Finance plays catch-up in digital innovation: Brands in Motion study
The global financial crisis may have happened over a decade ago, but the finance and banking sector is still battling to win back the hearts and minds of consumers. And it is far from the only battle facing the sector’s traditional brands as innovative fintech companies increasingly challenge their dominance.
These fintech companies are revolutionising the sector offering new ways of doing business with customer-friendly services. And banks that are investing in digital are now using data (with customers’ consent) to help people make better and more informed decisions about their finances. This is a world away from the finance sector of old, where unhappy customers were often forced to stay with their providers because it was too difficult to move, and there was no real difference in service anyway.
WE Communication’s second Brands in Motion report, which defines the finance and banking sector as all financial services and products, including alternative payments, highlights the issues faced by this heritage sector.
Can finance brands make their customers fall in love? Or are customers in a hostage situation?
Finance and banking is in ‘defender’ mode in four out of the six markets surveyed. In the UK, it is firmly in the ‘defender’ quadrant, and what that really means is that the industry is missing that positive emotional connections with customers.
It appears to be almost hostage-like relationship, with more than 60% of the respondents across five of the markets saying they cannot live without finance and banking companies. Even in India, the sixth market, 59% of respondents agreed.
However, more than 40% of respondents in all markets claim to hate the sector. That figure rises sharply to 69% in the UK and 64% in the US, most likely part of the legacy created by the global financial crisis.
It is, therefore, no surprise that majority of the respondents (over 50%) in four out of six markets describe dealing with finance companies as a completely miserable experience.
Only South Africa differs with 60% of respondents saying dealing with the sector is a pleasure, which is attributable to the rapid rise and success of fintech companies and services in the country.
It is symbolic of what is happening in all markets, however, with whole sector in all markets facing disruption from new entrants. It is situation that has been compounded by a lack of real innovation from the traditional brands in terms of products and services for many years.
Consumers are only too aware of this with more than 60% of respondents in the UK, US and Australia, and more than half of respondents in China and India, citing the sector as stuck in the Stone Age.
While the traditional banking and finance brands face significant barriers to innovating, including regulation and legacy systems, it is time they started to push the needle on all fronts to avoid losing consumers, not to their traditional rivals but the fintech disruptors.
Amid this loss of love and emotional connection with the traditional finance and banking brands, however, there are opportunities. For example, it notable that 53% of respondents across the whole survey believe brands can provide stability in our uncertain and chaotic times.
“The emergence of the fintech companies is dialling up the importance of having a strong brand positioning,” says Sara Bennison, chief marketing officer at Nationwide Building Society. “It used to be a small sector with a handful of brands that were fairly similar. There was only the difference between banks and building societies.
‘The differences are more fundamental now so it is important than ever to be clear about what you stand for.”
With over 60% of respondents in the US, UK, and Australia and nearly 40% or more in China, South Africa and China, citing that the sector actually does harm to society, it is clear there is work to be done.
Leveraging meaningful innovation
Consumers want meaningful innovation, but they also want to feel good about the choosing a brand. For that reason they expect brands to have a strong purpose. Kerry Chilvers, brands director at insurance provider Direct Line Group, says that purpose must be related to a brand’s core business and draw on a company’s knowledge and expertise.
She adds: “It should be win/win for the consumer, the business and society at large.”
Consumers are becoming savvy to fake purpose, warns Bennison. “It has become very trendy to have a purpose, it is the en vogue thing. Real purpose should be fundamentally rooted in the culture, organisation and history of a business.”
Once that is solid, brands can then test what consumers’ want and will accept from them, for example how comfortable are they their data being to create better, more tailored services and products.
Is data banking’s silver bullet?
Consumer expectations are being raised by how innovative companies outside of the finance sector are using data, explains Chilvers. She adds: “They’re demonstrating that data can be used for commercial advantage as well as the consumer’s advantage by making their lives easier.
Consumers don’t want to have to keep filling in the same information if we already know that about them. They want it (data) used to make tasks easier.”
However, data remains a source of real anxiety for consumers, with the Brands in Motion research showing a global average of 84% of respondents agreeing that their personal data is not secure.
“Brands need to work out where they have the right and the trust to play,” Bennison explains. “They must ask themselves where does innovation work around our core values, and what do people expect from us.
“We have always had data and an insight into consumers, but it could only used in communications. Now we have a new opportunity to deliver more and to use it to shape a real depth of service or point of difference.”
Annabel Venner, director of brand at insurance provider Hiscox, believes this point of difference can also be developed through collaboration. “I think we will see innovations in services created by traditional brands with an existing customer base working with smaller companies with better technology that are not burdened by legacy systems.”
The finance and banking sector faces a tough task in reigniting an emotional connection with its consumers. Strong brands with a clear purpose and innovation that meets real customer needs are the only ones that will survive to win back that love.
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