How the power of automation could help your financial institution boost customer lifetime value
By Stuart Ward (pictured), Senior Account Executive at Backbase
Orchestrating a continuous series of personalised, positive interactions can boost product uptake, loyalty and profitability.
For an example of an ultra-competitive market, it’s hard to look past Australia’s financial services sector, dominated by a handful of major players yet consistently challenged by new entrants and mid-tier banks. New Zealand’s market, with its closely related banking groups and agile fintech scene, presents a similar dynamic. Providers are numerous and their offerings relatively homogenous in nature.
Customers, meanwhile, have ever-increasing expectations for instant gratification and seamless digital interactions, mirroring their experiences with leading global and local tech platforms. In Australia and New Zealand, unlike predecessors a generation or two ago, banking relationships are no longer ‘for life’ – ease of switching and access to innovative products now truly drives loyalty.
In today’s times, established players are having to work harder and harder for their money, as fledgling fintechs continue to encroach on the payments and lending space.
Unencumbered by complex legacy technology stacks, many of these agile upstarts – from rapidly growing neobanks to innovative payment providers, or even business software ecosystems widely adopted by small businesses – have proven themselves better able to deliver convenient digital experiences and personalised service than their traditional rivals.
Those are the things today’s consumers and businesses expect and demand and they’re voting with their wallets; giving slices of their custom to the newcomers and severing ties with former suppliers whose standards of service they now perceive as sub-par.
Keeping the customer satisfied
Against that backdrop, traditional banks that want to maintain mind and market share have little choice but to act; taking a leaf out of the encroachers’ playbook and transforming the way they engage.
Stemming the steady flow of defections – and shoring up profit margins in a period of economic fluctuation – starts with taking a laser-focused look at Customer Lifetime Value (CLV) and striving to improve it for each and every customer on the books.
In the financial services sphere, this is the metric that matters most, courtesy of the fact there’s a direct correlation between it and the strength of an institution’s relationships with its customer base.
Customers who generate higher revenue in the form of fees, transaction charges and interest are typically those who use multiple banking facilities, rather than a single service.
That generally means they have more touchpoints with their provider. Over time, the regular cadence of contact leads to deeper engagement and tighter ties.
Using multiple facilities makes it less convenient for a customer to switch their accounts across to a competitor and, ergo, they’re less likely to do so.
Tackling the multi-channel challenge
Engaging effectively with customers is key to boosting CLV but a proliferation of channels has made doing so an increasingly challenging proposition.
In-branch interactions continue to be supplanted by telephone banking, online banking and mobile apps, and efforts to maintain a consistent, high quality customer experience are very often constrained by legacy technology in the back office.
Disparate systems and siloed data are the norm in many traditional banks and that makes delivering personalised, multi-channel engagement exceedingly difficult. This fragmentation also poses challenges for adherence to evolving data regulations, such as Australia’s Consumer Data Right (CDR), which aims to empower customers with their data but requires seamless internal data management from financial institutions.
Utilising AI to orchestrate meaningful interactions at scale
Until now. The advent of AI-driven customer lifetime orchestration technology allows old school players to adopt the proactive and highly individualised approach to engagement that’s working so well for their non-traditional counterparts.
Instead of being restricted to reactive, campaign-based interactions, they’re able to develop personalised marketing plans and orchestrate a continuous cadence of connections; steering customers towards the right facilities at the right times.
Unlike marketing automation, which relies on market segmentation and pre-defined rules, AI driven orchestration uses advanced analytics, machine learning and predictive modelling to ‘understand’ every customer’s unique journey. For banks in Australia and New Zealand, this capability is invaluable, enabling them to not only leverage their vast existing data but also integrate data accessed through initiatives like CDR, allowing for hyper-personalisation and proactive engagement while adhering to regulatory frameworks. It has the capacity to identify opportunities for engagement in real time and can adapt dynamically to customer behaviour.
Net result for institutions that deploy it intelligently? They can expect to enjoy increased customer engagement, more effective upselling and cross selling, reduced customer churn and enhanced customer satisfaction.
Setting your financial institution up for a stronger future
Whether you’re a venerable traditional player or niche digital disruptor, long lasting customer relationships are the foundation upon which every successful financial services provider is built.
Harnessing the power of AI-driven customer lifetime orchestration software can help you develop and expand those relationships and send your CLV stats stratospheric, via more effective engagement at every stage of the customer lifecycle.
If remaining relevant and competitive are priorities for your financial institution, it’s foundation technology you can’t afford not to have in your ICT stack.
