Interview with Baudouin Thomas
Managing Director at Accenture, leading the Financial Services practice in Belgium & Luxembourg
Stéphane Darimont (SD) [Banking Boulevard]:You recently conducted a survey on evolving consuming patterns in the financial sector in Belgium and internationally. How is Belgian consumers’ loyalty evolving?
Baudouin Thomas (BT)-[Accenture ]
We conduct this survey each year. The results of the 2015 edition allow us to confirm that loyalty and trust is soaring and that confidence in the banking and insurance industry gradually recovers following the financial crisis.
As a matter of fact, 82% of bank and insurance companies’ clients say they feel loyal to their main provider.
However, this does not mean that banks and insurance companies should ease up on competing for customers, because the main reason why consumers declare they do not change institution is…“out of habit” (namely 41% for banking customers and 28% for insurance customers).
Furthermore, less than 45% of Belgian respondents would consider their main bank or insurance provider as one of the options if they could start over.
Finally, 30% of Belgian respondents do not know which bank provider they would choose when starting all over. Almost the same score (31%) applies to the insurance industry.
(SD): That means that a substantial portion of financial institutions’ business on the retail market could be at risk.
Yes and this is not specific to the Belgian market. Accenture’s international surveys conducted in Western economies show that most consumers define their banking relationship as transactional—a perception that is consistently rising.
This trend is bad news for banks, and worse news if it continues unchecked.
The good news for financial services providers is that consumers are open to receiving more value-adding services from them.
(SD): Could you give us a couple of examples of the expectations expressed by the respondents to your Belgian survey?
Yes, we found out, for instance, that banks could improve their customers’ satisfaction by offering better product bundles.
In the insurance sector, respondents said companies should definitely go a step further in the development of their self-service channels and offer better online solutions. As an example, more than a third of our survey respondents declared they would prefer using a digital channel over traditional means to follow-up their claims.
Our Belgian survey also showed that there is still room for improvement with regard to the supply of clear and accessible information by financial institutions.
Digital transformation projects do therefore constitute an opportunity to meet such expectations. As a matter of fact, there is an opportunity for banks to transform customer relationships by becoming vital resources that support customers’ daily activities, both financial and non-financial. For banking activities, Accenture calls this model the Everyday Bank.
Far from a mere utility, the Everyday Bank is a trusted advisor, choreographing a digital ecosystem around customers and delivering superior customer experiences.
For example, the mortgage lending customer experience at an Everyday Bank is something entirely new. Rather than just providing the home loan, the Everyday Bank educates borrowers on the obligations of homeownership, suggests realtors who work in the area, or connects homebuyers with service providers to assist them with home improvement projects once they move in.
Both customers and banks benefit from this change in the bank’s conventional role in the mortgage process. Customers get end-to-end services that reflect the fact that getting a mortgage is a life milestone, not just a financial transaction.
(SD): The transformation of the traditional banking and insurance model you are referring to consists of proposing additional services on the basis of the analysis of a customer’s personal data. This raises the question as to whether customers will accept such an evolution.
Yes, and in this respect Accenture data indicate that banks have a strong foundation of customer trust, making for an enviable position in today’s digital economy. The majority of consumers trust their bank over all other institutions to securely manage their personal data.
In addition, “keeps my financial and personal data secure” ranks first among statements that consumers agree with about their primary relationship bank.
The message to banks and insurance companies is that there is opportunity to use customer data to improve the sales and service experience.
Our survey shows that 59% of Belgian respondents are ready to let their banks run analysis of the transactions on their accounts in order to pro-actively detect frauds. The percentage however drops to 27% when it comes to letting their bankers analyze their accounts to offer coupons or discounts for their preferred merchants.
Still in the field of data sharing, but on the insurance side, it is interesting to note that about half of the Belgian population is ready to share health data in return for discounts from 3rd parties.
So the future of financial services will be about continuing to secure personal data while finding ways to proactively drive advice, aggregation and value through targeted use of consumer preference and transaction data.
(SD): Another Accenture survey conducted this year in North America reveals very interesting trends with regard to consumer patterns among the new generation, or so-called “Millennials” (defined as individuals aged between 18 and 34).
Yes, Millennials will drive the future of banking and insurance.
It is one of the most important customer groups for banks to focus on.
They are significant contributors to consumer spending and are transforming financial services.
While financial institutions must win the Millennial generation, our survey indicates that they must do more to retain the Millennial customers they have. As a group, Millennials switch from their primary bank at a pace nearly double the average of other age groups. In fact, 18% switched their primary bank within the past 12 months—compared to 10% of customers aged 35 to 54 and just 3% of people 55 and older.
On the other hand, Millennials say that they are most likely to stay with their current bank if online banking services are good.
Banks that try to retain Millennial customers by serving them like they have served their parents and grandparents do so at their own peril. Millennials are a wholly new kind of customer. Their life experiences color their expectations of their banking and insurance experiences. They are digital natives.
Millennials have seen digital disruptors across industries defy convention to remake service experiences—and these breakthrough companies influence them. Being compared to digital leaders and being expected to keep up is no easy task for financial services providers.
Millennials choose their banks for online banking services, reasonable fees, branch convenience and loyalty rewards programs. And the same obviously applies for insurance services. So financial institutions can capture Millennial mindshare by delivering a seamless omni-channel experience with personalized, proactive interactions. More than developing digital products and services, this is about using digital as a springboard to meaningful experiences that bring new value to Millennials’ financial and non-financial lives.
(SD): What is your conclusion, and how can you help financial institutions through their digital transformation journey?
The financial sector is changing. Digital-savvy customers expect financial services providers to proactively and smartly serve and delight them. If they do not, other financial institutions and agile new entrants are poised to give customers just what they want. So banks and insurance companies alike must decide if they want to watch the future being shaped for them, or shape it themselves.
In Belgium and across the world, Accenture experts help bankers and insurers improve capabilities in the following areas:
• Know your customers: We help our clients carry out micro-segmentation analyses, which allow them to understand customers better as groups, sub-segments and individuals. It guides them to direct resources, develop products and service customers through individual interaction models and as part of an omni-channel strategy.
• Re-imagine the experience: Our experts help to create customer-centered journeys that go beyond conventional banking or insurance encounters. We assist our clients in developing test-and-learn approaches, using data insights to inform continuous improvement efforts that reflect customer behaviors and feedback.
• (Banks)- Change the distribution mix: Considering the changing role of the branch and the growing importance of digital, we help banks rethink the distribution mix to make the most of customers’ changing patterns of channel usage.
• Deepen and sustain loyalty: We assist bankers and insurers in developing insight-driven, holistic loyalty programs.
• Evolve into “Everyday banks”-move to a digital-savvy insurance model: We help financial institutions bring multiple elements together—channels, customer experience, analytics, partnerships, digital platforms and innovation among them—to power a new value proposition.
Contact Accenture Belgium : Baudouin Thomas, Managing Director at Accenture, leading the Financial Services practice in Belgium & Luxembourg. Tel: +32 (0)2 226 71 18 firstname.lastname@example.org