Efficiency in Action:
The power of tech collaborations for optimal customer outcomes
Revving up
In a recent roundtable discussion hosted by Beyond Encryption titled "The Power of Tech Collaborations for Optimal Customer Outcomes," I used the analogy of a Formula One team to illustrate how collaboration works in financial services. Formula One epitomises teamwork, with professionals from various disciplines – drivers, engineers, designers, mechanics, physios, dieticians, and more – working together to achieve a common goal: winning a Grand Prix.
However, reflecting on the discussion I am not sure the analogy is entirely accurate given how close Formula One is in terms of performance - the gap from first to last place in the Miami Grand Prix was less than 1.4%. Applying this to the business world would mean all businesses are closely aligned in terms of creating optimal customer outcomes – we know this is not the case.
I will switch the analogy to football which also requires teamwork from people in different disciplines working together to create a winning team whether this is on a local, country or international basis – the variation in team performance is huge depending on many factors. Success here is not solely related to the amount spent, you might have enormous investment behind you but without the right blend of skills on the pitch and the backroom team the outcome will sub-optimal. Just throwing money at the issue and buying all the “best” players, whilst being linked to success, does not guarantee it.
Returning to the business world, you could argue some companies have tried to “throw money at it” but if the tech stacks don’t work cohesively outcomes will be impacted. Furthermore, technology is powered in the business world by data and without premium grade data, results will be sub-optimal.
This article explores these topics to share thoughts on how optimal outcomes can be delivered without unlimited investment.
The Premier League
The largest companies seem to have got the use of data and technology cracked and when viewed through their lens they drive optimal outcomes for consumers. For online purchases, Amazon are recognised as a leader – within a few clicks your request can be almost immediately satisfied with the minimum of fuss.
Why can’t a similar approach be used in financial services? The answer lies in the engagement challenge which leads us to the first data problem. When you buy something on Amazon you ensure it is sent to the address of the correct recipient – if you move house, you update your address. As an online service you have only known communications by email or text – this saves Amazon money and enables tracking of goods, etc.
Engagement with financial services has first to overcome the “boring” challenge which impacts engagement – this is especially the case with Pensions because the benefits are only recognised in the long term when people retire. As with many financial services products, whilst digital comms is an option, fraud challenges quickly come to the fore. To mitigate this, financial services using email communication will typically ask recipients to log on to a portal to see the information shared with them. But this approach creates a fracture in the communications journey. Figures highlight that whilst 85% of recipients open the email only 15% log onto the portal – therefore in most cases, the intended information has not been received.
Considerations to change
In the “good old days” it was easier – you sent a letter, the letter was delivered, information received - everyone is happy. That said, there was no tracking of what happened to the letter – was it delivered to the right person? Was it opened, read, put on a pile for later or put in the bin? One piece of feedback from this process was the volume of returned mail, a waste of money. However, not all incorrectly addressed mail is returned – some is simply binned, and a tiny percentage used fraudulently in account takeover or impersonation of the intended recipient. Given rising postage costs, the cost of paper and printing and the ESG impact, using paper-based communications is not the answer, and what’s more, some consumers don’t want it.
An alternative is to communicate digitally, but for some companies the biggest barrier to full scale customer base digital communication is access to email addresses and mobile numbers. Whilst capturing email addresses and mobile numbers has been a standard part of data capture in the last 10-15 years some customer relationships pre-date this so the information is missing.
As we’ve stated above, Pension schemes have one of the longest-term relationships with their customers, but engagement is low; so often people move house without updating their address details, and there is little appetite to volunteer email or mobile (despite the on many pensions portals).
Furthermore, those with workplace pensions often enrol with their work email address or mobile number and when they leave their current employer contact is lost.
Banks are an interesting example – as they are examples of bridging the old world with the new. Consumers have high interactions with current accounts and credit cards so the move to paperless billing has been a success, however they have far fewer interactions with savings, investments, life insurance and protection policies, so coverage of contact data may be lower. Banks who have created their own single customer view to consolidate records across product silos mean interactions with consumers should yield better results.
Let’s not forget the fractured digital journey. Typically, an email or text directing the recipient to a portal to read the message in a secure environment thereby keeping personal information safe. Before we conclude that digital is the answer - it should also be recognised that not all consumers can engage this way, so a one-size-fits-all approach is not the right approach either.
A blueprint for improving customer outcomes
To provide optimal customer outcomes once the customer preferences and behaviours have been understood customers need to be informed of any onward impact this may have on the products and services they use.
A critical step in planning interactions with customers is to review existing contact information to understand any limitations to communication. It may be worth then considering enhancing this with 3rd party information.
Completeness of input data is high for traditional fields – first name, surname, and address (thus supporting postal communication) but much lower for email and mobile numbers. Whilst this basic data is largely complete in comparison to the LexisNexis® Risk Solutions data only around 88% were confirmed as living as stated highlighting that 12% have out-of-date data – explaining why organisations receive returned mail, or worse are trying to communicate with deceased people.
The good news is that this can be rectified and as often as fortnightly. The use of LexisNexis Risk Solutions reference data to append appropriately permissioned 3rd party email and mobile data means a far greater number of customers can be contacted through these more cost-efficient channels. This information can then be used in planning and revising communications strategy to determine how best to reach the target audience.
Enriching data via the use of 3rd party email and mobile
Additional attributes can be applied including when the email address was first used and last used. Together with confirmation of the association between the named customer and the email address and whether the email address has been used in fraud these attributes provide confidence of delivery of the right information to the right person via email along with the additional benefits of being able to track open rates.
Is there a better way via secure email distribution?
Returning to the topic of sending out letters, it was common to include all necessary information within the same envelope. Not so with traditional email where financial institutions typically ask recipients to log into their portal to view personal information. However, with secure email distribution, this extra step can be eliminated. By having recipients authenticate themselves upon receiving the initial email, a secure connection is established, allowing subsequent emails to contain personally identifiable information (PII) directly within the email. Thus, open rate can be maintained as the key measure of engagement.
Time for change?
With further changes in July 2024 extending Consumer Duty to all customer records, including gone aways and dormant accounts, there is a growing requirement to being able to communicate with all different cohorts within the customer base.
When this is balanced with the increased cost of print and mail, and its ESG impact, the combination of emerging capabilities to communicate with customers in a cost-effective way, with the benefit of being able to measure the effectiveness of the interaction are now available.
