According to CB Insights research of 101 startup failure post-mortems, 42% failed because they lacked market need. It's not only about “inexperienced” startups, this happens even to the “best of us”. Google failed with Google+ and Google Wave, despite enormous marketing budgets and award-winning ads. We see the same happening in digital banking. So, the question is - is it a good digital banking strategy to first create a digital financial product and then stimulate a market need with tons of advertising?
A shorter version of this article was originally published on Forbes.com
The rapid development of digital technology is making new demands on financial brands.
Marketing methods that used to work perfectly only a decade ago, don't deliver the expected results anymore. There are so many alternatives available on the market that a pretty package and a catchy slogan aren't enough to convince people to buy and stay loyal to the brand and the product.
In the digital age, it's all about the emotional connection customers have with the financial brand that is formed through the value they get out of the digital financial solutions.
Making financial products and trying to convince everyone that they need those is a very expensive Russian roulette with no guaranteed outcome. A much more reliable way would be to do it the other way around - first define and then match the market need with the exact product that the customers seek.
Experience transformation VS digital transformation in digital banking strategy
Unfortunately, when it comes to digitalization many finance companies still make the same mistake - they put all of their main efforts into creating a product and thinking about the benefits it will provide to their business, instead of focusing on the value for the users.
In creating digital banking strategy, they usually think about technology, development, business goals, and marketing campaigns. This is the model of how businesses have been operating for decades, yet when it comes to digitalization, as many as 78% of companies fail at their digitalization goals according to Everest group.
So, if the focus on technology and product alone leads to failure in digital transformation, then what's the key to successful digital strategy in banking? The answer is simple.
Banks can shift the focus from the product to the customers. Successful digital strategy in banking means transforming the customer experience by applying the possibilities of modern technology.
Today, customers are the ones deciding product's success. What if they don't care about all of the features and technological advancements of your financial product?
Creating products reversely
In the digital world, success is achieved not by creating a selling package for a product, but by turning the product into a value that sells itself. In this case, marketing becomes a waste.
The secret of creating such a user-centered product is to base it on the solution demanded by customers, not on the market segmentation and competitive strategy.
This means, using reverse engineering - a top-down approach that starts with customer research to define the ultimate value for them and proceeds with an action plan of how to execute that by creating a product.
It reduces the uncertainty of whether there will be a demand for the product even before it’s launched.
Different gap, different bridges
In the previous Industrial age, the gap between the FMCG brands (fast-moving consumer goods) and the sales was about lack of market distribution and promotion. Times have changed and for digital products, this is not the issue.
In the digital age, it's possible to reach almost anyone, without any marketing budget, using social networks, blogs and SEO (search engine optimization).
The main gap today is - can you provide something the customers actually need? A product that would solve people’s problems and make their lives easier?
Those who can reply with a confident “yes” will be able to succeed even without any marketing budget. That's because in the digital age you can bridge the gap between your financial app and the customers only by providing an exceptional customer experience. Huge advertising budget, nor nice packaging won't help here.
A user-centered mobile banking app that's based on the customer wants, needs, and expectations will always be able to market itself without almost any marketing budget.
For example, we can probably all name some local restaurant that offers unforgettable experiences to its customers and creates a ton of positive emotions. After visiting, everyone tells their friends about it, post about it on Instagram, and it's not long before it's almost impossible to book a table because it has become SO popular. And it's not thanks to intensive advertisements but the word of mouth because people were so happy and satisfied with it.
It is no miracle, anyone can integrate this into their own financial business, whether it's a huge bank or a tiny fintech startup. All it takes is a true dedication to satisfy customers in the best way possible by creating an unforgettable digital banking customer experience.
So, the only way to survive the digital age is to go big on delivering outstanding customer experience. And people will pay you back by becoming the ambassadors of your financial brand, happy to recommend it to their friends.
If you are seeking an exceptional competitive advantage in the digital age, contact us! With the power of Financial UX Design, we can help you turn your business into a loved financial brand that has a strong emotional connection with your clients, resulting in success, demand, and long-term customer loyalty.