CMOs opportunity to lead the great reset for financial services has been saved
CMOs opportunity to lead the great reset for financial services
A perspective on the 2021 Global Marketing Trends
Having been challenged by FinTechs, questioned on trust and purpose, and proven to operate efficiently in times of a pandemic, it is time for a great reset of the Dutch Financial Services Industry. In this article we discuss why CMOs are well positioned to lead their organizations to find new pockets of growth, water the roots of purpose and deliver the promised customer experience.
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- Using purpose to build a brand platform
- Leveraging digitalization to deliver a “human experience”
- Going beyond banking and insurance through partnerships
- As a result of the reduced earning capacity, loss in trust and the entrance of new FinTechs, CMOs at financial services organizations are taking a hard look at their purpose – the reason why they exist and whom they are built to serve.
- COVID-19 accelerated the second wave of digitalization, forcing CMOs to look at new ways to enhance their customer experience supported by new digital channels such as chatbots without losing sense of the human experience.
- Organizations are increasingly focusing on providing non-traditional financial services through fusion (i.e. partnerships and ecosystems) to extend their revenue models, moving towards a more connected economy in which a combination of FSI products and external services will be served via one curated platform.
- The role of the CMO is transforming as data provides better insights and the organization moves towards a more agile business model. CMOs should no longer solely focus on story telling or aligning the organization on customer centricity. Instead, they can play a leading role in the great reset for financial services as growth drivers & capability builders and take a prominent role in the organizations’ strategy debate
This article is written by Deloitte with contributions from Marteyn Roose (Director Consumer at Centraal Beheer), Patrick Kuijsters (Director Marketing and Digital of Volksbank) and Jack Hommel (Directeur Zakelijke Markt Achmea).
Incumbent financial services find it difficult to develop innovative ways to attract customers’ loyalty and sympathy with so many perceived regulatory restrictions. And the problem isn’t helped by customers seeing their financial service provider as a basic “utility.” In contrast, disruptive FinTech organizations, often cherry picking profitable financial services activities, frequently manage to avoid the heavy regulatory burden and are successful in winning the customers (returning) clicks and likes. This is eroding the earning capacity of traditional financial service organization and threatening the consumer base for which they were set-up in the first place.
During the COVID-19 pandemic, CMOs in the Financial Services industry (FSI) have found their marketing space further constrained, though trust in financial institutions and customer satisfaction have somewhat increased. Sales of some complex advisory products – like pension or wealth management – have suffered as companies have lost opportunities for in-person customer advice and interaction.
Within the new confines, and those long established, how can financial service organizations gain an edge over competitors? In Deloitte’s 2021 Global Marketing Trends report, we identified seven trends that are shaping marketing worldwide. Our conversations with several Dutch CMOs from banks and insurers revealed that these interrelated trends – especially Purpose, Human Experience, Trust, and Fusion – certainly apply to Dutch FSI organizations. What’s more, the trends reinforce each other.
Using purpose to build a brand platform
FSI has undergone profound change in recent years. Low interest rates have reduced the earning capacity of financial services organizations, forcing them to rethink their revenue models and ways to differentiate themselves. Despite their important macroeconomic function, trust in financial services organizations continues to be fragile as they continue to be plagued by miss-selling and financial crime scandals . Combine this with new, innovative FinTechs continuing to enter the market at a rapid pace and you have a perfect recipe for an industry transformation.
As a result of this transformation, CMOs at financial services organizations are taking a hard look at their company’s purpose – the reason why they exist and whom they are built to serve. “Financial Services organizations need to go back to their roots,” Marteyn Roose, Director Consumer at Centraal Beheer, told Deloitte. “Why were they originally established?” The customer needs that his company was founded to address “still provide a lot of opportunities for innovation.” His CMO counterpart at Achmea, Jack Hommel, emphasized that “it is important to understand the purpose of your company, and use this as the foundation of your storytelling.”
Today, customers expect that a company’s purpose will go beyond profits, as noted in the 2021 Global Marketing Trends report. “Companies should not only have a business purpose, they should also have a societal purpose,” Patrick Kuijsters, Director Marketing and Digital of Volksbank, pointed out. “Both should give direction to the way of doing business, provide service, talent and partnerships,” he added.
Many companies have embraced sustainability as a core element of their purpose. Issuing green bonds and insuring and financing complex energy transition projects are examples of FSI support for environmental sustainability. But forward-looking CMOs will look beyond environmental stewardship, according to Emeric Van Waes, Partner at Deloitte Consulting. Sustainable financial well-being is also a sustainability goal, and FSI organizations can use that as a launching point to invest in customers’ long-term financial health.
Whilst shifting towards a new future, it is important for the CMO to be at the foundation of the culture change. They should be a source of inspiration for the organization to evolve as the needs of the customers that they serve change, whilst staying true to their purpose and protecting their market position and reputation.
Leveraging digitalization to deliver a “human experience”
The COVID-19 pandemic has accelerated the second wave of digitalization in the Financial Services industry, forcing organizations to move an even larger part of their services to digital channels. Physical stores are increasingly closing down as the role of customer service moves from reactive to proactive and a range of new channels. New digital technologies are enabling financial service organizations to improve interactions with their customers by building a more seamless customer journey. In doing so, self-service alternatives such as chatbots and pre-filled forms can be used effectively for customer contacts that have limited value for the customer or the organization, but providing a human services will continue to be irreplaceable when a customer really needs help from the organization. Here, it is the role of the CMO to define the desired customer experience, and ensure that all employees know how to bring it to life.
As financial service organizations shift towards digital channels, the combination of data and analytics can give CMOs the insights they need to tailor the company’s offerings to their customers, and to ensure that their values align with those of their customers. This is in line with the “human experience” trend that Deloitte identified. CMOs can position themselves as the Capability Builder to help the organization compete in the future and demonstrate the function’s reach across the business.
Does new technology and data allow the company to meet needs that were previously out of reach? Centraal Beheer’s leaders believe the answer is “yes”, and they have invested significantly in retail customer data analytics in recent years, elevating it to a core capability of Marteyn Roose’s marketing team.
In the Financial Services industry “there is a sense of caution when it comes to the use of customer data,” Patrick Kuijsters told Deloitte. Protecting bank customers’ data is imperative for legal and ethical reasons. However, customers will often willingly grant permission to use their data if they perceive a benefit, or improved service and advice. In order to provide that benefit, financial services organizations should go beyond their regulatory duty of care and use the insights obtained through data to provide more relevant services to their customers. By actively looking for possible financial health issues in such data, these organizations could play a much more prominent role in helping their customers make better financial decisions, ultimately improving the financial health and well-being of their customers too.
Going beyond banking and insurance through partnerships
As financial services organizations are forced to rethink their revenue model, they are increasingly focusing on providing non-traditional financial services. As highlighted in Deloitte’s “FSI of the future model” in the image below, FSI is moving towards a more connected economy in which a combination of FSI products and external services will be served via one platform. A nice example is the acquisition of Klup, a platform that connects 50+, by Nationale Nederlanden in 2020. In revitalizing the Centraal Beheer brand, Marteyn Roose also looked beyond traditional insurance products, exemplifying the cross-industry partnering trend known as fusion, Centraal Beheer joined forces with other companies to offer additional services, such as solar panels and home repair.
This did not happen overnight. The company presented its updated brand to an ever-widening circle of employees and customers, gradually winning acceptance and endorsements. As Centraal Beheer gained support, the company carefully expanded what it could deliver to customers. As Roose said, “As a CMO, developing a strong brand is a continuous process that you need to work on, and you should not introduce a new vision all at once. It is better to be open and transparent and only make promises that you can directly deliver upon in the market.”
Instead of just focusing on selling a particular product, Roose advises other CMOs to “stay close to the original problem or need that you are trying to solve for your customers”. Whether this is assets that need protection, providing a safety net for families in uncertain times, a means to grow wealth or reducing a small business’s carbon footprint, Roose believes CMOs should “look at how you can solve it with the resources and partnerships that you have today.”
The CMO as the Growth Driver of Financial Services Organizations
Pushing boundaries, in all the ways described above, is a sign of agility: another trend Deloitte identified in our 2021 Global Marketing Trends report. The role of the CMO is transforming as customer needs change and the organization moves towards a more agile business model. CMOs should no longer solely focus on storytelling and aligning around customer centricity. Instead, they have an opportunity to become the capability builder and growth driver for the organization and take a prominent role in the strategy debate.
The opportunities for driving growth range from leveraging the brand to going beyond banking and insurance as described above. But more traditionally, specific customer segments might also present a path to progress with purpose. Robert Collignon, Director at Deloitte, believes that CMOs will benefit from leveraging their data analyses capability to add value to the small and medium-sized enterprise (SME) segment. “SME’s are underserved from a digital perspective and often have needs that mirror those of individuals. We see in markets such as Canada, UK or France that banks and insurers have discovered the ‘digital’ SME segment and are benefitting from it. Like the SME example, the customer base of many financial services organization is likely to contain pockets of valuable growth when analyzed carefully.
After being challenged by FinTech, questioned on the trust and purpose and having proven to operate efficiently in times of a pandemic, it is time for a great reset of the Dutch Financial industry. CMOs are well positioned to lead their organizations to find new pockets of growth, water the roots of purpose and deliver the promised customer experience. No matter which area of FSI a CMO represents – insurance, real estate, investment management, banking – they can ensure their organizations are living up to their potential by testing boundaries.