Are You Serving Customers Where They Want to Do Business? ... An increasingly mobile-savvy consumer base is demanding ne
Are You Serving Customers Where They Want to Do Business? Financial services has always been a competitive industry and today, companies are under more pressure than ever in their quest to gain and retain customers. Increased public and media attention about the security of our financial assets and information has left consumers confused, concerned, and less trusting of their banking relationships than ever before. Customers are being courted by both large financial institutions (FIs), smaller community banks and credit unions, and increasingly, also by alternative financial services providers that offer a mix of mobile and prepaid alternatives to traditional checking and savings accounts. It is more competitive and expensive to attract and retain customers. At the same time, the regulatory environment is uncertain and challenging for banks and emerging Fintech players, leading to additional costs and hesitation about making investments. The EMV liability shift is putting additional financial pressure on financial institutions and confusing consumers, many of whom don’t even know why the transition is happening and have no idea how to use an EMV chip, or “smart” card. An increasingly mobile-savvy consumer base is demanding newer, faster, and more engaging ways to digitally transact and communicate, requiring upgrades to legacy systems and investments in the customer experience. Now, more than ever, it is essential for FIs to understand changing consumer sentiment in order to effectively grow and retain their consumer base. Consumers are asking for convenience and personalization in all of their financial services. Finding a responsive and cost-effective platform to make this a cornerstone of a marketing strategy will be a huge advantage. To that end, we at Arroweye Solutions commissioned a survey of more than 1,000 Americans in order to uncover their preferences, concerns and level of education about their financial services options. In this paper you’ll find the information you need to retain your current customers and attract new ones, all while keeping up with today’s tough conditions. If you’re a bank or credit union, you may already know that Arroweye’s innovative card marketing and production solutions can help you tackle some of the industry’s toughest challenges and help you grow your business. We hope this paper will be a great starting point for you, and if you have questions or would like to receive more information, please don’t hesitate to reach out. Regards,
Render Dahiya President & CEO
How Consumers Use Financial Services Arroweye conducted a national study in September 2015 to understand how Americans’ primary source of financial services is meeting their needs, and what services consumers value most. The results reflect the responses of more than 1,000 adults, representing the general US population.
US Regions Pacific
21%
Mountain 8% Midwest
24%
South Central 9% South East
22%
Northeast 11% New England 6%
Age
Household Income 22% 26% 27% 25%
$0 to $9,999
7%
18-29 Years
11%
30-44 Years
17% 15% 10%
45-59 Years 60+ Years
$10,000 to $24,999 $25,000 to $49,999 $50,000 to $74,999 $75,000 to $99,999 $100,000 to $124,999
7% 3% 3%
$125,000 to $149,999
3%
$175,000 to $199,999
5%
$200,000 and more
$150,000 to $174,999
20%
Prefer not to answer
EMV and Consumer Awareness Consumers Are In the Dark About EMV
Our research shows that as of September, a full 73 percent of consumers have not received communication regarding the EMV shift from their current financial services provider. In addition, 61 percent still haven’t received an EMV card, and 65 percent don’t know how to use one.
Consumers Are Not Hearing From Their Bank About EMV 73% HAVE NOT RECEIVED EMV COMMUNICATION
61% HAVE NOT RECEIVED AN EMV CARD
65% DON’T KNOW HOW TO USE AN EMV CARD
Consumers indicate a lack of knowledge and understanding about the shift to EMV and what it means for them. Communication is imperative for a smooth transition to EMV and financial institutions have much to lose if you do not communicate properly. As banks and other FIs are rolling out EMV changes, communication plans must match the effort. You must continue to meet the needs of cardholders by communicating to them about EMV before, during and after the transition. Financial institutions have an opportunity to use the EMV liability shift to show consumers the anti-fraud measures that the FI has taken on their behalf. The chip in cards is a visible reminder that is reinforced every time consumers take the card out of their wallet. With the eminent EMV shift, and constant talk of fraud and security breaches, your customers are craving information. They want to know their account is safe with your institution. It’s an ideal opportunity to reach out and engage with them about this hot topic. You have their attention. Now is an excellent time to deliver additional marketing communications and refresh their card or cards. Personalizing, which we’ll go into a bit later, is a surefire way to not only keep your existing clients feeling important by speaking to their individual likes and interests, but can also attract potential new customers that they are likely desperately seeking.
Approaching the EMV transition with a thoughtful, holistic plan will be critical for not only a successful shift to chip technology, but also for a successful long-term business strategy. Ensure that you continue to keep your long-term goals on track while transitioning to EMV. You aren’t the only party transitioning to EMV – so are your cardholders. Make sure that you don’t take them for granted and use this unprecedented time to pull them closer to your brand. If you are interested in the EMV transition specifically, you can download our white paper on EMV strategies here.
Customization Potential Why Personalization Matters
Our research shows that 70 percent of all respondents use a bank as their current financial services institution, 19 percent use a credit union, and the other 11 percent use another service like prepaid cards, PayPal or other technology option, or don’t have a consistent financial services source at all. Among all respondants, online banking has eclipsed branch banking. Our survey shows that 59 percent of consumers’ primary means of interaction with their financial service provider is online or through their mobile device. The brick and mortar bank is in the midst of a sea change. There are fewer opportunities than ever for most customers to see and touch your brand in person, which makes remaining touch points more important than ever. At the same time consumers are becoming increasingly comfortable with digital and mobile touch points, and FIs must leverage them to promote the brand and deliver important messages. Communication must be organized for, and delivered through, multiple channels and messaging must be consistent from one touch point to the next. Amidst this frenzy of change, there is one constant: the one remaining physical contact point that plays a major role. The majority of consumers continue to touch your brand literally every time they pull a physical card out of their wallet. In fact, 65% of consumers we surveyed have a debit or prepaid card, and 41% have a credit card, while 28% have both. Each card serves as a billboard in consumers’ wallets and leaves a brand impression every time they use it. Where does your card stack up? Our experience shows that when brands create a cardholder connection with personalization, design and security features, that card can move to the coveted “top of wallet” position.
Herein lies a huge opportunity for financial institutions to woo customers who may not have previously used their services, or to win them back. How can you do this? In a word, personalization. In our experience, when cards are personalized, cardholders use the cards more, average card loads go up significantly and the card relationship is longer. All segments of the population want banking to be fast, easy and convenient, and most also want it to be personalized. Yet 27 percent of consumers said their FIs don’t offer personalization options and another 45 percent don’t know if the option exists. Regardless of what is actually offered through their FI, more than half – 57 percent – of millennials want the option to be able to personalize their debit or credit cards with an image or personal design, and 46 percent of the rest of the population finds this important as well. Additionally, 44 percent of millennials have already taken advantage of the opportunity when presented with it by their financial institution and so has more than a third of the entire population. These numbers are only going to increase.
57% 46%
OF MILLENIALS WANT A PERSONALIZATION OPTION OF THE REMAINING POPULATION ALSO WANT PERSONALIZED CARDS
A sizeable portion of the overall population would jump at the chance to personalize their cards, which presents a huge opportunity currently being missed by many FIs. If your organization offers customers a chance to make cards their own, it’s time to start spreading the word. Providing an easy, understandable, personalized experience is key for customers of all ages. Banks and credit unions that take advantage of this opportunity will very likely create more satisfied, loyal customers than those that don’t, and good communication and marketing is key to highlighting these benefits. You can even use your card marketing materials to drill down to cardholders’ individual needs and interests, and to capitalize on market trends or local preferences. Not only is personalized cardholder marketing not more expensive than traditional cards, it’s an investment you can’t afford to ignore. Studies show1 that consumers actually expect marketing to be customized to their interests and needs, and the effectiveness of mass-market materials will continue to wane. Don’t phone this in – take advantage of the touchpoint to build your brand and your customers’ loyalty.
1
http://www.emarketer.com/Article/Marketers-Respond-Consumer-Demand-Personalization/1010618 , http://venturebeat.com/2015/07/14/consumerswant-privacy-yet-demand-personalization/, http://www.websitemagazine.com/content/blogs/posts/archive/2015/02/23/consumers-demand-personalizedshopping-experiences.aspx
The Opportunity: Youthful Loyalty Trends How to Keep Millennials Happy
Everyone is chasing the millennial audience. There is no lack of data about their wants and needs, and the fact that they expect to be catered to. This past year, millennials switched providers at a similar rate as the rest of the population, but the type of provider they’ve switched to differs notably from the rest of the population with 22 percent switching to prepaid cards as opposed to 16 percent of the general public. Millennials are obviously confident in “self-banking” but that doesn’t mean they want to be left to their own devices. The reasons millennials switched providers is also different from the rest of the population, in that they were significantly more likely to seek a provider due to convenience (40 percent) compared with only 30 percent of the total population switching for this reason. And, they are less price sensitive than you might think: fewer millennials (17 percent) changed providers because of costs, including fees and penalties, as opposed to 21 percent of the rest of the population. The type of services they seek also differs from the general population. Millennials seek fewer checking and savings accounts, and many more millennials (47 percent vs 38 percent) want mobile banking options.
Why Millennials Switch FIs
40%
17%
47%
DUE TO CONVENIENCE
DUE TO COSTS
WANT MOBILE BANKING
Online banking has eclipsed branch banking by a wide margin for all audiences. Not surprisingly, our research shows only 24 percent of millennials and 31 percent of other generations frequently visit their financial institution’s physical branch or service location. While millennials are almost as likely as other generations to bank primarily online (39 vs 42 percent, respectively), far more millennials bank primarily via mobile device than do other generations. Financial institutions must start providing an engaging digital experience to all of their customers, but should be especially sensitive to mobile banking options for millennials.
24 PERCENT
OF MILLENIALS VISIT THEIR FINANCIAL INSTITUTION VERSUS THE 31% OF THE GENERAL POPULATION
29 PERCENT
OF MILLENIALS BANK MOSTLY VIA MOBILE COMPARED TO THE 18% OF OTHER GENERATIONS
Brick and mortar locations are changing in front of our eyes. Most consumers rarely even see and touch your brand in person anymore, nor do they take away any perception of what your branch looks like except through digital channels. But there is one place left where a majority of consumers continue to physically touch your brand, and that is through physical cards. Debit and prepaid cards offer exceptionally valuable real estate to the millennial audience, and should be used to maximize your brand reach through personalization. Even for early adopters that use Apple Pay or other mobile payment options, a physical card is still necessary. Make yours count.
It’s All About Trust
Earning Customers’ Trust is More Important Than Ever According to our research, 57 percent of consumers do not completely trust their bank or financial institution to keep their information secure. And a lack of trust means a lack of loyalty. So every new app, offer, and promise from a competitor sparks attention. And according to a recent Gallup poll1, many Americans trust technology firms more than twice as much as banks. That means you aren’t only competing with your fellow financial institutions, you’re competing with the likes of Google, PayPal, Amazon, and Apple to keep their trust and try to build positive brand recognition and loyalty. FinTech is booming, and consumers love it. With budgeting apps
...you aren’t only competing with your fellow financial institutions, you’re competing with the likes of Google, PayPal, Amazon, and Apple to keep their trust and try to build positive brand recognition and loyalty.
on their phones, and myriad payment options available from digital wallets to mobile payments, banks risk falling behind when they don’t delight their customers. Technology firms will continue to offer more seamless, fun and convenient payment options to consumers, giving them less reason to stay with established financial institutions if the incumbants cannot address data security perceptions and respond to payment trends.
57%
Do not completely trust their bank or financial institution to keep their information secure.
Banks and credit unions are among the most highly regulated financial entities in America, with extensive compliance and reporting and anti-fraud requirements in place. FIs have invested millions to keep consumer’s data safe, but negative media attention still dominates the marketplace and communication to accountholders is still lacking.
1
http://letstalkpayments.com/survey-shows-americans-trust-technology-firms-more-than-banks-and-retailers/
The Bottom Line
Be Nimble, Responsive and Personal to Win the Day with Customers The payments industry is complex, and it’s no wonder that many consumers are not well informed, let alone trusting- where they keep their money. To be loyal, consumers must first be educated and satisfied. Organizations that can promote what they are doing in today’s mobile and digital environment to deliver a frictionless customer experience and reduce fraud and data risk will give consumers one less reason to move their money and their business. For financial institutions, a changing competitive landscape means taking a more nimble, responsive and personalized approach will be absolutely essential for acquiring and retaining customers. The growing influence of millennials combined with the booming Fintech industry is changing the face of financial services as we know it today, and adapting to that change can make or break your business. The message is clear: consumers need to hear from you. They want personalization and convenience, and they will respond to targeted marketing that responds to their needs. FIs need a nimble marketing and card production partner that can turn on a dime as they put new campaigns into market and adjust to the changing demands of the modern consumer. At Arroweye Solutions, we are proud to be that partner. For more information on how Arroweye can help with your card marketing and production needs, visit us online at www.arroweye.com or you can reach us by email at
[email protected].
About Arroweye
Arroweye is a leading provider of innovative card marketing and production solutions for the financial industry. The company’s patented digital on-demand technology is the most efficient and profitable model for card marketers and issuers to bring highly customized programs to market. Founded in 2000, Arroweye offers the only fully-digital card solution approved by Visa, MasterCard, American Express and Discover. The company delivers EMV, hybrid and traditional card technology to some of the largest prepaid, credit and debit card programs around the world. A state-of-the-art manufacturing facility allows Arroweye to integrate with any number of processors and other services providers to be a single source provider for our clients. Arroweye serves closed and open loop markets in prepaid, credit, debit, reward and incentive, employee programs and emerging payments.
Arroweye Solutions, Inc. 549 West Randolph, Suite 200 Chicago, Illinois 60661 312.253.9400 (sales) 312.253.9419
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