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.
