Banking on Good Advice_Accenture

7/31/2019 Banking on Good Advice_Accenture

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ThePointAn OutlookFinancial Services Publication

Banking on Good Advice

How financial services companiescan gain competitive advantage

in advisory services


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Seizing the opportunity in financial advice

Now more than ever, customers are seeking meaningful

financial advice on the best way to manage their financial

matters. Companies seeking to gain a greater share of

the financial advice market find themselves confronting a

torrent of headwinds. Customer loyalty is down in the wake

of the financial crisis. Customers, particularly the younger

generation, are more self-reliant and dont have as much faith

in traditional financial advisor relationships. An abundance

of financial information can be found online, where aggressive

competitorstraditional and nontraditionalnow offer

increasingly innovative advice services.

To gain a competitive advantage, financial services providers

must move quickly to transform their advice operations.

Traditional approaches that heavily emphasize selling financialproducts will no longer win the day. Instead, the focus has

to be on anticipating customers financial needs and finding

appropriate solutions. To provide meaningful advice and

strengthen customer loyalty, companies must first gain a deeper

understanding of their customers needs and tailor advice tothose needs, making it available to customers on a timely and

reliable basis across multiple channels or entry points.

For many, achieving this goal may require significant

operating model changes. For example, by leveraging analytics,

institutions can better segment customers and develop

products to meet their needs. Reorienting front-line staff

through training and incentivesfrom product pushing to

deeper customer interactions is also vital.

The financial advice market is highly valuable. Some

institutions are already starting to reap the financial benefits

of taking innovative steps in the right direction. Those that

hesitate to develop the necessary capabilities to compete may

be left to watch these significant opportunities slip away.

Mark Halverson and Stephen Gardiner

Senior Executives, Financial Services


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by assessing their financial goals, analyze a set of tailored

investment strategies that match those goals and track the

results of the selected strategies. Since implementing the

technology, Wells Fargo has seen a dramatic increase in client

adoption rates and asset share of wallet and lower attrition. Over

a one-year span, households adopting Envision plans increased

their assets under management by more than 200 percent over

households without the plan. In turn, customers with a plan were

four times less likely to leave than those without plans.

Royal Bank of Canada is another bank gaining value through

advice. Between 2009 and 2010, the number of personal

financial reviews conducted by the bankstructured client

interviews that explore everyday banking, credit, loans and

investments needsincreased 43 percent. During that period,

there was a 15 percent increase in sales per full-time employee.1

Top-line growth is not the only benefit of meaningfulfinancial advice. Reduced costs can be realized through

improved customer attrition rates. Front-line staff can spend

more time growing the customer base than on replacing it.

The business case for providing advice is strong. The money

is clearly on the table, but financial services companies needto have a better understanding of what customers value in

financial advice in order to grow their market share.

Four keys to meaningful advice

Accenture research and experience demonstrate that there are

four key attributes customers look for in trusted financial advice.

1. Timely: The advice is there when I need it

Banks, for example, typically deliver advice only upon a

customers request and rarely at the moment when it is

needed most. Instead, they need to deliver advice proactively

and quickly so that customers can act on it.

Chases Instant Action Alerts is one example of innovative

advice. Chase customers can set up preset low balance limits

on their accounts and receive instant text messages, emails

or voice messages notifying them when their account has

dipped below the limit. Another feature alerts Chases more

1. Reproduced with permission of Royal Bank of Canada


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than 10 million mobile banking customers when they have

overdrawn an account, helping them quickly determine how

they might be able to avoid fees.

2. Accessible: I can access the advice on my terms

From mobile and online applications to branches, customers

want the flexibility to access advice when and where it is most

convenient. One global bank built a unique system of touch

points revolving around the lifestyles of its customers. Supported

by a network of branches, kiosks, mobile and Web capabilities,

the bank provides expert financial advice via tele-presence,

becoming an extended part of its customers daily lives.3. Tailored: It needs to be my advice

Customers seek advice tailored to their specific financial

needs, taking into account the products they hold, their

financial history and future ambitions.

A leading German bank delivers tailored advice to customersbased on their segment, history with the bank and channel

used. The banks system generates hints to call center

staff about which solutions would be most appealing to

the customer. Sales revenue generated from the program

exceeded implementation costs within four months.4. Reliable: I can always rely on what you are telling me

Contradictory or inconsistent advice leaves customers confused,

thereby contributing to a loss of trust.

A Canadian bank is launching a new sales tool to help drive

consistent customer conversations across its national branch and

mobile sales force. The tool will help lenders discover customers

needs in a structured, client-centric manner, regardless of which

lender is conducting the conversation.

Making operating model changes

To deliver meaningful advice at scale, financial services

companies must make significant changes to their operating

models by developing three distinct capabilities.

Leverage analyticsAccenture estimates that the clientto financial advisor ratio in the industry today is over 250:1.

With so many clients per financial advisor, companies are


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underperforming on the advice attributes of timely, tailored

and reliable as they strain to fully understand clients needs.

By leveraging analytics, institutions can address this

challenge by enabling a more intimate and accurate knowledge

of their clients. Three critical steps are required to effectively

use analytics in the advisory business:

Invest in infrastructure that supports the collection of

actionable client data in an industrialized manner.

Use this data to segment individual clients across behavioral

and demographic dimensions. Generate closed loop advice solutions (in the form of

offers and experiences) specific to the needs of the client

segment based on this data.

Financial institutions leading the charge with advice analyticshave progressed into advanced predictive modeling and trigger-

based marketing that help align their solutions to the clients

needs. A predictive modeling engine can provide consistent,

accurate predictions of a clients behavior, which supports the

delivery of reliable and timely advice. The engine combinesintelligent and reusable business rules and peer-set comparisons

in combination with client data to develop segment-affiliated

advice. Iterative and self-learning through a closed loop, these

engines continuously sharpen their insights as more client data

is collected. Therefore, the longer a clients tenure and level

of interaction, the more accurate the advice can become.

Move from sales force to solution forceTo get the most

value from their analytical capability, companies need to enable

their front lines to effectively deliver advice. To do so will require

shifting the orientation of the sales force from product pushing

and transactions to anticipating customer needs and providing

appropriate solutions through the desired channels.

A leading North American regional bank developed a

performance simulation training program that simulatesan employees interaction with a client. The program, which

adjusts its content based on the employees response and provides


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customized feedback, enabled front-line staff to have deeper

customer interactions and helped increase sales by four percent.

Simplifying front-line processes is another path to creating

a solution force. Outdated technology and complex, paper-

intensive processes leave little time for the sales force at

institutions to focus on providing advice to customers. At

one North American bank, the branch sales force spent

more than one-third of its time on administrative tasks. By

simplifying its origination process, however, it projects it

will be able to reduce administrative time by 25 percent.

Deliver advice across channelsFinancial institutions needto develop the appropriate breadth of channelsand depth

in each individual channelto deliver meaningful customer

advice. The online channel, in particular, is vital to delivering

advice profitably at scale.

California-based Yodlee, a leader in online personalfinancial management solutions, is one firm that is helping

both financial institutions and customers break down

traditional barriers and support the multi-bank customer.

Through a major US banks online banking portal, Yodlee-

powered technology enables customers to analyze spending,conduct budgeting and establish goals across all of their

accounts from various financial services institutions. This

helps customers holistically manage their accounts while

keeping the bank as home base for the customer.

In financial services, the market for financial advice is

extremely competitive with considerable financial value at

stake. To differentiate themselves, companies must be able to

deliver advice that is timely, tailored, accessible and reliable. To

capture and take advantage of this opportunity, they will need

to leverage analytics, deliver advice through highly trained and

properly incentivized solution forces and provide advisory services

on a multi-channel basis. Those that can quickly mobilize to

develop these capabilities will be the ones best positioned to

achieve high performance in this new world.Accenture management consultants Richard Wiltshire, Kurtis Wilkinsonand Kelly Yan contributed to this report.


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Copyright 2011 Accenture

All rights reserved.

Accenture, its logo, and

High Performance Delivered

are trademarks of Accenture.

The PointVolume 11, Number 3www.accenture.com/fs

The Point is a monthly thoughtpublication based on studies, researchand/or analysis by Accentures global

Financial Services operating group andthought leadership team.

For a more detailed report on thisissue and information on manyother financial services subjects andinitiatives, please visit our websiteat www.accenture.com/fs.

Fergus Reid

Editorial Director

Financial Services Marketing Communications

email: [email protected]

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Banking on Good Advice_Accenture