How Product Innovation Changes Customer Experience

Expert Insights is back for season two and we’re kicking off with one of the industry’s most notable banking experts, Ron Shevlin. Ron is the Chief Research Officer at Cornerstone Advisors and he recently joined our host, Joe Welu, to tackle some of the most pressing questions and topics facing financial leaders today, from the rise and fall of consumer experience in banking to the secret sauce to customer loyalty. Let’s dive into some of Ron’s key takeaways. 

Customer Experience is One Thing, But if You Don’t Have Product Innovation, You’re at a Standstill 

Over the last two decades, Ron has witnessed firsthand an industry that’s latched onto the concept of the customer experience, making it not only a business differentiator but a fundamental pillar in ongoing business strategy for banks. Recently, however, fintechs have staked their claim in the market by not only delivering on the customer experience, but by tailoring product offerings to meet specific customer demands for niche markets. 

The key to doing this is focusing on product innovation. From a strategic point of view, Ron says you should be telling yourself, “I’m going to focus on specific product innovation that gets a specific outcome for this particular set of consumers or target customers.” 

In 2022, delivering customer experiences rooted in quality should be a company’s bread and butter. It’s now time for banks to develop personalized, tailored products for the customer segment that they’re going after. 

The Secret Sauce to Loyalty

According to Ron, customer loyalty is more of a qualitative measurement than a quantitative one. Consumers don’t necessarily close accounts, but they will move their money. That means if you’re measuring loyalty by retention, you’re headed down the wrong path.

A common misconception about consumers is that they only have one or two financial accounts — for example, a checking and savings account. In reality, consumers can have 30-40 financial relationships. Think about it: people put money into their health saving account (HSA), their Starbucks app, their CVS app and use Apple Pay or any other number of accounts — all of which become payment mechanisms. 

Because there are so many payment options for consumers to put their money, the first step toward loyalty is to be in the consideration set. With consumers today, it’s more than just trying to be there at the right place at the right time — with the right message. It’s about building the relationship early so that loyalty and trust can flourish. 

What Defines Engagement

In terms of consumer engagement with a financial institution, you have to look at the entirety of the relationship, not just the digital behavior.  

As a best practice, look at the types of transactions and interactions that a person is having with the institution and the frequency of those interactions. For example, a consumer might make very few debit card transactions on a monthly basis, but they are much more likely to make transactions on their credit card, use personal financial management tools, or interact with an account manager. Taking these actions holistically rather than individually is a more accurate way to assess a customer’s level of engagement. 

Analyzing engagement then requires having an intelligent view of each customer that’s in your organization. Critical to an organization’s growth, these intelligent profiles can be artfully composed of a wide range of data sources to provide a holistic view of customer behavior. 

The Biggest Regret Banks and Credit Unions Could Have This Year 

In Ron’s opinion, the number one priority banks and credit unions should have this year is figuring out what ecosystem they play in. In particular, these institutions should focus on answering essential questions around interconnectedness: Who are you partnering with? What distribution channels are you looking into? 

The days of a standalone financial institution staying in its own geographical market and providing its standard traditional financial products are in question. While these institutions aren’t likely to become obsolete anytime soon, their growth rate will be challenged by newcomers more open to new partnerships.

For more of Ron’s insights, listen to the full Expert Insights episode.