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Five lessons that banks can learn from Amazon

Affinion, Amazon, AmazonSmile, Customer Data, Customer Experience, Digital Banking, Digital FinTechs, McKinsey, Mobile Banking, PensionBee, Traditional Banking

April 17, 2018

  • Affinion
  • Amazon
  • AmazonSmile
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Karen Wheeler, Vice President and Country Manager, Affinion

It would come as no surprise if internet retailer Amazon announced it was taking over the world tomorrow. There seems to be very little that it can’t offer customers, whether it’s conquering Christmas lists, watching boxsets through Prime or managing life admin through the intelligent personal assistant Alexa, almost everyone uses one or more Amazon service on a regular basis.

One common denominator that defines Amazon’s success across all of its platforms is customer experience – providing simple, convenient and engaging solutions that go that extra mile to ‘wow’ customers and retain their loyalty.

Banks, however traditional or modern, can take a leaf out of Amazon’s book when it comes to engaging with customers and harnessing innovation to continuously improve their offering.

Here are five important lessons banks can learn from Amazon.

  1. The customer always comes first

Listening to what the customer wants has been the driving force behind many of Amazon’s products and developments. McKinsey’s CEO guide to customer experience advises that the strategy “begins with considering the customer – not the organisation – at the centre of the exercise”.

This can often be quite a challenging ethos for the banking sector to buy into, particularly for the more traditional bricks-and-mortar companies where the focus is often on the results of a new initiative, rather than the journey the company must take its customers on to get there.

It’s a case of convincing senior management that the initiative is a risk worth taking and just requires some patience. Amazon originally launched Prime as an experiment to gauge customers’ reactions of ‘Super Saver Shipping’ and it was predicted to flop. Nowadays it’s one of the world’s most popular membership programmes, generating $3.2bn (£2.3bn) in revenue in 2017, up 47 per cent from 2016.

  1. Create trends rather than follow them

To stay ahead of the curve amidst the flurry of digital fintech start-ups, banks need to come up with their own innovative customer experience solutions, rather than allow newcomers to do so first and then follow suit.

From the customer’s perspective, a proactive approach will always go down better than a reactive one. Amazon CEO Jeff Bezos has previously spoken about tech companies obsessing over their competitors and waiting for them launch something new so that they can ‘one-up’ it. He once wrote: “Many companies describe themselves as customer-focused, but few walk the walk. Most big technology companies are competitor focused. They see what others are doing, and then work to fast follow.”

What sets Amazon apart is listening to what the customer wants and prioritising them over competitors.

A great example in the banking sector is mobile-only bank Starling, which recently announced partnerships with several financial service providers that customers can quickly access via its in-app ‘Marketplace’. The first to become available is PensionBee, a digital pension provider that aims to consolidate pension pots into one. Others, including a digital mortgage broker and a digital wealth management service, are soon to follow.

Ultimately, Starling listened to and understood its digitally-minded customer base who, like most people, see shopping around for financial providers complicated and admin-heavy. One central app where you can seamlessly select a trusted digital partner would no doubt go down as good customer experience.

  1. Use customer data to form any new idea

It’s no secret that Amazon is one of the leaders that has paved the way for analytics. It’s through the company recognising the need for them which has led to customers becoming accustomed to personalisation and expecting it as soon as they have had their first interaction with a business.

Banks are no exception to this and, while it may seem like a scary commitment to more traditional firms, it doesn’t have to be complicated. A classic, simple example is Amazon storing customers’ shopping habits and sending them prompts for new products similar or related to those they have purchased in the past.

In the financial world, digital bank Monzo is leading the charge by monitoring customers’ spending habits to offer them financial advice to help them save money and budget responsibly. For example, its data once showed that 30,000 of its customers were using their debit cards to pay for transport in London – so Monzo can advise them they could save money if they invested in a year-long travel card, for instance.

There are endless things banks can do using customer data to provide the customer with an experience unique to them, rather than continuing to make them feel like just another cog in the wheel. At Affinion we believe in ‘hyper-personalisation’, in that these days it’s no longer good enough to just know a customer’s history of transactions with a company and when their birthday is.

Customers are getting more tech-savvy by the day and are expecting real-time responses with a deep insight into their interactional behaviour – they won’t remain engaged if follow up contact is irrelevant and untargeted. Customer engagement has moved on from companies communicating to the masses, it’s about creating tailored, intuitive relationships with them on an individual basis.

  1. Widen the offering beyond traditional banking

The way we live as a society is forever changing and, as we get busier and busier, any small gesture to make life that little bit easier goes a long way. The consolidation of services such as banking, insurance, mobile phone networks, utilities and shopping is a great way to ensure customers remain loyal to a brand as it will – if done right – add value and reduce hassle to their lives.

As an expert at disrupting industries, Amazon has taken note of this growing need for convenience over the years and has expanded its offering for customers, allowing them to carry out multiple day-to-day tasks with one account. In the last few months alone, Amazon has hinted that it may acquire a bank to break into the financial industry and potentially start its own healthcare company.

Regardless of size, banks should always be looking for new areas they could tap into to broaden their offering and show customers that their needs are at front of mind.

  1. Engage with customers through goodwill

A rising factor in the way that customers align themselves to a brand is its stance on ethical issues and its contributions back into society. It’s a shift that seems to be most prominent with Generation Y, as the Chartered Institute of Marketing found that 81 per cent of millennials expect companies to make a public commitment to good corporate citizenship and nine in 10 would switch brands to one associated with a good cause.

Amazon has gone that one step further, with its AmazonSmile initiative that allows the customer to choose a charitable organisation that it will donate 0.5 per cent of eligible purchases to. Not only does this show Amazon’s commitment to charitable causes, it gives the customer control of where their money ends up.

This is an easy win for the banking sector, given that one of its sole purposes is to look after money and move it around. For firms that target younger generations in particular, looking at ways to involve customers in charitable donations in a fun, transparent and seamless way is a no-brainer for increasing loyalty and advocacy.

It’s time banks took customer engagement even more seriously

For many people, personal finance is perceived as a chore and often quite complicated. Improving the customer experience and building in programmes to engage them can help greatly with this and banks need to adopt the ‘customer first’ ethos that Amazon showcases so effortlessly. With new fintech disruptors creeping into view, keeping customers loyal and engaged has never been so important.

By Karen Wheeler, Vice President and Country Manager UK, Affinion

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