The Journey to Digital Maturity: How Financial Institutions Are Leveraging the New Age of Digital Solutions

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1 The Journey to Digital Maturity: How Financial Institutions Are Leveraging the New Age of Digital Solutions A WBR Digital Industry Benchmark Whitepaper Presented in Conjuction with Adobe June 2014

2 Table of Contents Executive Summary...2 Key Findings...3 Research Findings The Journey to Digital Maturity...4 Influencing the Customer Experience...7 The Next Generation of Technologies and Solutions...9 Digital Payments & the Future of the Mobile Wallet...12 Conclusions & Recommendations...14 Appendices...15 About NetFinance...15 About Adobe...16 About WBR/WBR Digital...16 Register for Next Year s NetFinance Conference...17 Executive Summary The expansion and evolution of the digital world has had a profound impact on the way people bank, narrowing the gap between consumers and financial institutions in ways never before possible. In an age where you can transfer your rent with the click of a mouse and instantaneously deposit a check by simply taking a picture, banking branches are becoming obsolete. In this brave new world of omnichannel banking, touch points have multiplied, marketing channels have become more diffuse, and the analytics required for campaign tracking have become highly complex. With consumers increasingly controlling how, when, and where they connect with their banks, financial institutions are working to uncover new opportunities to improve their omnichannel capabilities and enhance the customer experience. In other words, digital banking has become a top priority. Financial services companies are adapting to this paradigm by adopting powerful new digital solutions. Tools for customer relationship management, media listening, marketing automation, and analytics have become essential to financial institutions living in an omnichannel world. When embedded into business goals and processes, these solutions form the core of a company s digital maturity. Despite the proliferation of these dynamic digital tools, many financial services companies lack the structures and strategies to drive their businesses digital maturation. In fact, this report will show that organizational alignment is just as important to a company s digital development. Furthermore, many marketers are struggling to engage customers and prospects in more relevant channels like mobile and authenticated sites, thereby missing high-quality opportunities. The present study evaluates the digital maturity of financial services companies, assessing the obstacles that are inhibiting their digital development, as well as the solutions and capabilities that are enabling it. The study also evaluates how financial institutions are impacting the customer experience and how they are leveraging mobile. Although the majority of financial institutions surveyed indicated that they are investing in their digital capabilities, only 3% of respondents believed that they have reached full digital maturity. This underlines the fact that digital maturity is a fluid process that often involves the transformation of organizational structures and technology platforms. This study reflects data gathered at NetFinance 2014, the premier digital conference for financial services The Journey to Digital Maturity 2

3 Key Findings Financial services are lagging in their pursuit of digital maturity, with 85% saying that they are halfway there or further behind. Reaching digital maturity takes more than just powerful new technologies. In fact, 43% of respondents indicated that organizational alignment or executive sponsorship are the most important factors to their advancement toward digital maturity. The digital maturation of many financial institutions is being impeded by the competition for IT resources and fragmented data sources. 65% of respondents agreed that heavy reliance on IT resources is the main challenge inhibiting their companies digital maturation. Fragmented data sources and compliance requirements were also common obstacles. Many financial services companies are missing out on significant opportunities for conversion and engagement in the mobile space. Marketers have enhanced their ability to target, analyze, and convert public site traffic. But with web site traffic moving rapidly to mobile, very few institutions have succeeded in extending their core capabilities to mobile applications and mobile sites. Case in point, only 38% of survey respondents are leveraging analytics on their mobile sites, while a mere 25% are applying analytics to their mobile apps. Technology plays a critical role in digital marketing. However, the proliferation of solutions providers has made finding and implementing the proper capabilities more important than ever. Faced with an abundance of choice, many companies are choosing to buy digital marketing solutions or build them in partnership with a 3rd-party, rather than build the solution in-house. Financial institutions are prioritizing cross-channel campaign management and responsive design in the short run, although 43% of respondents already describe their digital marketing programs as excellent. Although the mobile wallet presents a tremendous opportunity to better serve consumers, most financial institutions are not yet comfortable with the technology. As a result, the majority of financial services companies only offer bill payment. While many companies agree that a clear leading technology and improved retailer support are necessary to make mobile wallet offerings more feasible, 82% believe that there is enough consumer interest to justify these investments The Journey to Digital Maturity 3

4 The Journey To Digital Maturity Financial institutions are lagging behind in their pursuit of digital maturity 60 Where is your company in its journey to digital maturity? 85% of respondents are halfway to digital maturity, or further behind of respondents are halfway to digital maturity % Haven t left the gate 31% Just getting started 12% We can see the finish line 3% We are at our end stage 53% Halfway there [I m] surprised to see half of respondents say they are halfway there since the space changes weekly/monthly in terms of new ways to interact and engage with customers through digital (even what we mean when we say digital changes so frequently). - Brad Leimer, VP Digital Strategy Mechanics Bank 2014 The Journey to Digital Maturity 4

5 The reliance on IT resources (65%) and fragmented data (60%) were clearly the two most significant barriers to digital maturity cited by respondents. Technology and data constraints are inhibiting digital development What are the obstacles slowing down your ability to mature digitally? 65% Significant reliance on IT resources 60% Fragmented data sources 48% Compliance 37% Inability to personalize customer experiences 28% Privacy and data security 25% Lack of organizational comfort with cloud- based solutions 12% Incompatible marketing solutions 5% No obstacles Despite the growing emphasis on analytics and solutions, organizational alignment remains the dominant driver of digital maturity. Digital development requires organizational transformation Which of the following has the biggest impact on the advancement of your company s digital maturity? 43% said organizational alignment and executive sponsorship 43% Organizational alignment and/or executive sponsorship 20% Single view of the customer / unified customer profile 16% Multichannel analytics combine online and offline data 8% Cross-channel campaign management 6% Efficient content management and deployment 5% Personalization / 1- to-1 targeted messaging on web and mobile sites 1% Solution functionality like Personal Financial Management There is little doubt that digital strategy has become a central goal for financial institutions, but the corporate structures and technologies required for this paradigm shift are often disruptive. The findings of this study suggest that organizational alignment and company culture are just as important to digital transformation as new technology platforms. Organizational enhancements, such as the consolidation of digital functions under a single leader and the improved alignment of digital objectives and performance metrics, will form the core of a digitally enabled business The Journey to Digital Maturity 5

6 These results contrast with last year s study, in which respondents cited new account acquisition as their top marketing priority. Digital marketers are focusing on retention and account volume Where will your company be focusing its digital marketing activities in the next 12 to 18 months? 55% Increase customer retention 53% Increase new account volume 47% Increase product penetration 40% Increase lead generation 31% Increase new account quality 30% Increase assets or deposits An important shift is taking place from marketing as a pure direct response acquisition engine to a more experiential tool aimed at deepening relationships with customers and driving retention. More than half of those surveyed will be focusing their digital marketing on increasing customer retention (55%) and increasing new account volume (53%). Conversely, less than a third of respondents reported that their businesses would be focusing their digital activities on increasing new account quality (31%) or increasing assets or deposits (30%) The Journey to Digital Maturity 6

7 Influencing the Customer Experience Only 42% of respondents stated that their companies have full control over the end-toend customer experience. Most respondents feel that their companies do not have full control over end-to-end customer experiences What level of control does your company currently have over the customer experience? % of respondents stated that their companies have full control 42% Control over the end- toend customer experience 23% Control over the digital, but not direct, customer experience 18% Control over all direct experiences (e.g. , direct mail, etc.) 9% None 8% Control over the prospect experience only Despite the fact that creating consistent, high-quality customer experiences is a prime objective for the financial services industry, the majority of respondents report they only have limited control over the customer experience. The fact that only 42% of respondents stated that their companies have full control over the end-to-end customer experience clearly indicates that the financial services sector must accelerate its digital development The Journey to Digital Maturity 7

8 More than half or respondents utilize at least 7 different channels to impact customer experiences Marketers relying on a multitude of channels to impact customer experience Which marketing channels do you rely on to impact the customer experience? 88% Public site 77% and/or direct mail 68% Mobile sites and applications 58% Social 56% Search 56% Outbound and inbound calls to call center 55% Private or authenticated sites 35% Third- party display ads Given the plethora of channels through which people can interact with their banks, marketers must understand where customers and prospects are spending the most time. Many existing customers (especially of retail banks) are primarily interacting with their banks through mobile applications or private or authenticated sites. This in turn means that marketers and digital channel owners should be emphasizing these channels, perhaps even more so than the public site. Just like in last year s report, company websites were cited as customers primary source of information. Company websites continue to be the dominant source of information for customers What is the primary channel through which customers are receiving information from you? 54% Visiting our website 32% 6% Web search 4% Direct mail 1% Social media 1% Webinars 2014 The Journey to Digital Maturity 8

9 As in last year s report, CRM systems were the most common solution. service providers jumped from third in 2013 to the second this year. The Next Generation of Marketing Technologies & Solutions Financial services companies are utilizing a wide variety of digital solutions What types of solutions and partners are you currently using? 65% CRM 65% service provider 54% Paid analysis (not Google) 51% Marketing database 49% Free Google analytics 47% Social and media listening software 40% Sales/transactional database 34% Marketing automation 2014 The Journey to Digital Maturity 9

10 Cross-channel campaign management topped the list of marketing technology priorities. Cross-channel campaign management is becoming a priority What are your technology priorities for marketing capabilities? Cross-channel campaign management including EM, DM, Phone, Web and Social Content management and responsive design 29% 26% 19% 21% 18% 20% 19% 8% 25% 15% Integrating data for a single view of the customer 22% 11% 23% 27% 17% Personalization via 1- to-1 targeting across digital channels 15% 24% 13% 24% 24% Multichannel analytics for attribution 10% 24% 27% 21% 18% Highest priority Lowest priority As this report has shown, consumers are interacting with financial institutions across channels almost at will. Thus, it is no surprise that marketers top priority is cross-channel campaign management, which enables them to engage consumers consistently and relevantly across channels. 88% of respondents are looking to add digital solutions, with 38% planning to buy them. Most companies are looking to add digital solutions, with many planning to buy those solutions If your company is looking to add solutions to support your digital marketing, are you looking to build or buy those solutions? 38% 38% Buy 29% Build via 3rd- party 20% Build in-house plan to buy digital marketing solutions 12% Not looking to add solutions 2014 The Journey to Digital Maturity 10

11 43% of respondents believe their digital programs are excellent. That is a strong improvement over last year, when only 27% labeled their programs as Excellent. Most marketers are happy with their digital programs On a scale of 1 to 10, how would you rate your online marketing programs today? 14% 9% 15% 14% 34% 9% 0% 3% Needs Improvement Satisfactory Excellent Perfect 0% 2% While the majority of respondents placed their companies in the middle ranges, a full third (34%) rated their marketing programs as a 7. Notably, very few respondents rated their digital marketing programs as either exceptional or particularly deficient The Journey to Digital Maturity 11

12 Most financial institutions are missing significant opportunities to drive conversion and engagement on mobile, where more customers are spending their time. Financial services must accelerate their optimization of mobile and authenticated channels Which public web / desktop capabilities are your company able to extend to mobile platforms or the authenticated space? 44% 35% 20% 44% 43% 31% 24% 36% 21% 37% 38% 25% Content Management Targeting Segments Testing/Optimization Analytics Authenticated Site Mobile Site Mobile App In recent years, financial services marketers have been enhancing their capabilities on desktop public websites, refining their ability to target, analyze, and convert public site traffic. Unfortunately, this traffic has been shrinking, thanks primarily to the ascension of mobile; prospects and customers are increasingly turning to mobile sites and applications to research products and services, look up balances, and pay bills. Since they are not extending their core digital capabilities to these areas, most financial services marketers are missing the opportunity to convert and engage customers where they are spending the majority of their time. As a consumer facing organization and brand, we need to be where consumers are. So we need to deliver scenarios on devices which have become the most frequently used items in our lives. Simple as that. - Michal Panowicz, mbank, from The Financial Brand, June 9, The Journey to Digital Maturity 12

13 Bill pay is the only digital wallet service offered by most financial institutions - only 10% have a full digital wallet. Digital Payments & the Future of the Mobile Wallet Bill pay is the most popular mobile wallet feature Where is your institution on the road to digital payments? 56% 56% Bill pay only of respondents currently offer bill pay as their only digital payment capability 22% Person 2 person payments 12% Other mobile payments (NFC, BT, QR, etc.) 10% Digital wallet Most banks believe there is enough consumer interest in mobile payments, but no clear leading technology. Lack of a clear industry-leading technology is impeding mobile wallet adoption What do you think is the biggest hurdle in mobile payments adoption? 32% agreed that the biggest impediment has been the lack of a clear industryleading technology 32% Lack of a clear industryleading technology 20% Risk in adopting too early 18% Lack of consumer interest 17% Too many solutions available 13% Not enough retailer support 2014 The Journey to Digital Maturity 13

14 The majority of financial institutions are offering mobile wallet capabilities, signaling a slow march toward wider adoption of the technology. Significantly, less than onefifth of respondents believe that there is not enough consumer interest in mobile payments, but only ten percent of those surveyed currently offer a full digital wallet. These early adopters may have an advantage in the enhancement and expansion of their mobile payments capabilities as the technology becomes more popular with consumers. However, according to survey participants, that may take the emergence of a clear industry-leading technology. We ve been talking about mobile wallets for the last few years, but are still yet to see mass consumer adoption and no one clear winner. However, with the introduction of ibeacons and HCE, mobile payments could be on the brink of finally taking off. I m excited to see where we are in December at the NetFinance Interactive show. This could really be an absolute game-changer for banks. - James Hodges, Director, NetFinance 2014 The Journey to Digital Maturity 14

15 Conclusions & Recommendations Financial services must accelerate their digital maturation While the challenges associated with digital maturity may be great, the benefits are unmistakable. According to a 2014 Adobe survey of U.S. marketers, digital/ social marketers and data analysts are the top two roles that companies should invest in over the next twelve months. Additionally, 76% of marketers believe that they need to be more data-focused in order to succeed. These findings reinforce the results of this study: the enhancement of digital programs is key to a company s success both in the future and right now. Unfortunately, many financial services firms trail behind in their journeys to digital maturity, impeded not only by their need for advanced digital solutions, but also (and more significantly) by a lack of organizational alignment and executive sponsorship. Although digital maturity requires organizational transformation and the deployment of new technologies, it will enable financial institutions to uncover new product offerings and novel ways of improving the customer experience. Mobile spaces represent the next frontier for digital conversions As customers continue to shift their attention away from public sites, mobile and authenticated sites and apps are becoming central to the customer experience. Unfortunately, many financial services companies are not extending core digital capabilities like content management, segment targeting, and analytics into mobile and authenticated spaces. Without those capabilities, those companies are missing out on critical conversion opportunities in high-traffic channels. Investment should shift toward digital payments as confidence in mobile wallet technology grows As consumers increasingly turn to mobile for their banking needs, the possibility for full mobile wallet services will continue to grow. Financial institutions seem to agree that there is great potential in digital payments, although many see the lack of a clear industry-leading technology as the major challenge facing adoption of mobile wallets. As those technologies are improved upon and consumer confidence in mobile payments grows, financial institutions should be ready to embrace this next banking frontier The Journey to Digital Maturity 15

16 Appendices Appendix A: Methodology For this study, Worldwide Business Research conducted in-person and online surveys of 101 digital professionals in the financial services field. Survey participants included decision makers and executives with responsibility for their firms multichannel marketing capabilities and strategies. Professionals from companies including JP Morgan Chase, BBVA Compass, Lincoln Financial Group, Accenture, TD Bank contributed to the survey s results. In-person surveys and interviews were conducted on-site at the 2014 NetFinance Conference in Miami, Fl. Responses were collected in April and May of Appendix B: Related Research 2013 Marketing Automation Trends: Marketing Executives at Major Financial Institutions Weigh In On Evolving Technologies and Strategies, WBR Digital, July Digital Roadblock: Marketers Struggle to Reinvent Themselves, Adobe Systems, Incorporated, March About NetFinance Since its launch in 2007, NetFinance has become the industry s #1 multi-channel marketing conference specially-designed for financial institutions. Featuring more than 70 speakers and 350 attendees, NetFinance brings together the most seniorlevel speaking faculty, enabling attendees to hear from the people making real decisions. In fact, 85% of speakers are at a VP level or above. The conference has proven to be a rich industry resource for networking, strategy, and cutting-edge information, with 93% of past attendees agreeing that they would recommend the event to a colleague. In just three days, attendees will learn, engage and discuss all aspects of mobile, tablets, responsive design, big data, multichannel restructuring, cross-selling, customer engagement and creating the branch of the future. The complete agenda, list of speakers and registration details are available at The Journey to Digital Maturity 16

17 About Adobe Contact Adobe 345 Park Avenue San Jose, CA Tel: Adobe Marketing Cloud: Adobe is changing the world through digital experiences. We help our customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on our established design leadership, we enable customers not only to make great content, but to manage, measure and monetize it for maximum impact. For more information, visit adobe.com. Contact Adobe 345 Park Avenue San Jose, CA Tel: Adobe Marketing Cloud support: About WBR/WBR Digital Media Contact: Andrew Cole wbresearch.com WBR is the world s biggest large-scale conference company and part of the PLS group, one of the world s leading providers of strategic business intelligence with 16 offices worldwide. Our conference divisions consistently out-perform their industry sector competitors on the quality of the events we produce and the relationships we nurture with both attendees and sponsors. Every year, over 10,000 senior executives from Fortune 1,000 companies attend over 100 of our annual conferences a true Who s Who of today s corporate world. From Automotive events in Bucharest to Logistics conferences in Arizona to Luxury conferences in New York and Finance summits in Hong Kong, WBR is dedicated to exceeding the needs of its customers around the world. In addition to our industry leading conferences, our professional services marketing division, WBR Digital, connects solution providers to their target audiences with year-round online branding and engagement lead generation campaigns. WBR s marketers act as an extension of your team, relieving strain on your internal resources while promoting your brand and solutions to your prospects. Solution providers can target identified accounts or relevant industry/function segments of WBR s entire global database of over 500K senior-level decision makers The Journey to Digital Maturity 17

18 Be a Part of Next Year s NetFinance Conference After participating in 50+ sessions with more than 70 financial service leaders, you re bound to come back with takeaways to move your business forward. 85% of speakers are at a VP level or above. Learn best practices from industry leaders. 94% of attendees said they d recommend NetFinance to colleagues. We think that means you ll like it too. Call our customer service team to get the best available discounts for your firm at , or us at netfinance@wbresearch.com Be a part of next year s event and join in on the discussion shaping the industry. Click To Register Now Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries The Journey to Digital Maturity 18