At one time, a consumer’s relationship with a financial institution was akin to marriage, lasting ‘until death do us part.’ While retail banking satisfaction and customer retention scores remain high, mobile satisfaction is declining. There are other customer relationship red flags; 71% of U.S. consumers now categorize their banking relationship as merely transactional.

As with modern-day marriages, people need new reasons to stay with their financial institutions. This is especially true when it comes to affluent consumers and millennials. The affluent banking customers – the ones with the large deposits — are the least satisfied. What is  lacking for both of these customer segments is a very important aspect of any relationship, proactive, personal and individual attention.

Mortgage, loan and lease automation is increasing. Yet the online customer experience that consumers demand remains elusive. According to a recent Xerox Mortgage Services survey, only 8% of mortgagors believe e-mortgages will be possible within 2 years.

Credit card backlash stifles other financial product lines

What is the looming customer relationship buster for the financial service industry? Fear stoked by compliance risks.

Due to the ambiguous Consumer Financial Protection Act (CFPB), some companies are spending months and months fighting their own lawyers over placement of non-PPI related copy and screen designs. They request unnecessary multi-layered security levels. Anytime you inject an unnecessary extra step into the customer’s access to online information, you risk abandonment.

I believe a backlash from the plethora of credit card related security issues has created a perceptual barrier for other areas such as the mortgage, retail installment loans and vehicle financing.

In my own quest to make a recent online purchase, the end result was my credit card was denied for other purchases because the security for the site was so convoluted. Unbelievably as part of the process, they asked me to take a picture of my credit card and upload it. I did. Seconds later, I could not use my credit card at all. The lengths that some companies go to safeguard consumers is truly a deal killer.

What are best in class companies doing?

First of all, they know what customer data is personal identifying information (PII) and what is not.

A recent Aberdeen study reveals identifying and classifying enterprise data is a good foundational step for any company’s compliance and security plan. A cross-functional committee of lawyers, compliance professionals and the marketing department working together can determine, based on PII guidelines, what data must be protected. Advanced companies understand not all data needs protection. In the end, a senior business executive must make the final call on any grey areas that are not clear-cut.

In companies that lack an enterprise data plan, marketers need to ask the lawyers:

  • How big is the risk?
  • Does the data actually fall under the PII guidelines?

Some bank cultures are so stifled by fear they have missed a decade of technology progress that has already proven to increase customer satisfaction, loyalty and revenue. Since 2006, automotive finance companies (without any audit issues) have been using personal microsites or personal URLs (PURLs) to connect with consumers. (Automotive captives fall under the same rules and regulations for PII as mortgagors and banks.)

Yet, some banking institutions fear these marketing automation solutions may not be compliant. They will not accept any risk.

Yes, absolutely we have an obligation to protect consumer personally identifiable information (PII). There is no question, PII information such as social security numbers and account numbers should be behind a secure login.

For the past five years, progressive companies have been allowing customers to access account information (non-personally identifiable information) without forcing them to login. They understand that 48% of consumers appreciate online reminders. With one click, a customer can see relevant information such as his or her vehicle lease miles and contract end-date.

Proactive and personal communication is key

At the recent National Technology in Mortgage Banking Conference & Expo 2015 conference, I learned most financial companies are burdened with compliance requirements. The industry leaders I spoke with feel it will be a year or more before they can think about being proactive. This explains a recent experience with my mortgage company.

My ARM mortgage was due for an adjustment. My mortgage company knew this and said nothing. When we realized it was almost time for an interest hike, we researched and refinanced our mortgage with another company for a lower rate. If my original mortgagor had proactively sent me an online message warning me and offering a competitive market rate, I would still be their customer. We all know in any relationship, open and honest communication is key.

Time-bound contractual situations offer a great opportunity for financial institutions (and other industries). You know when the customer’s contract term is up — cell phone contract, loans, lease, mortgage, insurance. When it is time to renew or pay off a loan, the customer has a decision point: stay or walk away. Proactively leveraging this type of opportunity to upsell or cross sell is critical to continuing an ongoing customer relationship.

With hundreds of risk controls mandated by the government, and more being added everyday, I understand the financial industry’s paralysis. Somehow, the C-suite needs to find the right balance between compliance, risk and customers’ demand for personalization. It can be the difference between delighting the consumer and watching them walk away.

The original version of this article was published in CMO Essentials on June 10, 2015. Paula Tompkins, CEO and founder of ChannelNet, is a digital marketing and sales expert. ChannelNet has helped hundreds of the world’s leading companies use technology to sell their products and build customer relationships.