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Fair dinkum bionic banking

"I wouldn't call if I didn't think I was getting ripped off to start with… if I felt I was paying a fair price for the service I was getting I would do it all online and I wouldn't feel the need to negotiate."

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In typical Aussie fashion, a recent purchaser of car insurance tells it like it is. 

" Customers demand simplicity but find complexity.”

They aren’t happy.

It’s a trend all too familiar for financial services providers and echoed across different products. In Australia, in a post-Royal Commission world, frustration with insurance, superannuation and home loans from brick-and-mortar retailers - and digital disruptors - is pervasive.

Financial institutions are searching for solutions to shift the dial.

New research by the Boston Consulting Group delves deep into the minds of financial services customers and asks them “how satisfied are you with your purchasing journey? How did you go about it? How much do you trust the institutions you’re buying from?”

The insights may paint a grim picture, particularly for complex financial services products like superannuation, but it’s not all bad news.

I can’t get no… satisfaction

Part of the problem is customers demand simplicity but find complexity. For instance, if we take superannuation as an example, there’s a lot to read and understand, the rules change on an annual basis and even a rocket scientist can find it hard to decipher some of the deals and terms.

It’s the same story for trust. Trust is lowest for new super customers at 64 per cent, compared with home insurance at 86 per cent. But there’s a trust paradox: once a consumer changes provider, the levels of trust increases, except for insurance where the levels actually decrease.

What’s the issue?

The research found people want to be able to do more online - especially when they are researching a new insurance or superannuation policy.

With trust in financial institutions plummeting and consumer satisfaction in consumer products at an all-time low, particularly following the Royal Commission, one way of shifting perception and gaining trust is to better leverage digital capabilities to provide more personalised offers.

Paradigm shift

This is where the “bionic bank” comes in.

BCG coined the term bionic banking back in 2015, describing the blending of digital technology with a human touch to deliver the right products and services to target customers. The best bionic banks will evidentially be the ones that win and retain customers in future.

Our research found even among those who prefer digital services, there was still great demand for a human touch when it comes to significant and highly emotive purchases - like a home loan - or complex decisions like choosing insurance policies.

People reported spending twice as long researching a home loan than any other financial service. This is why it’s so important to get the balance right.

Do I trust you?

All industries should be data-driven but the shift is more pronounced in financial services than most others.

Personalisation helps customers understand their options and reduces information overload during research. It simplifies the purchasing process and strengthens relationships when customers don’t have to re-enter personal information repeatedly.

For example, a customer at the research stage for a home loan enters a long list of information in order to find the best rate or deal for them. But when they come to talk to a banker at the purchase phase, frustration ensues when the same information has to be entered again from the beginning.

The research shows customers are willing to share this data, so long as there’s a tangible value exchange. More than half of those surveyed were happy to receive promotions that meet specific purchasing needs (56 per cent) and expect customised communications after sharing data (51 per cent). However the offer needs to be timely and more importantly it needs to be personalised.

Significantly, despite the loss of trust across the industry, when it comes to data sharing, consumers tend to trust the established network banks more than online or digital competitors.

Overall, consumers want to do more online. That means the data they provide should be used to develop personalised communications. And they still expect human interaction when it’s required.

All of this can be addressed.

Bionic banking requires significant investment but there are clear steps that can be taken to improve customer experience and increase loyalty.

Critically, while the shift to digital will continue at pace, there’s still great value in providing the right levels of human touch where needed. In Australia, let’s just call it fair dinkum bionic banking.

Sam Stewart is Global Head of BCG’s Retail Banking Practice and Jane Danziger is Australia and New Zealand head of both BCG GAMMA, BCG’s advanced data science business, and Marketing, Sales & Pricing Practice

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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