Pay It Forward: Examining the Future of Money in America

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Despite federal rules and regulations, established firms, such as American Express, and unexpected brands, such as T-Mobile, are poised to disrupt the financial services space using digital strategies that go far beyond traditional transactions.
Customer Experience

Though plagued with federal restrictions, financial services companies continue to persevere in an effort to reach and retain customers no matter the obstacle. But, as consumer demand drives greater need for innovation, most banks find themselves scrambling to keep pace with industries that have long surpassed their fledgling strategies.

For companies in the financial services sector, innovation remains steady, but labored, as banks have few examples on which to base their approach. Amanda Wilson, marketing director for Qvidian, notes that, moving forward, firms must be willing to consult experts and conduct research before implementing new solutions and strategies. "Other industries have the luxury of learning from others' mistakes, but as this is all relatively new to financial services, it's important that companies tap into partners when they need help," she emphasizes. Therefore, financial institutions must proceed with caution and understand the potential drawbacks and pitfalls so they may proactively address problems before they arise.

Yet, while progress will likely be slow and deliberate as firms attempt to navigate this uncharted territory, here are four areas in which financial institutions have already begun to make strides:

Digitization

Because consumers now conduct many of their banking transactions online or via mobile device, branches will soon look for ways to refresh the in-person experience in an effort to remain relevant and profitable. According to one study conducted by Financial Management Solutions Inc., the average monthly branch teller transaction rates have fallen from 11,700 in 1992 to about 6,400 as of May 2013. Thus, some banks, such as First Hawaiian Bank, have already begun to introduce video teller machines, image-enabled ATMs, and biometric entry systems, bringing the digital appeal of self-service to the basic branch experience. Banks may also seek to digitize customer communications in an attempt to streamline interactions and create an added layer of transparency and reliability. For instance, consumers are likely to expect digital copies of their bills and statements in the future, as well as payment reminders, so they may track important documents, while avoiding overdraw costs and late fees, says Chuck Cordray, CEO of Inlet. All such tactics cater to emerging consumer behaviors, indicating the industry's eagerness to accommodate and evolve alongside its customers.

Social media

Though most financial firms are still grappling with how to integrate social media into their overarching strategies, such channels will continue to gain prominence as consumers increasingly take to Facebook and Twitter in search of customer service. Banks currently use feedback from these social interactions to gauge customer sentiment. However, as analytical tools become more advanced, these institutions will soon be able to target existing customers with personalized, automatically generated product offers that resemble service suggestions more than distracting ads. Rob Heiser, CEO of Segmint, notes that such strategies will allow financial firms to develop customer relationships based upon trust and transparency, rather than necessity.

The intersection of convenience and relevance has never been as important as right now, for banks have an incredibly small window of opportunity to capture attention. Social media has not only changed the way brands consume data, but also how society expects to see it. Thus, Heiser emphasizes that every piece of data will fail to intrigue unless it's timely and relevant, requiring marketers to alter the way they think about campaigning and advertising their brand to prospects and current customers. Financial institutions must also be aware that consumers are becoming decreasingly brand loyal due to lagging relationships. Therefore, embracing social media will afford marketers the chance to rekindle connections and establish bonds that were once broken.

Collaboration

While Wilson highlights that it's always been difficult for financial institutions to unify consumer data and deliver the ideal single customer view, banks are already working to realign their focus to become more customer-centric. However, much of their potential success hinges upon improved collaboration between their CMOs and CIOs. Because consumer data and personalization will continue to drive marketing strategy, CMOs and CIOs must no longer allow disputes over budget and influence distract from what should be their primary unifying factor: the bottom line.

"The speed of leveraging data is very critical to the experience," Heiser emphasizes. "CMOs and CIOs have to align to make sure they can serve the customer when they need to be served. Gone are the days of data warehouses taking days or even weeks to turn around data to a service or marketing organization. Customers expect banks to know their needs and answer their questions. But even more important than that is to know what they need before they know what to ask."

CMOs and CIOs must align their goals and break down the silos that hinder collaboration, particularly with regard to the use of data. Leaders must educate customers to ensure each makes informed decisions that are right for them, thereby cultivating an added layer of trust. Also, by understanding their own enterprise data, CMOs and CIOs will be able to help the brand better position its products, creating the options their customers need to improve their experience.

Data privacy

Due to numerous past data breaches, the privacy and protection of sensitive customer information will be paramount for future success. Consumers continue to trust banks and other such financial companies less and less, making it increasingly difficult for organizations to retain loyalty and attract prospects. Thus, cyber security will be instrumental as the industry explores strategies for defending consumer data and rebuilding customer confidence in the given brand. David M. Wallace, global financial services marketing manager for SAS, suggests that financial firms implement solutions that allow for intense, continuous analytical surveillance to detect suspicious patterns of digital activity. Brands must also communicate with consumers when immediate threats emerge, for such transparency will demonstrate a bank's proactive approach to protection at all times. Customers will also be more willing to share sensitive data if they're confident that this information will be secure, thereby allowing the given company to use these records to predict future needs and target consumers effectively.

However, as financial brands look ahead, some are already blazing the trail for future innovation:

American Express Partners with Taylor Swift to Expand Reach and Entice New Prospects

While American Express has already seen great success with its social media efforts, many also associate the brand with its tendency to reach beyond the typical boundaries of the financial relationship to bring its customers added value. For instance, American Express launched 'Unstaged,' in partnership with Vevo and YouTube, in 2010 to bring unique music experiences to fans via digital technology.

In an effort to appeal to potential future cardmembers, American Express recently teamed up with Taylor Swift. Both parties worked together to bring fans the American Express Unstaged Taylor Swift Blank Space Experience App, which allows users to explore the world of Swift's latest 'Blank Space' music video. This never-before-seen, 360-degree immersive music video experience engages fans by offering behind-the-scenes footage, exclusive interviews, tour date and ticket information, and the option to purchase Swift's latest album. This new level of interactivity connects with Swift's dedicated fans, many of whom are too young to own their own credit card, creating brand awareness at an early age in an effort to cultivate the next wave of loyal customers. Financial firms recognize that, with each generation, acquisition and stickiness become more and more difficult. By presenting value before marketing to this demographic directly, American Express hopes to gain the competitive advantage down the road.

T-Mobile Introduces 'Mobile Money' App, an Alternative to Traditional Finance Services

According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, 27.7 percent of all U.S. households are unbanked or underbanked, meaning these families don't have bank accounts or use multiple alternative finance services (AFS) in addition to their traditional account. Thus, as consumers move away from older banking methods, T-Mobile took the opportunity to create its own alternative, thereby allowing the mobile 'un-carrier' to expand its reach via prepaid debit cards and smartphone apps.

Much like Simple or Bluebird, Mobile Money allows users to access the free money management service as if it were an actual checking account. Consumers need only open an account at their nearby T-Mobile locations with an initial deposit. Customers will then be given a prepaid Visa card until an actual debit card with their name can be provided. Once activated, users can then reload their account by depositing cash in-store, cash checks by snapping a photo with the app, make free cash withdrawals at more than 42,000 in-network ATMs, transfer money to other Mobile Money customers, and pay bills electronically. Though convenient, such services threaten traditional banking methods, making competition and innovation throughout the industry increasingly fierce.

EXPERT OPINION
EXPERT OPINION