic changes!
Is now the time to set aside those sacred cows? Here are four that should be examined by all financial services firms to better address the changing needs, wants, desires, and attitudes of consumers in today’s marketplace:
- Convenience is no longer a function of location. It used to be that the financial services provider with the right number of the best locations was the winner because consumers perceived them as “more convenient.” And when retail banks delivered the vast majority of services, that made sense. Now financial services organizations must define convenience as a function of “ease of doing business.” Consumers access financial services online, on their phone, through the ATM, and oh yes, occasionally at their bank’s retail locations. Creating a comprehensive, seamless environment that allows “ease of doing business” for the consumer is the new holy grail in banking. If you want to make it convenient to do business, it must be easy to do business.
- User experience and customer experience are no longer restricted to existing channels. Consumers access different channels to accomplish different tasks in their financial lives. Modern omnichannel banking allows for each channel to play a specific role (and part) in the overall customer journey. However, consumers need a seamless experience that enhances their relationship with the institution. By using “connectors” to lead an end-to-end journey across all channels, financial services providers can and should enhance the overall user experience and customer experience, which also builds and strengthens the customer relationship.
- People-and-Paper banking has evolved to People-and-Technology banking. In the past banking transactions were all about personal interactions and processing paper records. The paper transactions were the evidence or proof of the service delivered. While it remains critical today for financial services providers to form and maintain strong customer relationships, paper is gone and technology has taken its place. Technology also plays an important role in building customer relationships, while at the same time making it more difficult to maintain competitive differentiation. The right mix of quality people and innovative technology will help banks remain relevant and distinctive.
- Consumers are more likely to consolidate providers for their banking and investment needs. Leading up to and right after the recession, consumers were less likely to say that they would consolidate their banking and investments with one provider. However, with the improving economy and plethora of full service providers, this dynamic is changing and consumers are becoming more open to the idea of consolidation. Especially for more affluent consumers, who have relatively complicated personal and household finances, the need to simplify their financial lives by using fewer providers is a key motivator. Financial services companies benefit from this by building stickier relationships, by providing consolidated access, easy to understand dashboards, and customized advice. There has never been a better time to engage in conversation about consolidating relationships.
Instead of being ruled by sacred cows that wander around our banking institutions, firms need to find a new approach and adapt, unless of course the fate of Sears and Toys R Us is more appealing.