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Social Insights

Financial Services

Technology, digital transformation, and the industry’s evolution towards the customer

10 Minute Read

Social InsightsFinancial Services
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Financial service institutions facilitate billions of transactions each day. Here’s how technology and younger consumers are molding the industry.

Executive Summary

As some of the least trusted organizations, and with customers increasingly influenced by the digital revolution of other sectors, financial service institutions must build comprehensive strategies that prepare them for the changing consumer universe.

Through the perspective of social data, Brandwatch looked at a few ways that technology and changing consumer behaviors have affected three branches of financial services: consumer banking, card/payment, and insurance.

In the last section, we discuss how these societal changes will continue to affect the industry and financial consumers globally. Fintech will continue to transition from the tools utilized mostly by Millennials to the main service touchpoint for most customers, and new monetary systems like bitcoin will disrupt both consumer behavior and financial regulations around the industry.

Financial service institutions will need to convert real-time data into immediate actions in order to face the inevitable changes in their industry.

REPORT HIGHLIGHTS:

  • When discussing financial services, consumers mention ‘convenience’ 6X more often than they do ‘security’
  • Digital banking experiences on mobile and web bank apps are more positively discussed than non-digital banking experiences
  • Baby Boomers make up nearly three-fourths of insurance conversation online

Introduction

How technology is shifting customers’ relationships with financial services

Financial service institutions are charged with keeping our money, assets, and transactions secure. Monetary and financial institutions have been in existence for millennia, and many banks still in operation can trace their origins—and their business structure—back several centuries. While financial institutions are among the most established companies of any industry, the integral space they occupy in our society makes these institutions most threatened by changes in consumer behavior and a progressively technological society.

Since the recession, financial service institutions have experienced a lack of consumer trust and lag in market growth, compared to other industries. In tandem with the growing distrust, the changing market and consumer base are transforming how these institutions interact with their customers.

A generation defined by their relationship with the internet revolution of the 2000s, millennials are emerging as important financial decision-makers across the globe.This demographic is vital for financial institutions to consider, as their behaviors are currently informing decisions about financial technologies and influencing the market at large.

Additionally, as consumers are increasing demand for convenient, on-demand services in every industry, financial institutions must be sure they’re acclimating to expectations. In an industry once shackled by the goals of keeping company data secure and private, financial institutions now must also consider the ease and convenience of their services compared to their competitors. This trend among consumers is immediately apparent when looking at the conversations surrounding 41 of the largest financial institutions. When referencing these organizations, ‘convenience’ was discussed much more frequently than mentions related to security, with only temporary bursts of conversations about security and safety occurring directly following security breaches or data hacks.

Does this trend show that customers today feel security is a given, and thus don’t discuss it as much? Or is this trend indicative of the industry-agnostic age of the consumer, an artifact of an industry shifting its priorities towards convenient, easy services?

Brandwatch was interested in diving deeper into the expectations and sentiment consumers had around different financial service institutions.

With Brandwatch Analytics, social data analyses revealed trends within three sectors of financial institutions: banks, payment/card companies, and insurance companies. Specifically, we examined important facets of the brand-customer relationship, and the role technology will play in the future of financial services.

Banking Institutions

Consumer insights reveal the effects of financial service digital transformation

Since the 2007 global financial crisis, trust and loyalty for banks have been unstable at best. Banks have experienced the least growth in brand value over the last 10 years, and according to Forbes, nearly half of Millennials would consider switching their banking services in the next few years.

With diminished brand loyalty in banking institutions, banks must consider how they position themselves with the changing times. Banking has typically been thought of as traditional and inconvenient; however, technology—both customer-facing and within the organization— can help these companies provide more positive experiences.

The effect of mobile and web banking on customer sentiment is apparent when looking at social data. It’s expected that when consumers reference banking experiences of any kind, the conversations would generally be more negative. We just typically don’t mention average or pleasant banking experience on social media.

However, there is a stark difference between how customers discuss interacting with electronic services using mobile and web apps and the conversations they have about human interactions. The following data highlights key insights into what bank customers need and expect from banking interactions.

Nearly 60% of complaints about banks online are about non-digital experiences like bank visits and phone calls. Over three-fourths of all emotive conversation around non-digital are negative, with customers frequently complaining about negative banker interactions and extremely long waittimes.

According to Viacom Media, almost half of Millennials expect technology to “overhaul the way banks work.” Social consumer data provides a window into any banking experience, revealing insights as specific as the most common issues U.S. customers have with mobile check deposits.

In an industry notorious for inconvenient experiences, learning from audience pain points can help banks comprehend their customers’ needs and expectations to better prioritize service changes and technological developments.

Payment Card Companies

Using social insights to connect with the new customer

Payment systems, including credit/debit card companies and technology companies like Paypal, are as integral in people’s personal finances as companies can be. Like banking institutions, the interactions between payment systems and their customers are very intimate and very frequent, with hundreds of millions of debit and credit card transactions occurring each day.

These companies are charged with the task of transferring personal or corporate financial information to another trusted, specific entity. Individuals and corporations, therefore, expect that their transfer is safe, secure, accurate and convenient.Because of this intimate relationship, it is important for these companies to stay mindful of the mood of their clientele, and identify where their relationships are weakest.

Because of this intimate relationship, it is important for these companies to stay mindful of the mood of their clientele, and identify where their relationships are weakest.

Twitter, Facebook and public forums are ripe with customer questions and grievances, providing companies with insight into their experiences. Therefore, it’s imperative for companies to maximize on social intelligence technologies to capture these customer-service conversations and crises online.

An audit of the conversations highlights three levels of service-related instances when people mention financial institutions directly: when they request help, after they’ve had a bad customer service experience, and before they cancel, suspend their account, or threaten to switch providers.

The analysis of conversations about insurance companies demonstrates a healthy customer-service relationship, with fewer than 15% of customer-service mentions any more severe than requesting help or asking questions.

However, banking institutions and card companies have more people reporting they had negative customer service experiences or threatening to leave. Being able to use an analysis like this to deduce the exact touchpoints where brand-customer relationships breakdown is integral in maintaining trust, building loyalty, and improving customer sentiment around your brand.

An interesting addition to this— conversations regarding the electronic payment company PayPal resembled those of other payment services. However, Paypal did receive fewer severe customer experience mentions, with only about 30% of the discussions regarding bad customer experiences or threats of cancellation.

The customer-service issues Paypal did receive were more technical in nature, as expected when their transactions occur with minimal interpersonal activity needed. It will be interesting to measure how sentiment around traditional card companies changes as payments and purchases continue to reduce human involvement.

Insurance Companies

Learning from audience decision-making to encouraging future-thinking

Insurance companies of all types are are fighting an uphill battle. Today, people are just less likely to get insurance. One role of insurance companies now is to get people to think of the future. People feel less secure in their positions, change jobs more frequently, and believe insurance isn’t a financial priority at the current time.

As easy as it is to silo this trend as a result of strange “Millennial” decision-making, data suggests that many individuals younger than 60-years-old are saving and investing less, and deferring purchasing insurance.

The following analysis overlays social data around insurance with savings data collected from a survey of 5,000 adults of different ages. It’s clear that the “Baby Boomer” generation is more likely to be making future-oriented decisions, like having significant savings and discussing insurance.

This trend doesn’t necessarily reflect a lack of concern for financial decisions. Currently, three-fourths of Millennials owe student debt, a financial burden that is dictating most of the generation’s important life decisions, from choice in one’s apartment to age to have children.

Not just a symptom of Millennials, 35% of all current education debt comes from individuals over 40. Our current economy and society have drastically morphed how people are making present vs. future financial decisions.

Insurance customers are significantly happier when they can receive an “effective, single source” of information and solutions. So in order to get more people, especially younger people, considering the future in their financial decisions, insurance companies should clearly articulate solutions that apply to both their current customers and the audiences they hope to attract.

To do this, it’s important to understand the aspects of insurance that often provoke confusion or require clarification. Social data provides one window into that information.

On social media, people typically had the most questions about current claims they’ve made, or the cost or pricing of services. Understanding what customers are currently using social media for arms insurance companies and even individual agents with the power to ensure current customers with the exact resources they want and need.

Even more importantly, younger generations—those least likely to have insurance—are more autonomous with their financial decisions, choosing to collect financial and investment information themselves rather than deferring such decisions to an advisor. Learning how these demographics understand insurance, and their gaps in knowledge, should be informing messaging and marketing strategy for companies targeting these groups.

Looking forward

Despite its current effect on the industry, digital services and FinTech aren’t new. Companies already know how vital an online presence is, and the impact of convenient web and mobile apps are on customer satisfaction. Even the most steadfastly traditional financial organizations know that the future of banking, transactions, requires both flexibility and an eye on technology.

So, why are many companies still resistant to change?

More and more consumers are taking digital currency seriously. Each day, generations of people who don’t remember a time before internet services are becoming financial consumers. How can companies and entire financial systems quickly and efficiently respond to these changes?

It’s vital these institutions adopt and implement the right technology to stay up-to-date with consumer trends. Additionally, monitoring the sentiment and opinions around current services and products can inform every part of a business: from development learning how people interact with mobile products to individual advisors being trained on the needs and expectations of different groups of consumers.

Finally, ensuring that company insights are communicated quickly to the right stakeholders is imperative. Having an easy, instantaneous data communication platform like Brandwatch Vizia is uniquely valuable for companies needing to quickly turn data into action.

Social intelligence is incomparable in providing financial businesses with the tools needed to situate themselves in the changing market. For more information about the data in this report or how Brandwatch provides for financial services, explore more of our content or request a demo of our products.

Crimson Hexagon has merged with Brandwatch. You’re in the right place!

From May 8th, all Crimson Hexagon products are now on the Brandwatch website. You’ll find them under ‘Products’ in the navigation. If you’re an existing customer and you want to know more, your account manager will be happy to help.