Andrew McAfee recently posted on Harvard Business Review how many of the largest financial services providers in the world are noticing and concerned that their younger customers don’t really like them.
This is not surprising since the entire financial services industry is historically built on marketing to fear and necessities, not joy and desires. Nobody enjoys buying insurance.
He explains how their ‘old’ models of interaction do not resonate with the young customers:
The model involves initial recommendations from the company, often delivered in face-to-face meetings, sporadic follow-ups, and more frequent and routine transactions (making deposits, paying bills, etc.) that nowadays often happen online.
What’s so bad about this? In the eyes of digital native customers, a few things.
The initial recommendations are seen as untrustworthy, since they come from someone who’s likely to be more interested in maximizing personal or corporate income rather than customer well-being. The meetings and phone calls around these recs are intrusive and inconvenient, and the documents impenetrable. And the associated websites are clunky; it’s harder than it needs to be to execute processes and transactions, find basic information, and get questions answered. In short, the human interactions seem to date from the Eisenhower administration, and the online ones from 1996.
The number of dissatisfied customers is increasing as even the older generations adopt new technologies and models of interaction.
Where there’s scarcity, there’s opportunity.
Financial services incumbents have taken security in the fact that it’s difficult for new companies to get started and compete in this highly regulated and slow-moving industry. There was never enough pain to provoke proactive value creation for customers. Until now.
Customers have access to more choices, switching costs are lower than ever before, complaints and compliments are all visible online. That’s where the younger customers are.
Isolated tactical efforts such as building social media teams, upgrading websites and CRMs, launching loyalty programs do not solve these problems. They do not create a sustainable advantage.
This is a leadership and cultural issue.
This is not about building an online presence to respond to your younger customers. You need to be at the cutting edge of wherever your customers will be, anticipate expectations and concerns, understand what they value and proactively take actions to increase loyalty.
You need to be young again – curious, passionate and fast.
You need a leadership team that role-models, encourages and incentivizes the right behavior, and a culture that aligns and reinforces it internally and externally.
Companies like NTUC Income in Singapore are rapidly capturing market share and increasing revenues by building an uplifting service culture. Employees (even agents and partners!) are full of ideas and taking actions to create more value for their customers.
Others like Progressive Insurance, Wells Fargo, BUPA are looking to do the same in their markets.
Bonus hint – this is not about the financial services industry or generational differences. Customers’ expectations and dissatisfactions are rising even in your industry across customer demographics.
As a customer, how are your expectations changing? What are you doing about them? Tell us in the comments below.