Expert: William Rouse, UK Client Success and Sales Director, Avaloq Facilitator: Gilly Green (FoxRed Insight)
Headlines:
- The need to understand each segment's needs and how to communicate with them effectively
- Leveraging technology to improve efficiency and client experience
- The power of brands and a need to deliver on the promise
- Having the right skills and diversity within organisations to relate to different clients
- Using data effectively for insights while complying with regulations
- The threat of big tech firms entering financial services
Discussion:
The group discussed the challenges for financial services organisations in trying to serve a broad range of client segments and demographics.
Client communication:
Most firms are trying to find ways to deal with the lower-end of the client wealth spectrum more efficiently – the obvious factor being digital. Whilst many err away from near-to-full automation, if communication is handled carefully, it can be an improvement to service, not a reduction in contact.
One participant cited how they moved a whole client segment (lower value) to a digital service and took the banker RM away. A group of RMs serviced the book with approximately 500 clients each. While there was some initial pushback, after 2 years satisfaction levels had gone up, largely due to ease of access, cost attractiveness and more regular (automated) reviews. The transition was done where there was no other choice.
Perception is often not the actual experience and clients can be managed through it with the right communication.
Briefly discussed was matching your relationship/client-facing team to the profile of the client e.g. gender (38% investor landscape is women), race. However, it is a challenge in finding FPs/RMs.
The role of branding:
Brands are often positioned to a particular segment. The brand needs to deliver on promises in the first instance, but this becomes much harder to do if the target client base is very diverse and has different needs and/or the brand needs to reposition to do it.
It was agreed that established wealth brands may not appeal to younger demographics who prioritise ease of use over security, compliance or reputation. This means big-tech firms will increasingly become a real threat to the sector as the younger generation generate or inherit wealth. In any case, the starting point for expansion is to determine the needs of the target audience.
Acquiring new clients vs servicing existing ones:
Large institutions find it hard to acquire new clients in new segments organically. They are mainly using technology to retain, and better serve, existing clients across segments.
Those that are successful across multiple segments will be those that can engage with multi-media and can be multi-specialist across the client journey through age/life.
It was noted that it is easier to move clients up these layers/segments, but a lot harder to move them down – the investment in cost to serve should be considered as banking the revenue in the early years to support the cost of someone who has drawn-down much of their investment later.
Using data and insights:
Determining what the client needs over and above what the client wants, is something the industry has often been mediocre at – we often take the RMs view as the absolute reality rather than really understanding the client view and/or testing out different approaches with them. The participants all thought our education process on financial competence should start in schools. It should also emphasise need.
AI can provide significant insight when using multiple data sources – however this needs to be balanced against being intrusive (deducing pregnancy from what someone buys!) and must be in line with the rules. GDPR regulation is a barrier – one participant said 50% of clients had opted out of marketing communication. Even where it is for the benefit of the client (e.g. a legacy vs new and better or cheaper product) there was a reluctance to contact them.
Big tech firms have an advantage with their access to data. Banks also have significant customer data but face regulatory barriers in using it fully.
The conclusion of the group was that it is very difficult to be 'all things to all people'. No one has achieved this and even the big banks haven’t covered all segments or transitioned clients well between them. Rather, firms should focus on their strengths whilst making use of digital tools to extend reach.
Key takeaways:
- Review your brand promise and how you deliver on it for each client segment
- Explore use of technology and digital tools to improve efficiency and broaden access without compromising compliance or security, and recognise that digital does not necessarily mean a drop in, or minimal, client service
- Identify quick wins to improve customer experience using client data and insights already available
- Define core strengths and target client segments; resist trying to be 'all things to all people'
