The Role Of Emotion In The Financial Industry
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.