Financial Services Firms Need Five New Skills
During the past decade, consumer needs have changed significantly, but the financial services industry has not evolved to meet these needs. This is why most financial services firms do so poorly in our customer advocacy rankings.

What's holding the industry back? Silos. Financial institutions have created stovepiped organizations that only focus on their own channel (e.g., Web, call center, agent, branch), their own product (e.g., deposit, mortgage, credit card, brokerage, insurance), or their own functional area (e.g., marketing, IT, retail delivery).

Forrester expects that the convergence of three factors -- changing consumer needs, increasing competition, and new capabilities -- will put enormous pressure on financial services firms to finally break down their silos.

As this happens, how can firms become less rigid and more responsive to customer needs?

Our research has uncovered five critical skills for making this transformation.

• Skill No. 1: Customer-centric DNA. Every company can meet customer needs some of the time. But to consistently deliver great experiences, firms need a deep-seated, companywide focus on customers. Rather than pursuing customer relationship management efforts that often focus narrowly on data warehouses and technology, firms should master customer-centric DNA, which consists of two elements: customer familiarity and organizational engagement.

• Skill No. 2: Solution management. Today, firms develop new offerings for customers by tweaking the features of specific products, such as a new interest rate for a savings account, a different affinity group for a credit card, or a lowered price for trading in a brokerage account. But these product-centric efforts miss the opportunity to meet the financial needs of customers who cross the boundaries of a single product.

• Skill No. 3: Cross-channel process agility. Customers want what they want -- when and where they want it. A consumer may check mortgage rates online, verify terms over the phone, and then go into a branch to fill out the paperwork. While customers regularly cross over channels, many firms design their retail delivery models one channel at a time. To meet the needs of consumers, firms need to provide a seamless experience across channels.

• Skill No. 4: Integrated merchandising. In many financial institutions, marketing efforts are heavily focused on new customer acquisition. But firms recognize the importance of selling into their current base of customers as well. That's why so many of them are now pushing products at customers -- in the name of "cross-selling." Rather than throwing products at customers, firms need to develop an integrated merchandising strategy that puts the right offering in front of the right customer at the right time.

• Skill No. 5: Interactive education. Let's face it, financial services are complicated. How many consumers fully understand the difference between a variable and fixed-price mortgage, a Roth and a traditional IRA, or an ETF and a variable annuity? Rather than crafting marketing communications to push consumers through buying cycles, firms need to provide interactive education -- information and tools that help consumers make good financial decisions.

• Customer experience reviews. We can evaluate the usability of your Web sites, emails, and phone apps.

• Web site assessments. We can compare the features on your site with those of your competitors' sites.

• Market research. We can provide insights into consumers from our existing North American Consumer Technology Adoption Study data or through customized research.

• Online activity benchmarking. We can compare your firm's online efforts with those of other banks and credit unions.

Research Referenced In This Issue Business Process Management Suites Implementation Best Practices (39566) Capitalizing On Banks' Sales Opportunities (39494) Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, And Insurers (34610) Dutch Bank Public Web Site Rankings (39331) eStatement Adoption: Is The Glass Half-Full Or Half-Empty? (39635) Financial Consumers Adopt Social Computing (39781) Insights From Forrester's Finance Forum 2006 (39565) Insurance Process Templates Make Progress (39803) Life Events Alter Consumers' Financial Needs (39799) Make The Most Of Your Financial Services Brand On The Web (39270) New Realities Impact Australian Financial Services Firms (39777) Online Mortgage Shoppers' Paths To Purchase (39408) Prosper's P2P Lending Network Defies Status Quo (39530) Retailers Get Into Banking; So What For Banks? (39805) Social Computing's Impact On Financial Services (38857) Strategies For Combating Online Fraud (39698) The Customer Experience Value Chain (36551)    The Financial Services Survival Guide (39738) The Forrester Wave™: Blogging Platforms, Q2 2006 (37147) Turning Online Prospects Into Applicants (39622) Zopa Shows That P2P Lending Can Work (39512)

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