Using Data to Drive Consumer Financial Wellness
May 17, 2023 | 2 min read
Parin Kothari leads the strategy and communications practice for digital channels at TD Bank, North America. In this interview we talk about how TD Bank is using analytics to create a richer customer experience.
How do you use analytics at TD?
Let’s take a step back and look at the strategy ecosystem of which analytics is an important pillar. Over the past year we’ve been focused on envisioning and executing a single, unified TD customer experience. It’s an effort that is founded on three main pillars. The first is destination. By destination we mean the end goal that the customer is striving for from their lifestyle and aspirations perspective. Cross-channel is a key piece of the destination pillar, where we figure out how to provide a consistent, connected and contextual experience as the customer moves from one channel to another of their choice and convenience. The second is design, where we turn product management upside down and start our internal process with thinking about how the customer really wants to interact with the product or service as they chart their journey to reach their destination, instead of thinking about business metrics first. And the third is data of which analytics and insights are the defining piece. This is where we figure out how to map customer’s intended and actual behavior across products and channels so we can better design for what they want, where and when they want it, and how they want it.
Why do you think it’s so critical to get the cross-channel experience right?
Well, there’s been a migration to digital since the 1990s, first for basic information, then for communication and onto transactions. As devices and e-commerce have driven digital deeper in customers’ psyche, customers are increasingly expecting digital to be the driver of overall experience. Now over two-thirds of our transactions are done digitally. It’s interesting because still a bulk of these digital transaction types is high volume but low value. The average value of transactions in the branch is increasing because the low-value transactions are moving to digital. For instance, remote deposit capture has been a major contributor to reducing the snaking lines at branches. So we’re seeing a greater need to make sure that the customer feels like the transition from digital to physical and back is seamless, engaging and value-adding.
According to Gallup, 69% of customers who are perfectly satisfied across all channels are fully engaged, but only 30% are fully engaged when one channel isn’t perfectly satisfying. This clearly points to the importance of not ignoring the branch or online in the wake of digital. It’s just a matter of shifting expectations, and most importantly transforming skills and incentives within each of the channels.
Do you think the shift toward digital will move up the value chain?
Generally speaking, yes. Self-service transactions are just going to get better and better on digital, especially mobile, but relationship-building transactions will see a split. There will be a segment of people who want to do everything digitally, from account opening to servicing. At this point this segment is skewed towards price-sensitive, brand agnostic, early technology adopters. They’ll go wherever offers the best pricing and launches the most innovative functionality first. And there will continue to be a segment of people who would want to visit a branch for certain relationship-building transactions. Banks will have to look at these evolving customers in a structured step-by-step manner. Taking the brand strength and its internal capabilities into account, banks need to identify customer segments having a higher contribution towards their profit margins, and leverage emerging technologies to satisfy them first. This will enable them to ensure that (a) they are making the right bets, mimicking the diffusion curve of innovations as empirically tested by Everett Rogers, and (b) the diffusion of the new technologies to the broader user base is self funded, partially if not fully, through proven adoption and engagement.
Can you think of a good example to follow for digital centricity but still savvy from cross-channel perspective?
Apple, though more in limelight for its design-oriented products, has also worked extremely hard on its cross-channel services. From customer education in group classrooms in their bigger stores on how to use various software and hardware offerings, to one-on-one tailored skill enhancing sessions with a ‘genius,’ Apple stepped up the game with the launch of Apple Watch with being persistent on offering a 15-minute immersive session with customer. This helps Apple to not only make the customer feel comfortable and appreciative of what the watch has to offer, but also listen to customers’ apprehensions and initial feedback. Banks will benefit tremendously by organizing their distribution strategy around this continuum of education, adoption and immersion for their complex and involved products and services.
In other words, banks will need to work with the customer for building a sustained relationship based on providing education, personal guidance, and the right products and services through the right channels. As consumers evolve on using digital through their journey, the human element of phone and branches needs to be tailored to offer support and value-adding advice.
Are you including loan products when you talk about online interactions?
Yes. Credit cards followed by the wave of eSavings and eChecking accounts led the way in getting customers comfortable with digital channels from purchase to servicing. However, the latest wave is lending-focused and is being led by the customers and small businesses not able to access credit from the big banks cringing from the effects of Great Recession. Innovations leveraging social and data technologies such as Lending Club and Prosper, though small at this stage, hopefully will shake the banks out of slumber. The fastest-growing product sales digitally for TD in the US market is the home equity line of credit.
How are you approaching design thinking?
We have created ‘art of the possible’ workshops for cross-functional teams to consider a problem or an opportunity by stepping out of their day-to-day ruts and ideate about steps, interactions and designs that would wow the customer. This approach differs from the analytical scientific method, which begins with thoroughly defining all the parameters of the problem in order to create a solution. In design thinking, we try to identify and investigate with both known and ambiguous aspects of the current situation in order to discover hidden parameters and open alternative paths which may lead to the destination. Design thinking helps us being iterative in defining the path to the destination and at times in redefining of the initial problem.
What are the best practices for customer journey mapping?
The customer journey maps blends the analytical and emotional aspects of a customer’s thought process into a comprehensive strategic roadmap for product design and execution. The best ways to achieve legendary results are (a) to observe the customer in as natural and unguided setting as possible, (b) to blend this anthropological research data with analytics from past behavior tracking, and (c) to build a linear process map substantiated by order of importance that traverses the customer path from interest to purchase to feedback. The last bit of ‘feedback’ is most commonly missed out in similar exercises across industries.
How do you do that?
We go across the organization to gather operational data about customer interactions, transactions and feedback. Parallel to this, we work with primary research agencies to digital breadcrumbs data providers such as ComScore. We’re starting to incorporate vendor technologies that can capture audio and video recordings of the customer interactions and complete experience. All this is then pieced together to give a journey map. It takes a lot of collaborative effort within and outside TD.
And what metrics do you look at to measure your performance?
We look at key milestones in the customer journey. For instance, we look at the research-to-purchase phase, the purchase-to-consumption phase, and the consumption-to-feedback phase. We're tracking conversion rates at each of these milestones to see how many people move along during each step. And in every instance we're looking to see whether account holders used a single channel or multiple channels.
What other analytics do you look at?
We're starting to map non-banking data, such as data that shows how consumers are interacting on Amazon and how they're using their phones or how they are communicating on social media. The sensors within phones be it GPS or accelerometer also provide a rich potential in the future. We're constantly evolving in mapping these external sources of data to the internal data we have about the customer. The vision we are shaping is an organic ecosystem of data that will evolve with the consumer and their surroundings.
And finally, what do you think banks should be doing now that they're not?
There are three key shifts that the banks have to work on to be able to compete and stay relevant to their consumers, their employees, their shareholders and to the society at large.
Product-to-Customer Centricity: Banks need to put a stop to their internal structure of product fiefdoms and organize on a customer value continuum instead. The first step could be relationship pricing and goal orientation in product development.
Innovation to Integration: Rather than trying to compete with the technologies of the start-ups that offer a slice of the financial pie, banks would be better off in leveraging the start-ups and their technologies to provide customer with an integrated financial management package that is based on a sustained relationship rather than a discrete transaction.
HIPPO to analytics-led decision making: It's ironic that the old-school banking culture has nurtured decision making by Highest Paid Person’s Opinion (HIPPO) rather than by numbers and facts. If banks want to successfully fight the disruption coming from the likes of Silicon Valley start-ups, they need to flatten hierarchies and promote openness, besides listening to the data and the customers.
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