Forrester's Vision On The Next Generation Of Digital Financial Services

Many of today’s financial services websites seem increasingly outdated. Why? More and more people are using the web as their primary banking channel and firms like Amazon, Apple, and Google are raising the bar on what customers — especially the younger generation — expect from their banks.

Despite the fact that the online channel is more than a decade old, most retail financial services companies have yet to make full use of its potential. Many banks still don’t make it easy for customers to achieve their goals online, they struggle to provide compelling cross-channel experiences, fail to tailor content and functionality to individual needs, and don’t enable customers sufficiently to take action by themselves.

We believe that a new generation of digital financial services is required — one that provides a fundamentally improved digital experience. To be successful, these next-generation digital financial services should be SUPER — simple, ubiquitous, personal, empowering, and reassuring.

This framework presents Forrester's vision of the of future of digital financial services and describes the technologies, processes, and organizational aspects that will enable it. It also provides examples of leading financial services firms that provide next-generation experiences today.

A key enabler of the Next-Generation is Agile Commerce which means optimizing people, processes, and technology to serve today's empowered, ever-connected customers across a rapidly evolving set of customer touchpoints.

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The Role Of Social Gets Clearer For Financial Services

To this point, marketing and specifically interactive marketing have been the focus of social and its applicability to financial services. A colleague of mine – Nate Elliott – has written on the opportunities for the industry on a few occasions, and if you have not seen his work, please check it out.

The role of social outside of pure marketing has been less clear to this point, and it is only now that we can see the areas social can move the needle for financial services. Over the last year, Forrester has written numerous reports and case studies on the subject, and I wanted to highlight a few key areas of social strategy and related reports on the subject. In my view, those areas include:

  • Online sales. For years, marketers have used testimonials to sell products and services, but that concept was foreign to most eBusiness executives in charge of online sales then USAA showed the way. USAA uses customer ratings and reviews to drives sales on their web site. The essence of the strategy is to use the “authentic voice” of the customer to win over would-be shoppers, and represents a great way to tap the good will that USAA has garnered over the years with it customers. During a nine month periord in 2009, the utilization of customer ratings and reviews drove nearly 16,000 incremental product sales.
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Welcome To The Era Of Agile Commerce

Multichannel commerce no longer makes sense. As consumers are increasingly connected through a wide array of Internet-connected devices, the traditional multichannel commerce experience is becoming obsolete. Customers no longer interact with companies from a “channel” perspective; instead, they interact through touchpoints. These touchpoints include channels such as stores, branches, call centers, and websites, but also emerging interactions such as apps, social media, mobile sites, SMS messages, and interactive advertising -- across a wide range of devices such as smartphones, tablets, Internet TVs, cars, and even appliances. 

As a result, it is time for organizations to leave their channel-oriented ways behind and enter the era of agile commerce —optimizing their people, processes, and technology to serve today’s empowered, ever-connected customers across this rapidly evolving set of customer touchpoints. This is agile commerce.

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The Secret To Loyal Financial Services Customers

Eight years ago, Forrester set out to find the corporate trait that does the most to create loyalty among financial services consumers. Loyalty, of course, is about more than simply retaining customers: Loyal customers are willing to buy more, borrow more, save more, and invest more with the firms they already use. We tested dozens of variables, including the length of the customer’s relationship with the firm, the quality of the firm’s customer service, and the firm’s money management skills. One trait emerged above all others: the perception on the part of customers that the firm does what’s best for them, not just what’s best for the firm’s own bottom line. We call it customer advocacy.

Our research continues to show that customers who rate their firm highest on customer advocacy are most likely to stay at and do more business with the firms they use. In the just-published “Customer Advocacy 2011: How Customers Rate US Banks, Investment Firms, and Insurers,” we show which firms are ranked highest by their customers – and which ones bring up the rear. 

The Big US banks dominate the bottom of our rankings of 47 firms. Thirteen of the bottom 14 firms are banks, including all of the nation’s 10 largest banks. Fewer than one-in-four customers of Citibank and Capital One Bank believe that the firm has their best interests at heart.  Small banking institutions, on the other hand, are among the customer advocacy leaders – and are winning market share in the process. Two-thirds of the customers of credit unions and well over half of the customers of regional and local banks rate their firms high on customer advocacy.

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First Details Of Forrester’s 2010 Global Banking Platform Deals

Forrester began surveying global banking platform deals in 2005. For 2010, we evaluated about 1,200 banking platform deals submitted by 23 vendors and located in more than 130 countries. Shortly, we will publish the final results of this evaluation. Today, I want to offer some initial trends:

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