Money MindsetsCustomers think about money differently today. Banks must, too.

Some banks are finding that their bonds with customers aren’t nearly as strong as they would like to believe.1 One possible reason is that banks may have “blind spots” to important customer attitudes about money. That lack of insight prevents them from delivering the differentiated experiences customers want and the operational capabilities that drive efficiencies and growth.

The good news is that banks now have the opportunity to stand out from their peers. By acknowledging the different “money mindsets” of today’s customers, they can jettison long-held beliefs that hold them back. And with a new appreciation of what customers value, they can revitalize their relationships and build the capabilities needed to thrive in the years ahead.

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Customers’ banking expectations, which are increasingly shaped by experiences they enjoy in other industries, are changing fast. A third of customers (32 percent) have higher expectations than they did just one year ago.2

Banks sense their customers want different things today. But a number of them may be missing the link that explains why. For them, investments made to strengthen customer relationships aren’t addressing root causes. These banks aren’t keeping up with their customers; they’re falling farther behind. Our research shows:

• Only 36 percent of customers are very satisfied with their banking experiences.

• 73 percent are frustrated with the lack of convenient interactions.

• 59 percent are frustrated by their inability to access information via their preferred channel.

• 18 percent of banking customers in mature markets (and 29 percent in emerging markets) moved at least a portion of their banking business to another provider in 2015. That’s the highest rate of switching in any industry other than retail.3

Customers’ dissatisfaction and defection should be a wake-up call to industry players that have long believed customers will stay with them to hold their money. It’s clear that customers don’t feel the same way.

Catch me if you can.

1/3 of revenue at riskCould you survive, let alone thrive, with 30 percent less revenue? Accenture Strategy’s analysis suggests that switching and disintermediation of services can put 30-35 percent of banks’ revenues at risk by 2020.4 Given that banks are already struggling to reduce costs and grow revenues in a near-zero interest rate environment, absorbing a revenue loss of that magnitude is unthinkable.

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Don’t follow the money. Follow the mindset. Many banks don’t fully appreciate how customers in the digital age think about their relationships with their money and the institutions that manage it. This is likely from decades-old approaches that incrementally improve clustering of customers based on the value of the assets they own, not on how they think about, use and manage money.

That old mindset makes it difficult for banks to address root causes of dissatisfaction and deliver tailored experiences that strengthen customer relationships. They know that all customers won’t be interested in new one-size services or enhanced channel experiences. But many don’t have the full understanding of what their customers value to offer the “right” thing. For example, some banks continue to invest in fee-based models without aligning the price they charge to the value the customer receives. As a result, customers just tolerate their relationships with banks. Enthusiastic endorsements are rare.

Customer sentiment is quite different for FinTechs. They and other non-traditional financial services companies aren’t constrained by legacy belief systems that prevent them from seeing new opportunities to strengthen relationships. They use different types of analytics to identify the products and services customers want. And they use digital technologies to make interactions simpler, more convenient and more—not less—human. This more easily aligns with customer mindsets. In a sense, FinTechs have “gone back to the basics” by delivering targeted experiences that are aligned to the ways customers think about money.

The FinTech Eye-OpenerOur research revealed that 27 percent of customers would likely consider a branchless digital bank. Among 18 to 34-year olds, that figure soars to 39 percent.5 Contrary to what many believe, this is not an indicator that physical banks will go away. We found that customers still value branch interactions. In fact, 78 percent of US-based consumers said they expect to visit their local bank branch just as much or more frequently in the next five years.6

The rise in FinTech interest is not so much a threat to traditional banks as it is a wake-up call. To attract and retain customers in the digital age, all banks need to achieve the right balance. Winners will offer the best of what both physical and digital banking models have to offer.

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What’s different? Money isn’t just money. Money is identity. To test our theory that the mindsets of traditional banks are not aligned to the mindsets of today’s more dynamic banking customers, Accenture and Fjord™, a design and innovation consultancy that is part of Accenture Interactive, conducted qualitative research on the role money plays in consumers’ lives today.

In examining how people engage with money, we identified two factors that inform people’s mindsets. The first is “structure,” or how people define their approach to money. Those consumers with high structure tend to follow rules. Those with low structure follow their gut. The second factor is “scope,” or what people focus on when they think about money. Those banking customers that apply a wide scope tend to think about the big picture. Those with a narrow scope seek to maximize the moment.

From our findings, we discerned four distinguishing mindsets. Each has unique attitudes and behaviors around money and how they spend it. All groups, however, shared one core belief: Money is not just money; money is an extension of their identity (see Figure 1).

Money Mindsets are the product of the attitudes and beliefs that guide people’s approaches to money and financial services.

FIGURE 1 | Four money mindsets translate into distinct definitions of “success” and behaviors that define groups of banking customers today.

EXPLORERSIn this mindset, people define success by saving money and making trade offs so they can be happy and live comfortably.

EXPERIENCERSIn this mindset, people define success by enjoying the present. They seek delight in how they choose to spend money and are optimistic about the future.

ACHIEVERSIn this mindset, people define success by budgeting for clear, often tangible goals. This helps them feel in control and prepared for the future.

BALANCERSIn this mindset, people define success by getting the best deal in each transaction, maximizing rewards and staying on their financial plan so they don’t have to worry.

HIG

H S

TRU

CTU

RE

LOW

STR

UCT

URE

NARROW SCOPE

WIDE SCOPE

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6 | Accenture’s Dynamic IVR Solution helps a leading fixed-mobile operator

As opposed to banks’ traditional service models based on the value of assets customers own, a mindset model is grounded in the premise that a customer’s financial worth does not dictate their financial behaviors. Their beliefs do.

EXPERIENCERS, for example, put their lifestyles first. They are prone to splurging, and are willing to spend money (e.g., via higher interest rates) for access to money that fuels their impulsive nature. They value flexible banking products and services that enable them to indulge their short-term financial desires.

BALANCERS are the opposite. They are risk-averse and more anxious during money moments. They value banking services that give them “peace of mind” and reward them for prudent financial behavior.

ACHIEVERS focus on long-term financial goals, and value knowing that their investments are safe and well managed. Mortgages are a “natural” product for achievers. So are other loan products or financing services that allow them to achieve their medium- to long-range goals for things like education, large purchases, trips or retirement.

EXPLORERS rely on their intuition when it comes to money matters. They generally prefer minimal engagement with financial services.

While these customer identities may seem new, there is no evidence that the mindsets unearthed in our research reflect new attitudes. In all likelihood, these money mindsets are universal archetypes that have always existed. Digital has simply given us the tools and insights to dismantle long-held assumptions and see customers in new ways.

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Accenture’s Dynamic IVR Solution helps a leading fixed-mobile operator | 7

Change your mind(set)In their efforts to regain customer trust and relevance, leading banks aren’t merely content to compete with FinTechs and other non-traditional financial service providers. They strive to become the non-traditional alternative, moving beyond both their traditional peers and emerging players to stand out in the fast-changing financial services market.

An appreciation of money mindsets and the customer identities they represent will enable banks to reset their economic futures by:

Re-energizing growth strategies. Seeing the full picture of customers (including their mindsets) presents a tremendous opportunity for traditional banks struggling to retain and grow their market share and revenues. An examination of localized customer mindsets can help banks transition away from one-size-fits-all solutions and design unique products, services and experiences that will resonate with customers across their major markets. Importantly, banks can also use an understanding of customers’ money- related beliefs to better align their core operations to a growth agenda.

Making design decisions based on customer identities. Advanced analytics and customer data sources are now available to help banks under-stand their customers’ unique identities, expectations, behaviors, and even their potential lifetime value in new ways. With those insights, banks can conduct root-cause analyses of poor-performing segments and eliminate products and experiences that aren’t meeting customers’ needs. Importantly, an understanding of customers’ money mindsets and identities will enable them to adapt their portfolios and experiences to reach more valuable customers with new products and more appealing go-to-market strategies.

Adopt liquid customer strategies. As banks look to align their revenue and reset the economics of their cost structures, they will need to question many of the orthodoxies that have underpinned banking operations for decades. An understanding of customers’ mindsets can reveal opportunities for banks to eliminate waste and redesign everything from branch roles and resource allocations to fee structures and back-office processes. Further, a mindset orientation can drive efficiencies by helping banks identify programs that no longer work or customers don’t need. That, in turn, frees capital for growth.

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Switching to a mindset-based approach can take time, sometimes a year or more. That’s because redefining a customer approach and redesigning product strategies are complex undertakings that affect many aspects of the business—from the technologies needed to generate insights and deliver new experiences to the operating model and talent strategies needed to effectively drive the change that is required. For that reason, banks are encouraged to begin the shift now, before their customers shift away, for good.

Trust the customerHistorically, banks have grown by incrementally enhancing and adapting their product and channel strategies to meet customers’ needs. But in today’s world of liquid expectations, some banks aren’t so good at assessing what their customers want and expect. An understanding of customer mindsets is essential to the creation of a new customer strategy—a strategy that not only strengthens relationships and trust, but also simplifies operations, resets economics, and helps banks align their costs and revenue for competitive advantage.

It’s time for banks to view the services they deliver through the eyes of their customers. What they see will likely surprise them.

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Contact the AuthorsMauro Macchi Senior Managing Director – Accenture Strategy, Banking mauro.macchi@accenture.com

Robert Wollan Senior Managing Director – Accenture Strategy robert.e.wollan@accenture.com

Additional Contributors Mark Curtis Managing Director – Accenture Interactive mark.curtis@fjordnet.com

Luis Villa Strategy Director - Fjord Spain luis.villa@fjordnet.com

Piercarlo Gera Managing Director Accenture Distribution & Marketing Services piercarlo.gera@accenture.com

Alex Secchi Accenture Distribution & Marketing Services Senior Principle - Accenture Distribution and Marketing Services alessandro.g.secchi@accenture.com

Notes1 Accenture Strategy and Fjord Mindset Segmentation research, 2016. 2 Accenture Global Consumer Pulse Research, 2015.3 Ibid.4 ”The Everyday Bank How Digital Is Revolutionizing Banking and the Customer Ecosystem,” Accenture, 2015.5 “The Digital Disruption in Banking: Demons, demands, and dividends,” Accenture, 2015.

6 Accenture North American Consumer Banking Survey 2015.

About AccentureAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network— Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 375,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. About Accenture Strategy Accenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise-wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership helps drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy.

About FjordFjord, part of Accenture Interactive, is a design and innovation consultancy that reimagines people’s relationships with the digital and physical world around them. We use the power of design to create services people love. By combining a human-centered approach with robust methodology, we work with some of the world’s leading businesses to make complex systems simple and elegant. Founded in 2001, Fjord has a diverse team of 800 design and innovation experts in 22 studios around the world, including Atlanta, Austin, Berlin, Chicago, Dallas, Helsinki, Hong Kong, Istanbul, London, Los Angeles, Madrid, Melbourne, Milan, New York, Paris, San Francisco, São Paulo, Seattle, Stockholm, Sydney, Toronto and Washington, D.C. For more information visit www.fjordnet.com or follow us on Twitter @fjord.

About the ResearchAccenture and Fjord™ gathered information and opinions from a diverse group of banking consumers from across the United States, and augmented those findings with in-context interviews and extensive observations. The goal of our research was to understand how people think about money across various demographics, life stages and income levels. The findings provided insights into how banks might use customers’ mindsets to redesign their growth strategies and operational capabilities in the years ahead.

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