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Why Financial Institutions Need to Understand the New Customer Engagement Model




While the industry’s shift toward digital banking creates new customer engagement opportunities for financial institutions, it also upends a host of longstanding relationship dynamics. For example, engaging earlier in the customer journey is crucial to have any influence on the buying decision.

Consumer satisfiers – and dis-satisfiers – are altered in a digital environment, making delivery of an exceptional customer experience more complex. And with abandonment rates of 80 percent par for the course for many online application processes, the stakes for designing a satisfying experience are higher than before. At the same time, it’s more important than ever for banks to understand the value of each customer relationship, so that bandwidth and investment can be efficiently deployed. Let’s consider the situation from both sides of the equation.

Shifting Customer Perceptions in a Digital Environment

Customers’ stated intentions and demonstrated behaviors align with expectations in some cases, while confounding them in others. For example, most are more than willing to use automated support – IF human assistance is readily available when needed. More than half are either open to or actively desire financial advice. And three-quarters are willing to share their personal data if they believe it will deliver benefits to them.

At the same time, the expanding array of information and options available to customers has led to diminishing bank loyalty. It’s not only harder for FIs to influence customer decisions, but the effectiveness of predictive sales models becomes compromised when banks lose their connection with the decision journey and the timing of various actions.  Therefore, Customer Engagement (CE) capabilities which aide banks in influencing customers during the awareness and consideration phase and generating leads which have a higher propensity for conversion is highly relevant. For all the talk of the “death of the branch,” these brick and mortar locations remain banks’ top source for sales conversion. 

What does a software based customer engagement model look like?

  • Listen to the customer
  • Respond with relevant content
  • Interact both reactively and proactively
  • Communicate using the most effective method and media
  • Remember prior interactions for communication consistency
  • Offer human engagement at just the right time

The Customer Engagement considers purchases made across your own bank as well as competitors’, all interactions with the customer and Customer Value Index (CVI), which is calculated based on customers market segment based on age, current financial position and potential future net worth.  

Let’s consider 2 customer interactions:

In our first case, a prospective new customer’s journey begins with visiting and exploring the bank’s website. They have become aware of the brand, and are now considering its offerings. Through digital sensory capabilities including analysis of clicks and time spent per webpage, the buyer’s propensity toward a particular offering is deduced, and intelligent marketing is triggered. In the event that the process is abandoned, the prospect is retargeted and re-engaged. Once the prospect becomes a customer through fulfillment, an automatic campaign is activated leading the customer to personal and relevant engagement. Well timed thank you emails, online surveys, follow-up contacts regarding ordered checks and debit cards, and access to online banking and financial planning tools, are sent with the intention of leading this customer into a growing long term relationship.

Suppose in our second case (which may have begun in similar fashion to the above), with the help of self-disclosed financial planning information, the customer’s CVI is calculated to be in the high 20th percentile. In an effort to manage valuable human capital at the bank in the most cost effective manner, automated processes handle less valuable and less complex processes, but some degree of human interaction is appropriate here. This customer has identified saving for retirement as a key goal, and based on value, the campaign is structured differently from our first case. This customer is provided access to additional educational material, scheduled for an in-person appointment with a banker, referred to a personal wealth manager, offered relevant products and services through cross selling channels, followed up with by a personal banker, nudged to reengagement should inactivity be detected, and notified with market alerts and educational programs. In each of these cases, a customer’s need, personalization and targeted offerings are initiated through customized customer engagement touchpoints.

For more informaton on the new customer engagement model and how to implement it for your institution, view our recent solution brief, "ARGO Connects Overview."

Download Solution Brief