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Financial services, beware: disruption is coming

Think the financial services sector is safe from the challenges of digital disruption? Think again.

Google chairman Eric Schmidt once said, “Someone, somewhere in a garage is gunning for us.” And Google isn’t alone. A new report shows there are plenty of gunning for the financial services sector. Our Business Development Manager, Giuseppe Bloom-Mangione, has a question for the industry: What are you doing to protect your position?

If the taxi industry across the world could jump back to the start of 2012, what would it do differently? Judging by the throngs of cabbies protesting Uber’s 30 per cent market share gain in three years, it’d probably do a lot.

Back in 2012, the taxi industry was complacent. They thought they had a monopoly that would last forever. They didn’t, and it won’t.

Almost no sector is insulated from digital disruption. The accommodation sector has been seriously challenged by AirBnB, 3D printing promises to seriously diminish traditional manufacturing and driverless cars are set to upend not only the motor insurance industry but even the idea of private car ownership.

What about our financial sector? So far, Australia’s retail banking space has seemed relatively unaffected by digital disruption. Of course, there’s been a shift in power from brand to customer, as there has been in every other industry. But has it been disrupted? Not yet.

But financial sector, beware. The challengers are coming. And they’re coming quickly.

If you work in the financial services sector, you are in the same position now as the taxi companies were in 2012. The relationship between taxi users and taxi companies has moved from the transactional to the experiential. Retail banking needs to complete this shift, and quickly, because the future of your business relies on it.

The severity and urgency of this threat was highlighted in a recent McKinsey report, The Fight for the Customer. In it, five major retail banking businesses – consumer finance, mortgages, SME lending, retail payments and wealth management – were highlighted as being at risk by 2025.

It’s a significant risk, too. Ten to 40 per cent of revenues are at stake in the next 10 years, and between 20 to 60 per cent of profits, with consumer finance highlighted as the most vulnerable. Peer-to-peer lending is starting to loom large in its rear-view mirror.

So, why are we talking about this? As a content marketing organisation that works with numerous financial services companies, we spend long hours helping those companies plan ahead and create strategies to hit their business goals. And that means we have a professional responsibility to help them best position themselves to ride the wave of disruption, and not get dumped on the seafloor.

So, what to do?

As with all of these things, it starts and ends with the customer, a theme that echoes through the McKinsey report. Every interaction with them has to be first class. You need to excel when they need you, and be there even when they don’t realise they need you. You need to seamlessly and easily fit into and complement their lives.

The big four banks seem to be getting it right at present with mobile apps, but what about the in-store experience? How do your customers feel when they leave? Has it been easy? Do they leave feeling positive about the experience?

And, how about the information you give them – the content you provide? Is that there, tailored to them as an individual and not as a demographic? Are you providing useful information – tools, calculators, apps, anything and everything you can muster – to help them live more financially secure lives?

Take mortgages for example. Are you delivering information when your customer is considering purchasing a home? And how do you know when that time is? You need to use the data available to you.

A colleague of mine has recently purchased a property. His bank – one of the big four – didn’t provide any information to him about a mortgage, despite him being a customer for many years. With a bit of insight and thought, they could have kept him and his mortgage. They didn’t. He went elsewhere.

The McKinsey report identifies two immediate actions for banks to take on the digital challenge with their full energy: reimagine the customer relationship and integrate digital approaches.

Every bank, the report says, produces feel-good marketing messages, organising their thinking around products and how to sell them.

An emotional connection is needed with the customer before they’ll even consider your products, and you need to build that connection through the experiences you deliver.

A cultural shift to all things digital is needed, says the report, as well as a reimagination of your brand to build that emotional connection by identifying and adopting brand attributes that reach customers emotionally.

For those of us working in content marketing, the suggestions of the McKinsey report ring loud and true. Content marketing is all about building long-term, lasting relationships, and connecting emotionally with your customer. Products aren’t front and centre, your customers are.

We’re not for one minute suggesting content is the whole solution, but it’s certainly a significant part of the project to build emotional relationships and experiences with your customers.

Three years ago the taxi companies were in the same position as retail banks today, and they did nothing.

It’s your move. What are you going to do?

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