In most businesses, customer apathy is not a good thing. If your customer is apathetic, they’re unlikely to feel loyal towards your business, let alone be an advocate for your brand. In banking and superannuation, however, it could be argued that the opposite is true.
CoreData’s research has persistently shown that while super funds’ most engaged customers are usually among the highest value members, they are often also the members most at risk of leaving.
If knowledge is power, then the more knowledge a customer has the higher the chance they’ll use that information to find a better deal elsewhere, or at the very least make an active rather than passive choice about where to invest their retirement nest egg.
That’s why engagement in superannuation and banking is a double-edged sword. And it’s a key reason why most of the innovation we’ve seen in the financial services industry to date has been focused on products, rather than on services.
Super and banking are two industries that rely on apathy. It’s hard to think of another industry with such a high proportion of customers that are dissatisfied with the product or service they receive and yet do nothing about it.
It’s not all the lazy customer’s fault
Even though switching super fund is certainly easier than it used to be, thanks to the introduction of the standard ATO rollover form that allows you to submit a request to transfer your entire balance between funds, it’s not exactly easy for a member to work out how the arrangements they have with their current fund compare with one of the 200-odd alternatives out there.
Consumers need more than a master’s degree to make a like-for-like comparison between funds that report historical returns over different time horizons, charge a range of administrative, insurance-related and assets-under-management-based fees, and offer “balanced” fund options that are either highly conservative, or bordering on growth, depending on the fund.
Switching bank is likewise not all that straightforward. Customers have to submit many types of identification, fill in a whole bunch of forms, and sort out their pre-existing direct debit and credit arrangements.
While the banks have been required to help facilitate the cancelling and re-instating of direct credit and debit setups since 2012, funnily enough it’s not something they promote.
The reality is, there’s significant friction in the provision of financial services that the institutions providing the service have little incentive for taking away.
Open Banking could change all that
The UK’s Open Banking initiative was introduced to increase competition in banking, but it’s also expected to reshape the customer experience, offering consumers greater choice and more control over their finances.
A new report from PwC titled ‘How to Seize the Open Banking Opportunity’ predicts that over time, open banking will reduce friction for customers in key areas such as overdraft fees, data control and customer service.
According to PwC, we’ll see more aggregation platforms providing a single view of customer financial information across multiple providers, improved credit scoring and tools to help customers switch bank accounts.
Imagine what a similar initiative could do for superannuation.
Pain pain, go away
Whether it’s led from within industry or by regulation, sometimes innovation removes obvious pain points for customers, and sometimes it removes pain points we never knew we had.
While we were happily tapping away at our laptops and smart phones over the last few years, technology giants like Amazon were busy recognising that the friction in the online retail customer experience lies in our thumbs.
They knew, before we did, that the next technological advance set to reshape the customer experience is the voice. Voice will impact the entire customer experience, from discovery through to purchase, and the application goes well beyond retail shopping.
Amazon’s voice-assisted AI technology, Alexa, has been making waves in the smart home arena, along with Google Home and Apple, who are all competing to take the friction out of our everyday lives.
Now, Alexa is improving the customer experience in hospitality, with its Echo speakers being installed in hotels across America.
By all reports, the voice-enabled AI revolution is only just beginning. While to date innovation has focused on the B2C market, Tact.ai, a startup backed by Amazon, Salesforce and Microsoft, boasts technology that increases productivity in the workplace.
It’s hard to see how technology that helps us work smarter, not harder, could be anything but hugely influential in reshaping enterprise as we know it.
Finding the friction
The challenge with innovation is that it requires time and resources, and comes with an opportunity cost, in that it’s time and money being spent in an area that could be funnelled elsewhere.
There’s a fine balance between innovating for future sustainability and protecting the core of a business – get that balance wrong and you could find you no longer have a business to future proof.
But identifying the friction in your customer experience doesn’t require innovation.
It requires curiosity to understand customers’ pain points and delight points, a willingness to walk in their shoes, and enough humility to acknowledge the need to refine the customer journey in response to what you find.
Apathy might help super funds and banks today, but it will be their death knell tomorrow. Having a bunch of customers who are too lazy, or perceive it’s too much hassle to go elsewhere, isn’t success and it won’t help you grow.
In today’s fast-paced digital world, a relentless focus on putting the customer first is the only sustainable competitive advantage.
Kristen is a highly motivated and passionate researcher with eight years' experience in the market research industry. As Director of CoreData Western Australia, she is based in our Perth office and responsible for business development, client relationship management and project management across a diverse client base.
Kristen has a deep understanding of the financial services industry, strong client engagement skills and is a regular media commentator. Her Perth client base spans aged care, banks, super funds, not-for-profits and utilities.
Before relocating to Perth to establish the WA business, Kristen was Head of Financial Services in CoreData’s Sydney office. Prior to joining CoreData in 2009, she was a financial journalist for seven years.
Kristen is a graduate of the Australian Institute of Company Directors, has a Master of Business Administration (Exec) from the Australian Graduate School of Management, a Bachelor of Arts, Journalism (with Distinction) from Curtin University of Technology and is a fully accredited member of the Australian Market and Social Research Society of Australia.