At a time of economic uncertainty, delivering a good customer experience is no longer enough. Consumers want consistent and contextual engagement that shows empathy and a commitment to helping achieve financial wellness. They want a “GPS of financial services” that will help them reach their financial goals as easily as possible.

More than a good customer experience, contextual engagement involves personalized two-way interactions, using data, analytics and real-time communication at scale. To build and grow loyalty, financial institutions must do more than just process transactions efficiently – they must keep customers engaged with the brand in a consistent manner.

The goal is to provide value beyond just products and services, displaying empathy for their financial wellness needs and interests that will strengthen the overall relationship throughout the entire customer journey. This involves using data and analytics to understand the customer's preferences, behaviors and purchasing history and using this information to deliver personalized content and experiences across various traditional and digital touchpoints.

The crucial importance of this capability is increasingly understood by banking leaders. Unfortunately, most organizations are falling well short of what’s required.

The power of contextual engagement

Contextual digital customer engagement can take many forms, such as delivering relevant and personalized content and experiences to the customer based on their preferences and behavior, targeted messaging with the customer across multiple traditional and digital touchpoints such as social media, email, mobile apps and websites or proactive real-time customer service triggered by specific events or behaviors.

By providing a more personalized and relevant customer experience, financial institutions can increase customer satisfaction and loyalty as well as drive revenue growth. Contextual customer engagement can also generate valuable data insights that banks and credit unions can use to improve their customer experiences over time.

According to MX data, which represents data from thousands of financial institutions across the U.S. and Canada, consumers who are digitally engaged with their financial institutions maintain higher deposits than consumers who have only signed in once to adopt the technology. Furthermore, according to MX data, engaged consumers maintain deposit levels over five times more than individuals who have not adopted digital banking solutions.

More importantly, engaged consumers generate an average of $477 per year in annual interest and fee revenue for financial institutions, according to MX. Consumers who have adopted digital solutions but don’t use them frequently generate an average of $357 per year in annual interest and fee revenue. And those individuals who don’t engage digitally at all generate an average of only $79 – less than one-sixth of the revenue an engaged user creates.

In addition, according to the Zendesk Customer Experience Trends Report 2020, 70% of businesses are not meeting customer expectations and over 80% of customers will churn after a bad customer experience, so there is a ton of pressure to succeed – and right away. To succeed, customer engagement must be focused on value for the customer first and the business second.

According to Zendesk, “Customers want to be treated as individuals, meaning they expect companies to know their preferences and purchase history. To do that, companies need to be able to harness their customer interactions across platforms and turn that data into actionable insights. Better digital customer engagement leads to more customer data and better customer experiences, which can lead to higher profits.”

Current state of customer engagement in banking

Most financial institutions are playing a game of catch up, trying to meet current and future customer needs using yesterday’s technology. As customers have changed their expectation of service and engagement, banks and credit unions must find ways to deliver unique, personalized and contextual journeys that help promote financial wellness during times of economic uncertainty.

This requires a shift from a traditional product-centric approach to a customer-centric approach that focuses on intelligent customer engagement. In fact, many of the conversations can involve the connection to relevant content created by a financial institution without any specific product sales message. Done well, the result will be the ability to capture new growth opportunities by delivering greater value for customers now and in the future.

It is not surprising that previous research by the Digital Banking Report found that increasing customer satisfaction and improving efficiency were the top two customer-oriented objectives of financial institutions globally. It was also not surprising that cross-selling was a major objective. The good news is that there has been an increase in emphasis in providing proactive advice and increasing engagement opportunities.

Unfortunately, while financial institutions have the desire to deliver higher levels of engagement, most organizations are still only delivering basic customer service interactions. Not only do firms have challenges with easy account opening and onboarding processes, but only a few are currently offering financial wellness tools, proactively providing advice and offers or empowering employees with a 360-customer view.

These challenges are reflected in the self-reported ratings financial institutions provided relative to their customer engagement maturity. Except for offering some level of personal financial management (PFM) tools and account aggregation capabilities, the engagement maturity level of financial institutions across all asset sizes and regions is extraordinarily low.

Of significant concern, we found that less than 10% of all organizations can provide personalized financial recommendations, automated actions based on transactions or lifestyle-related offerings using open API technology.

8 steps for a digital customer engagement strategy

Building a future-ready customer engagement strategy requires financial institutions to take a holistic approach that considers the needs of their customers, the capabilities of their technology and the trends and challenges within the banking industry. Here are some key steps that organizations can take to build a future-ready digital customer engagement strategy:

1. Define customer needs and expectations : Financial institutions must start by understanding the financial needs and expectations of their customers. This requires collecting and analyzing data on customer behavior and preferences as well as conducting surveys and focus groups to gain deeper insights. By understanding their customers' needs, organizations can develop a customer-centric digital engagement strategy that meets those needs and exceeds their expectations.
2. Leverage emerging technologies: Banks and credit unions must continuously monitor emerging technologies and assess how they can be used to enhance customer engagement. This may include exploring new channels such as social media or messaging platforms or adopting technologies such as artificial intelligence and machine learning to personalize interactions and automate certain processes.
3. Democratize data and analytics: Organizations must prioritize the use of data and analytics as a key driver of their digital engagement strategy. This requires investing in the infrastructure and talent needed to collect, analyze and interpret customer data and then sharing these insights across the organization to inform decision-making and drive continuous customer and employee experience improvement.
4. Collaborate with third-party providers: The ability to create the foundation for proactive customer engagement at speed and scale will often require the collaboration with third-party providers. The expertise and experiences of these organizations will help to eliminate missteps and allow for early victories that will pave the way for broader implementations.
5. Support a culture of innovation: Financial institutions should create a culture that encourages innovation and experimentation. This means empowering employees to propose new ideas and initiatives, providing resources and support for experimentation and celebrating and learning from both successes and failures.
6. Build agile and responsive processes: Organizations should develop agile and responsive processes that enable them to quickly adapt to changes in customer needs, technology and industry trends. This may include using agile methodologies to develop and test new digital engagement initiatives or building cross-functional teams that can respond to customer needs in real-time.
7. Embrace automation: To deliver contextual insights at scale, financial institutions need to automate their customer engagement processes. This can be done using chatbots, automated emails and other tools.
8. Include a human touch: While automation is essential for delivering contextual insights at scale, businesses also need to provide a human component to creating customer engagement. The most successful firms integrate human interactions into the contextual engagement process, differentiating experiences from competitors.

Now more than ever

At a time when many customers may be facing financial hardships or simply question how to improve their financial wellness, banks and credit unions must move beyond delivering positive experiences to engaging with customers in real-time on a value-added basis. This will require an investment in modern technology, a data-driven innovation culture and a focus on serving customer needs with proactive solutions.

But personalization and contextual engagement are only the starting points. Viewing customer relationships in an empathetic way with a focus on financial wellness must be the ultimate mission. Done well, businesses can increase customer loyalty, improve customer satisfaction, drive sales and gain a competitive advantage.

Jim Marous is the co-publisher of The Financial Brand, the owner and publisher of the Digital Banking Report and the host of the top-five banking podcast, Banking Transformed. As an author and recognized industry futurist and authority on disruption in the financial services industry, Marous has spoken to audiences in over 50 countries on how individuals and organizations must respond to the digital transformation of financial services.