The Role Of Emo­tion In The Fi­nan­cial In­dus­try

Forbes Middle East - - CONTENTS - By Ash­win Ku­lothun­gun and Wil­liam Shin­tani

A large com­po­nent of our lives re­lies on fi­nan­cial trans­ac­tions, whether we're shar­ing a cup of cof­fee with friends, tak­ing a ride into town, or send­ing fi­nan­cial sup­port to the fam­ily. Our lives are in­ter­twined with money, and we ex­pect our fi­nan­cial ser­vices to be avail­able, se­cure, and ac­cu­rate.

The re­la­tion­ship we have with fi­nan­cial ser­vices brands is com­pli­cated. While we take our fi­nances se­ri­ously and put sig­nif­i­cant en­ergy into man­ag­ing them, there is an in­her­ent dif­fi­culty in nav­i­gat­ing the of­fer­ings of the in­dus­try.

First, there is an enor­mous va­ri­ety of in­sti­tu­tions and pay­ment meth­ods to choose from, and the ben­e­fits and draw­backs of each can be­come con­vo­luted, whether we choose cash, credit cards, cash cards, loy­alty cards, or oth­ers. Add to this nu­mer­ous pay­ment providers and the chal­lenge in de­ci­pher­ing where and how they can ac­tu­ally be used. Com­bine this plethora of choice with an over­whelm­ing num­ber of touch­points. These pay­ment meth­ods and providers, their elab­o­rate in­ter­ac­tions, and the tech­ni­cal in­for­ma­tion they pre­sent all re­sult in a com­plex cus­tomer jour­ney full of hur­dles, mak­ing it dif­fi­cult for con­sumers to make in­formed choices.

And those choices aren't per­fectly ra­tio­nal: ad­vances in neu­ro­science show that de­ci­sion mak­ing is sig­nif­i­cantly af­fected by emo­tion, and be­hav­ioral sci­ence demon­strates that con­sumers' feel­ings about brands and their of­fer­ings are an ex­cel­lent pre­dic­tor of pur­chase and us­age pref­er­ences.

Brand in­ti­macy is the emo­tional sci­ence that mea­sures the bonds we form with the brands we use and love. The most in­ti­mate brands out­per­form oth­ers in the S&P and For­tune 500 in­dices for rev­enue and profit. Con­sumers are will­ing to pay price pre­mi­ums for in­ti­mate brands and are less will­ing to live with­out them. The pri­mary archetype in the in­dus­try is ful­fill­ment. This indi­cates a fo­cus on ex­ceed­ing ex­pec­ta­tions and de­liv­er­ing su­pe­rior ser­vice, qual­ity, and ef­fi­cacy. It aligns with our ex­pec­ta­tions of fi­nan­cial ser­vices to be de­liv­ered with pre­ci­sion, con­fi­den­tial­ity, and speed.

Fi­nan­cial brands know that safe­guard­ing money and pro­vid­ing ef­fi­cient ser­vices are table stakes, not key dif­fer­en­tia­tors. Fi­nan­cial prod­ucts have be­come com­mod­i­fied: most credit cards of­fer sim­i­lar ben­e­fits, most dig­i­tal pay­ment sys­tems are in­ter­change­able, and most bank­ing apps of­fer com­pa­ra­ble func­tions.

This im­plies that fi­nan­cial brands must un­der­stand and lever­age emo­tional re­la­tion­ships in or­der to drive pref­er­ence and gen­er­ate higher rev­enue and prof­its. For any brand, this starts with three fun­da­men­tals. The first is defin­ing a clear essence: the own­able pur­pose of the brand. The sec­ond is de­vel­op­ing an ef­fec­tive story: the nar­ra­tive of the brand and how it speaks to and res­onates with au­di­ences. The third is cre­at­ing a fric­tion­less and de­light­ful ex­pe­ri­ence for con­sumers.

For ex­am­ple, Mastercard per­forms the best in the in­dus­try across all six archetypes. This demon­strates that con­sumers are con­nect­ing well with the brand, and indi­cates that it has a strong and well-de­fined sense of pur­pose, a clear ar­tic­u­la­tion of value, and ex­pertly de­liv­ered ex­pe­ri­ences.

Side by side with brand build­ing, com­pa­nies in fi­nan­cial ser­vices should con­sider strength­en­ing prod­ucts tar­geted at younger con­sumers. The pro­cesses of man­ag­ing money, mak­ing pay­ments, and us­ing ser­vices are at the top of mil­len­ni­als' minds, which is an op­por­tu­nity for brands to cre­ate mean­ing­ful re­la­tion­ships at an early age.

PayPal, for ex­am­ple, is a fi­nan­cial brand that users rec­og­nize as one that they can't live with­out. The brand is im­prov­ing its per­for­mance with users by act­ing as a fa­cil­i­ta­tor of a more fluid and con­nected life­style.

While tech­nol­ogy is fre­quently touted as a way to im­prove users' ex­pe­ri­ence and re­duce costs, it is not a cure­all. While new dig­i­tal so­lu­tions are per­va­sive, they do not al­ways sim­plify ac­tions and trans­ac­tions. In many cases, the op­po­site can hap­pen. When brands fail, they in­cur a flurry of neg­a­tive emo­tional re­sponses in cus­tomers, and the less in­ti­mate the cus­tomer is with a brand, the less likely they are to for­give its mis­steps. Ev­ery ap­pli­ca­tion of new tech­nol­ogy needs care­ful con­sid­er­a­tion of how it can be im­ple­mented in a com­pre­hen­sive man­ner that pro­motes pos­i­tive emo­tional in­ter­ac­tions.

Ul­ti­mately, fi­nan­cial ser­vices brands need to start con­sid­er­ing and mea­sur­ing emo­tions, not just trans­ac­tions. This means they need to take a crit­i­cal lens to all of their pro­cesses that goes be­yond the ex­pected and truly serves and sat­is­fies. Ev­ery step should ul­ti­mately be an­a­lyzed un­der the frame­work of re­duc­ing fric­tion and cre­at­ing stronger emo­tional bonds with con­sumers.

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