February 14, 2019

Australian Banking Scandal: Can banks regain consumer trust?

Australian consumers are outraged, and for a good reason. Misconduct by some of the nation’s biggest banks, exposed in a recent Royal Commission report, have been going on for decades and included the charging of fees for no service – sometimes even to dead customers.  

This comes at a time when consumer trust in the banking industry is already sliding across the globe. According to a Bain research, over half of consumers would trust at least one technology company with their money more than they trust banks.  

But if one can find a proverbial bright side to the matter, it may come in the form of a renewed focus on the customer. According to the Australian Banking Association, this could be “an opportunity for banks to reset their relationship with customers and the public and they are determined not to miss it.”  

That trust needs to be earned, especially in the competitive marketplace that banks face now as customers have an ever-widening field of choices. According to Business Insider, a third of bank customers would switch to a big tech provider for banking services. And we already see challenger banks in the UK and elsewhere enticing increasing numbers of customers to switch to their current accounts. 

Harnessing the power of artificial intelligence, banks can learn a great deal about their customers’ behavior. They can figure out when a customer spends more than usual in a category, when they have extra money available to deposit in savings, and when it looks like they might be heading for an overdraft.  

Banks can regain consumer trust by using this data analysis to benefit the customer, engaging them with personalized insights and advice that speak to their specific circumstances and, most importantly, help them simplify and improve financial decisions.  

Banks across the globe are already putting these principles into play to improve the customer experience, increase engagement, and build trust in order to position the bank as the go-to-partner for the customer’s financial life:  

• Just last week in the US, Huntington announced the launch of Huntington Heads Up, bringing AI-powered predictive analytics to deliver personalized insights to customers.
• After launching in October 2017, NOMI Insights and NOMI Find & Save, RBC’s award-winning money management and automated savings tool, has already delivered over 375 million insights to their customers in Canada and helped customers save over 60 million dollars, leading to a significant uptick of new savings accounts and doubling user engagement with the bank in the process. 
• And in the United Kingdom, Metro Bank is simplifying money management by empowering customers with personalized insights that highlight spending patterns, subscription renewals, predictive low balance warnings, and more. 

Make it personal and relevant 

Generic money management tips are available everywhere and mostly ignored. Make every engagement count by basing the message on data and analysis of each customer. I already know that they should save more money, but how much can I save today? 

Make it insightful and forward-looking 

Knowing your account balance is useful. But knowing that you may not have enough funds to cover an upcoming payment based on an analysis of your cash flow patterns is a game-changer. Utilizing predictive analytics, banks can help customers anticipate such money issues before they become problems, and even automate the fix by moving money into the right account. While the bank may lose the quick windfall of an overdraft fee, they earn the appreciation and loyalty of the customer, which is a far bigger payoff in the long run.  

Make it bite-sized and useful 

Consumer behavior has moved everyday banking into the digital and mobile space, and this medium speaks in short messages with actionable information. Engaging with customers in the digital realm requires banks to embrace the delivery of concise insights with clear guidance (see the 10-second banking experience) and a frictionless, automated solution for the customer (see The Future of Autonomous ‘Hands-Free’ Banking).  

In Australia and elsewhere, opportunity awaits those banks that step up and forge a new paradigm of trust and advocacy with their customers, proving that they are not only competent stewards of deposit accounts, but also trustworthy partners for money management and financial wellbeing.  

As Stockspot’s Melanie Novacan said in her interview with CMO, “loyalty, trust and advocacy is going to be the number one thing setting a brand apart in the finance category moving forward.” 

 

To learn more: 

4-minute video: Empowered to save more, happy customers fuel RBC’s growth 

 eBook: Winning the Deposit War by Empowering Bank Customers with Self-Driving Savings  

Self-Driving Finance™ in Action: How Banks Use AI to Improve Customers’ Financial Lives