The research and consultancy firm warns that as the use of
technology by institutions has proliferated, banks have distanced
themselves from the customer – ultimately confusing consumers with
mixed messages.
While there once was a time when a one-to-one relationship
between a client and a relationship manager was the norm in
financial services, today it is the exception, not the rule, says
TowerGroup. Technology is responsible for this shift.
“Since most of a client's interactions are through an ATM or web
browser, it is not possible to avoid the perceptions associated
with technology. As a result, the positive perceptions of financial
services are being degraded by the largely negative perceptions of
technology,” says the report.
These includes fears about security, reliability and
accountability.
The preponderance of financial services products, not only from
the traditional industry, but also from newcomers such as car firms
and supermarkets, is having a further impact on brand value. It is
encouraging consumers to view banks as purveyors of
undifferentiated commodities and to purchase products from
alternative financial services providers based on price, says
TowerGroup.
The report, "Financial Services Technology Is Not Supporting
Traditional Brand Values", suggests that poor brand management is
also to blame.
It reveals that there is frequently a “disconnection between the
information technology department's approach and that of the banks'
strategists,” that may result in the tactics of the IT department
contradicting the company’s brand strategy.
It gives the proliferation of self-directed channels as an
example.
“Although it is true that operational costs spiral downward as
customers adopt self-service channels, self-service works contrary
to basic financial services brand principles and thus hampers the
loyalty that customers have to their banks,” says the report.
A survey carried out by TowerGroup assessed how various
departments within institutions considered the importance of the
customer’s emotional perception of brand in purchasing a
product.
Ninety-eight percent of brand managers and 87% of senior
management thought that this was a factor in the customer’s
decision, compared to only 15% of IT heads.
But brand loyalty is still strong. While the gap between
technology and brand objectives has created a serious effect that
can jeopardise the long-term viability of the entire industry,
TowerGroup believes this trend can be reversed if IT departments
make the financial services providers' brand an essential criterion
in their decisions.
Banks must consistently and carefully evaluate the impact new
technology may have on a financial institution's brand so that it
supports rather than degrades the institution's image, concludes
the report.
