The ROI of consumer insights when building digital finance products

Laura Rae is the founder of OpenBox, a digital transformation consultancy that specialises in the financial services industry. In this guest post, Laura describes the current landscape of digital financial products and how an emphasis on human insight can help organisations stand out from the competition.

Keeping pace with consumer expectations has become a challenge in almost every industry.

Customers and clients are always looking for that little bit extra (better service, more convenience, or lower costs) and the rewards for organisations that meet these demands are huge.

Although some industries have excellent track records for tapping into consumer needs, banking and digital finance isn’t traditionally one of them. Due to the dominance of legacy institutions and complacency brought about by strong customer loyalty, I’ve seen finance fall behind in my 15 years of working in the industry.

It’s become clear that there’s a very real opportunity for financial services brands to gain an advantage by fully incorporating and leveraging human insight. 

Changing attitudes in banking

I’ve worked for—and with—many of the biggest banking organisations in the UK market. And in my experience, advocating for the customer can be very difficult. When many stakeholders from different departments of a large organisation are involved, the customer is often forgotten (or at least deprioritised) when creating systems and products. Traditionally, changes are driven by the institutions themselves, not what their customers need.

This landscape is shifting, though. Regulatory developments, such as open banking initiatives, have expanded the marketplace and opened it up to newcomers.

As a result we’ve seen a rise in the number of smaller fintech companies and ‘challenger banks’ that have driven greater innovation and digitisation within the banking industry. Brands like Starling and Metro Bank have done a great job of putting individual customers’ needs at the centre of their products and customers are voting with their feet. More than a third of UK adults now have an account with a digital-only bank.

This rate of change has forced a culture shift where traditional banks, who used to make decisions based on what they thought customers would find useful, have had to adapt to consider how people live their financial lives and work out the best way to help them directly.

At OpenBox, working with both established institutions and disruptors has shown me that every organisation—across the financial services market—is now expected to seek out genuine customer insights and adapt their approach to digital experiences. The organisations that have quickly adapted to the modern dynamic seem to be growing fastest.

Leveraging consumer insights in financial services

This is an issue I deal with a lot because organisations know they need to change, and focus more on customer insights, but they’re not quite sure how to do it.

In our experience of working with digital leaders at various financial institutions, we’ve tested multiple approaches to doing this. There are several paths to take, from simple customer feedback methods like quick surveys, online reviews or even instant pop-up boxes (such as ‘how was your experience today?’) to platforms that provide deep and powerful levels of audience analysis.

An important part of the latter group is UserTesting, which has given many of our clients access to crucial user research to implement through their design, UX, product and marketing teams.

The insights gained have helped organisations provide better experiences for their users in the short term and, more importantly, often changed the very culture of their own business in the long term. When organisations place customer care and understanding at the heart of everything they do, their customer acquisition and retention rates increase. We’ve seen it happen many times.

However you choose to engage with customer insights, the bottom line is that doing nothing about it is actually the biggest risk. Without knowing how your target audiences think, feel and use financial services, you will find you very quickly fall behind the competition – especially in today’s market.

The benefits of these insights will range from immediate, short-term gains like increased stickiness on your websites and apps to more long-term benefits such as increased customer retention or profitability. As a bank, developing a reputation as somewhere that really understands the customer can lead to organic referrals and increased word-of-mouth customer acquisition.

This is where challenger banks are starting to make real inroads over larger banks today. Take Monzo for example, which started as an app-only platform to appeal to a younger target demographic while offering budget-management features that these customers craved.

The flexibility of platforms like this makes it easier to roll out more customer-centric features, which can be more difficult to do within the legacy institutions. 

This ability to flex their services while continuously learning and listening to customers means they’re keeping products relevant and driving genuine business growth. Since 2017, when Monzo was still something of a start-up with just 240,000 customers, its client base has grown by an impressive 3025% to 7.5 million (as of May 2023).

Additional benefits of human insight for financial services

Deep customer insights improve companies’ bottom lines. But there are other benefits too.

By truly understanding your customer and their needs, you’ll spend less time re-working products and feature updates. That means your deployment cycle will be more efficient. Genuine insights will also drive innovation, so new products can be built based on what customers tell you they need instead of assumptions.

You'll create product-market fit more consistently and increase the stickiness of the financial services you offer. This will be increasingly important during times of financial difficulty such as the current cost of living challenges. 

Now is the time people really need organisations they bank with to truly understand their issues and help provide properly tailored solutions. Building trust between banks and their customers is a critical factor in long-term retention since finances are such a crucial part of consumers’ lives.

At Openbox, we’ve seen firsthand how customer insights have the potential to unlock the usefulness of financial services—beyond simple money management. They genuinely help people live better, through more targeted financial help, more personalised and easy-to-use platforms, and more seamless integration with other aspects of the everyday – all driven by deeper knowledge of the audience they’re catering to.

Technology-driven change

The financial services industry is in a state of flux, with new players arriving all the time. Open banking, open finance, and open data has heralded a new wave of market entrants, which includes well known institutions like Apple, Google and Amazon who are already experts in targeting customer needs.

As the market develops to become even more competitive, traditional institutions must keep up or they’ll be left behind.

We’re already seeing competition for customers reaching record levels. The Current Account Switch Service (CASS), the independent body set up to manage consumer bank account switches and make it easier for customers to move from bank to bank, reported a 76% year-on-year increase in customers moving their current accounts in Q2 of 2023. Organisations that bake in customer insights to their business models are the ones who will reap the benefits of this.

Big change doesn’t have to start at scale either. Even small steps towards insight gathering can lead to short-term benefits, which are then ramped up so eventually customer insights are embedded in your organisational culture.

About OpenBox

OpenBox is the premium digital experience partner to the financial services industry that seamlessly connects technology and customer. Armed with decades of experience, their consultants help deliver high quality digital experiences that meet industry regulations and customer expectations, every time. Openbox works with organisations to drive successful digital adoption, strengthening customer acquisition and retention.