Financial firms that want to offer a better digital experience to their clients should look outside the financial services industry, according to Corporate Insight.
The company held a webinar on Thursday outlining findings from its study, “The Innovation Advantage.” Corporate Insight surveyed 1,500 individual investors who were active users of their primary brokerage firm’s website.
“Most of the innovation and most of the interesting things that are happening in terms of digital experience are really happening outside of financial services and it makes sense for firms to be looking that way,” James McGovern, vice president of consulting services for Corporate Insight, said on the webinar.
More than 60% of respondents in Corporate Insight’s study said they wanted access to planning tools from their primary brokerage firm, and 56% said educational materials were important to them. However, less than 30% had gone to their primary brokerage firm to find those tools.
“While there’s clear demand for and interest in goal planning capabilities and education, it appears that investors really aren’t going to their primary firm for these tools,” McGovern said.
One reason for that is because “very few of these tools do a good job of capturing the client’s full financial picture,” McGovern said. Users may have to manually enter information and may be limited in the goals they’re able to set through the tools, which often focus only on retirement. Furthermore, the analysis they provide “tends to be superficial,” he added.
Lack of ongoing tracking to measure how far users are from their goals is another factor that reduces the usefulness of and engagement with goal planning tools.
UP by Jawbone, a fitness tracking app, offers an example advisors can follow to increase engagement, said Corey Limmer, lead author of the report.
Jawbone users get customized tips from their “smart coach,” tailored through machine learning to be even more customized for the user.
Financial firms could track users’ spending behaviors to analyze poor behavior and offer suggestions to improve it. Machine learning is key, Limmer said, and users should be able to “thumbs up or thumbs down each recommendation” to further tailor recommendations.
Jawbone UP, as well as Nike + Running, introduce a gaming aspect, allowing users to compete with their friends. Financial firms could integrate this feature by letting users compare their progress toward goals on a percent basis to other users’ progress.
Limmer said this social element “has great potential if applied to the financial services goal setting experience.”
Firms have to make their offerings more interactive, and especially have to make them available and easy to use on mobile devices, according to McGovern.
“Nearly all financial firms offer a basic library of educational materials,” McGovern said, but few offer the kind of interactive and engaging materials that consumers are looking for.
“We see videos and we see webinars at some firms, but they’re still relatively rare,” McGovern said. “Very few offer what we could describe as a gamified experience or an interactive experience that really engrosses the user.”
Furthermore, static articles don’t encourage repeat visits or ongoing support among users, he said.
There are multiple opportunities for financial firms to introduce these kinds of interactive, accessible tools that encourage engagement and repeat visits among clients.
Some mainstream financial firms have created valuable offerings for clients. Limmer pointed to tools from Fidelity and USAA as standouts. Consumers can set and track multiple goals, aggregate external accounts and get personalized recommendations through those tools. However, they don’t give users an easy way to implement investment recommendations from the tool and recommendations don’t take into account other goals.
Looking outside mainstream financial firms, Corporate Insight identified iQuantifi as an example. IQuantifi is a robo-planner users can access through a financial institution. The app allows users to drag and drop financial goals across their timeline to change the target date. It delivers customized next-steps with an “action due date” to help them stay on track.
Advisors should adopt questionnaires and inputs to help capture users’ full financial picture, with intuitive interfaces that let them easily set goals, which could encourage repeat visits as goals change.
TD Ameritrade stands out among the mainstream financial firms with high-quality educational offerings, Limmer said. It offers a video-based and gamified platform, but Limmer noted, “While this is a great example of an educational platform, it is relatively uncommon among financial services firms.” Limmer suggested Duolingo and Elevate as examples of ideal education apps. Duolingo is a language learning app, and Elevate offers brain training activities to improve memory, focus and other skills. Drawing from those apps, Corporate Insight found best practices for firms developing their own educational tools include a clear curriculum and lesson plan for users to follow.
Both apps offer placement tests to make sure “users are landing on the correct starting material according to their skill level.”
Gamification is useful here, too. Duolingo users earn lingots for passing courses, and Elevate users earn badges for high scores, completed sessions and login streaks. Gamification can help financial firms by making their educational materials more engaging, and increasing their actual usage among clients, Limmer said. “Users feel good from being rewarded,” even if it’s just a virtual reward.
“Innovation is really the ultimate competitive advantage in this marketplace,” McGovern added.
The financial crisis slowed down traditional firms’ innovation as they focused just on staying afloat, McGovern said. That left room for robo-advisors like Betterment and Wealthfront to “take some of that business away from the established business by focusing very heavily on digital experience and on providing tools and functionality that are very easy to use, elegant and, frankly, enjoyable compared to your average financial services website or mobile app.”
He continued, “For established financial institutions to compete with these firms, they really need to rethink the digital experience.”
There are five core elements to a financial services firm’s digital offering, the report found: goal setting, news, document management, education and, of course, security. Gamification and augmented reality are areas where firms can distinguish themselves and their offerings from other firms.
Firms can integrate augmented reality into their marketing by adding symbols to their promotional materials that consumers can scan with their phones. When they do, the application can launch a video, a webinar invitation or other educational materials.
“The technology is going to be driven by non-financial firms, obviously,” McGovern said, referring to games like Pokemon Go, “but the smart financial services firms are at least exploring the idea to see in what other context it might make sense.”
— Read Blockchain-Powered Financial Tools Get Big Push From IBM, Deloitte on ThinkAdvisor.
— Corrections: This article has been updated to correct the name of the white paper and its lead author, Corey Limmer.