Next year, children born when Amazon.com sold its first book online — in July 1995 — will turn 18, possibly striking out on their own for the first time to get a credit card, open a checking account or secure an auto loan. Those consumers will have grown up in a world defined by e-commerce — their ability to instantly purchase products and services has been limited only by their imaginations (and their wallets). Like a new song? One click on iTunes and it's yours in 30 seconds. A friend at school has a cool pair of new shoes? Zappos can deliver your own pair in 24 hours.
Feel old yet? Well, you can't afford to if you're in financial services. Within the banking enterprise, the business, technology, marketing, distribution, human resources and even compliance departments must work together to create and deliver products that meet consumers' evolving needs and real-time expectations.
"Retailers tend to put a lot of focus on the customer and tailor their delivery plans and development plans to that end," says Theresa Wilson, CIO, consumer lending, for San Francisco-based Wells Fargo ($1.3 trillion in assets). "We approach meeting our customers' expectations with the same thought process."
Though speed is of the essence, there are a number of other lessons financial services companies can learn from the ways retailers have adapted to the new consumer paradigm, adds Neff Hudson, assistant VP of emerging channels at San Antonio-based USAA (approximately $19 billion in revenue). "Consumers' expectations are being set by the smartphones in their pockets and the tech companies that they're doing business with, all of which operate at a very different speed than anything the financial services industry does," he says. "When you think about what's happened to retail because of commoditization and price transparency, they have to get really good about getting people into stores, and they've been very forward-leaning in terms of marketing, use of data, partnerships in unusual places and cost-efficiency."
USAA has viewed Amazon as a role model for "three to four years," according to Hudson, who says the integrated financial services provider is especially impressed with Amazon's use of predictive analytics to offer product recommendations. People like easy-to-understand comparisons, he adds, and there's a lot of opportunity to do that at his company, which provides banking, insurance and investment products to military personnel and their families. "For example: 'People like you need life [insurance],' 'People like you need this much comprehensive coverage,' 'Have you considered umbrella insurance — because people with your asset class tend to use it.'"
But when it comes to cross-selling USAA financial products to the company's banking and insurance customers, the regulatory framework is not always so simple. USAA is required to disclose, store and secure very specific information for its investment sales, for example. This means USAA has to be very careful about sharing information among business units, Hudson says. "Sometimes we get intimidated by regulations and following process and procedures, and we forget that what people really want is advice," he acknowledges.
There's also the matter of customer loyalty, Hudson says — specifically, not taking it for granted. "We can't assume we have a trusted relationship with every product — you may trust us with auto insurance, but do you trust us as an investment company?" he poses. "We feel, if we can get you as an auto insurance and banking customer, we can keep you for a long time."
Where USAA really sees the benefit in retail-like customer analytics, Hudson adds, is in product development. He points to the banking unit's Deposit@Mobile capability as an example of tying the end consumer's desire for faster processes with a business need to reduce paper flow. "Our best innovations have been the ones where the business need was aligned with the member need," Hudson reports. "In that case, our enemy was paper, and what members needed was a way to get their money deposited quickly. Asking people to use their phones to speed up a process is just natural."
Smoothing the Buying Process
To speed up the insurance application process, Progressive is looking to exploit consumers' penchant for mobile devices by offering mobile imaging. Forrester Research (Boston) analyst Ellen Carney says streamlining the application process is an area in which insurers need to up their games in order to meet customers' demands to get out the door with an insurance policy as quickly as they would with an online retail purchase. Big data, she says, can help these efforts by tapping unconventional data sources to build a risk profile faster and with less effort on the prospect's side.
"As soon as customers have to put in things like their Social Security numbers, you're going to get drop-off," Carney contends. "If we can get the algorithm right, where we don't have to ask for sensitive information, people are going to be more apt to complete the application."
But are banks in a position to take a similar step? Tracey Weber, head of Internet and mobile banking for North America consumer banking at New York-based Citi ($1.9 billion in assets), says it's not about collecting less information -- it's about designing a process that facilitates completion and identifying the sticking points where consumers get tripped up.
"Traditionally, because we don't have a sexy product to sell, people thought design didn't apply in this context of checking your balance or paying a bill," Weber says. "But we do a lot of acquisition through our website, and that's a great example of where the design of the experience makes a big difference."
Retailers have done a good job of website design that is aimed toward getting people to complete e-commerce transactions, Weber notes, and Citi recently redesigned its website with that in mind. For example, online chat -- another retail innovation imported into financial services -- helps release consumers from snags in the account-opening or card application processes.
"The challenge is, the amount of information you need to input is not insignificant," according to Weber. "So we're always looking for ways to make any of our digital experiences easy for consumers and as elegant and as streamlined as possible. The retailers were the first to use chat to make sure people made it to the end of the shopping cart."
Before joining Citi, Weber worked at Travelocity, an online travel booking company. She says that from the consumer's perspective, the barriers to "closing the deal" in the travel industry are comparable to those in financial services. Her goal at Citi, she explains, is to incorporate best practices learned during her time with Travelocity into the online banking experience.
"People are a combination of rushed and nervous, very much focused on speed and purpose when booking an airline ticket. There's that, 'I picked the correct day, right?' feeling," she explains. "In financial services, people are similarly nervous when they pay a bill: 'Is the amount right?' 'Is it going to be delivered in time?' Web analytics are very useful in understanding where people are struggling in the flow."