A key ingredient for building loyalty in banking - FICO...Source: FICO conducted an online survey February and March, 2017, of 1,012 US consumers over the age of 18 who are involved

A key ingredient for building loyalty in banking

2017 Consumer Banking Survey Results

FPODiagram

A new commitment to knowing

your customer“Know your customer” is more than a compliance mandate. Knowing your customers’ preferences, goals and aspirations—and using these insights to shape every interaction—is the key to earning and keeping their business.

How do banks tailor their acquisition and engagement strategies to meet the expectations of today’s customers?

FICO recently completed an extensive consumer research study of the banking industry. This report presents data on insights and opportunities related to banking customers’ changing attitudes and behaviors.

Source: FICO conducted an online survey February and March, 2017, of 1,012 US consumers over the age of 18 who are involved in financial decision-making with checking accounts. Data was weighted by age and region to reflect US Census data. Demographic categories are defined as Generation Z, ages 18–21; Millennials, ages 22–37; Generation X, ages 38–52 and Baby Boomers, ages 53+.

©2017 Fair Isaac Corporation. All rights reserved. 2

Now, More Than Ever: Know Your CustomerA key ingredient for building loyalty in banking


Success-Driven Savers• Planners, confident in their approach• Actively manage their finances and avoid debt (e.g.,

heavy credit users but not carrying a balance)• Less tech-savvy

Precarious Passives• The largest segment• Indifferent to financial management and not

particularly engaged with saving or planning

Ambitious Adopters• Millennials, early adopters and more affluent • Actively using apps, both their banks’ apps and

third-party apps• Receptive to new products/financial relationships,

including expanding existing relationships

Delayed Dreamers• More likely to be female • Aspirational, but budget-conscious and worried

about debt and not saving enough

Fiscal Futurists• The smallest segment; young, but feel confident

that they can manage/plan their way to financial success

• While satisfied with their current banks, they are interested and excited about new products and providers


For the 2017 Consumer Banking survey, FICO divided the US consumer market into five distinct behavioral segments, presenting a cross-generational view into today’s financial services customers. We overlaid these behavioral segments on top of traditional demographic groups: Baby Boomers, Gen X, Millennials and Gen Z.

US Consumer Segments

Behavioral segments

42%

Success-DrivenSavers

PrecariousPassives

23%

FiscalFuturists

DelayedDreamers

AmbitiousAdopters 21%

9%5%


How are you acquiring your next

generation of customers?

Insight: More Gen Z and Millennials use national banks over regional and community banks, or credit unions. National banks also dominate with credit cards.

Opportunity: Credit cards are ideal gateway products. Regional and community banks can keep pace with national banks by developing and marketing entry-level credit cards for Gen Z and Millennials.

Digital account opening is a good start, as younger “digital native” generations increasingly prefer finding and acquiring products online.


Primary Banking Relationships Vary Considerably by Age

67%73%

57%48%

16%15%

19%

20%

9%

4%6%2%

13%

7%

13%

11%

Gen Z

Millennial

Gen XBaby

Boomers

CommunityBank

CreditUnion

RegionalBank

NationalBank

LEGEND

Product Ownership Varies Significantly by Institution Type% ownership of CREDIT CARD products

76% National Banks

40% Credit Unions

25% Regional/Community

How do you engage your customers

to deepen and keep the relationship?Insight: National bank customers are much more likely to open new accounts with their primary banking provider, as compared to community bank, regional bank and credit union customers.

Conversely, they are also more likely to close existing accounts with primary banking providers and open new ones with non-primary providers.

Opportunity: National bank customers are increasingly transitory. The pressure is on for these banks to deliver the right products and services—ones that build loyalty by truly improving customers’ financial wellness and security. One-size-fits-all experiences and aggressive, generic cross-sell campaigns are no longer an option.

Other Provider Primary Provider

New account

New account

Close one or some accounts

Close all accounts


National Bank Customers Are Much More Open to ChangeThey are more likely to do the following in the next 12 months than regional, community and credit union customers.



Insight: Email is a preferred method of communication across every banking activity. But email alone can’t address all customer communication gaps.

• Text messaging is growing as an unmet preference, especially for notification of suspicious charges.

• Banks are missing opportunities to better serve customers with online applications for new products.

Opportunity: As new channels and technology options become standard, banks must keep pace. Digital channels and self-service capabilities are increasingly preferred. Banks need to support the interactions that customers want through a multi-channel approach.

Customers want to bank in ways that makes sense to them, instead of adapting to their banks’ rigid requirements.

Do you know how your customers

want you to communicate with them?


receiving credit limit warnings

via Email

MORE THAN THEY TYPICALLY EXPERIENCE

CUSTOMERS PREFER

2X

submitting supporting application documents via PC/Laptop/Tablet

2X

receiving late payment reminders

via Text Message

3X



Insight: For the most part, consumers say they are very satisfied with their banks and are willing to recommend them to their friends and colleagues. Great customer service is the most common reason listed for this willingness to recommend.

In addition to customer service, consumers rated their primary banking providers extremely well on transaction security and overall trustworthiness. This was a notable difference between traditional banks and non-traditional providers.

Opportunity: The biggest advantage banks have over non-traditional providers is the established trust they have with their customers. Banks should look for opportunities to reinforce this advantage by providing additional resources and education, particularly in the area of cybersecurity.

Do you know why most of your

customers are satisfied?

Primary FI Non-traditional providers

Security and Trustworthiness MatterConsumers reported the biggest qualitative differences for:

Security of Transactions

79% 38%

Overall Trustworthiness

78% 36%(rated “Good” or “Excellent)

SERVICEGREAT

GOODBANK

CUSTOMER

friendlyfees

problems

problem

never

easy

years

ratesalways

banking

services

convenient

excellent

interest needshelpful

Friendlybusiness many

online Great account

like

local

locations

people

staff

issues

experience

low

can

best

use

Goodmakecustomers

Reasons for High Likelihood to Recommend Ratings


Insight: For the most part, consumers rate their banks higher than non-traditional providers and say they aren’t looking to switch. One area of potential concern for banks is convenience—an attribute that consumers rate non-traditional providers highly on and that is increasingly cited as a reason for switching banks (especially among Gen Z and Millennials).

Opportunity: While disruption from non-traditional providers doesn’t appear to be an immediate threat, banks can’t risk giving them an opening. Banks should look for opportunities to continue to improve the convenience of their offerings (particularly for younger consumers whose definition of convenience likely differs from their parents’).

Do you know what your customers like best about

non-traditional competitors?

Unlikely

62%

Already Using

Very Likely

Neither LikelyNor Unlikey

15%

15%

8%


Likelihood of Considering Non-Traditional Company in Next 12 Months

89% of GEN Z and 74% of MILLENNIALS who

switched banks last year listed CONVENIENCE as a top-five

factor in their decision.


How can you make sure every interaction

is relevant to every customer?

Insight: Consumer behavioral and attitudinal data cuts across demographics, providing important insights into payment tendencies, technology preferences, and financial goals and aspirations.

Opportunity: Banks can integrate behavioral-level consumer data into every decision and customer interaction, to gain an edge over competitors that depend on demographic data, and operate reactively to competitive threats.

Precarious Passives Success-Driven Savers Ambitious Adopters Delayed Dreamers Fiscal Futurists

Are the largest segment and are difficult to engage. Marketing and product development efforts should instead focus on differentiating your institution with smaller, more engaged and profitable segments.

Rely on old-school financial planning tools and techniques. They will respond more to excellent service than to new technologies.

Represent future, high-value customers. Your institution can attract them with sophisticated digital capabilities.

Desire for financial security and basic financial management skills make them an excellent target for automated, hands-off personal financial management tools.

Are the most likely to believe they won’t need banks at all in 10 years. Non-traditional providers pose the greatest threat to banks in this segment.

Sophisticated product design, and precise customer targeting through behavioral and attitudinal data, can drive improved results across the organization.


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FICO is a registered trademark of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2017 Fair Isaac Corporation. All rights reserved. 4426BK_EN 06/17 PDF

Do you know your customer?

You may think you do.

When it comes to knowing your customer, attitudinal behaviors and preferences between generations mean a lot. FICO helps you respond to changing dynamics with unmatched tools and insights that help you create stronger, longer-lasting relationships.

Learn more: www.fico.com.

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A key ingredient for building loyalty in banking - FICO...Source: FICO conducted an online survey February and March, 2017, of 1,012 US consumers over the age of 18 who are involved