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How Lifecycle-Led Design Anchors to Financial Well-Being

Across the Australian financial services landscape, a transformational shift is emerging. While financial institutions were once primarily driven by the pursuit of transactional excellence, today they are embracing a deeper, more impactful focus: lifecycle-centric experiences.

Today's financial consumers, empowered by the digital revolution, seek more than just transactions. They desire seamlessly integrated financial experiences that align with their life's journey, fostering a more meaningful sense of financial empowerment and well-being.

The legacy framework: A transactional mindset

Up until now, most financial institutions continue to view customer journeys as quite linear. The journey is primarily defined by transactional, underperforming touchpoints, such as account origination, lending procedures or investment and growth consultations.

Banks are aware that digital capabilities are no longer nice-to-haves but rather are mission critical. Approximately 83 percent have a clearly articulated digital transformation strategy—and say the pandemic has increased the urgency to act.

Banks say the following factors have had the biggest influence on their digital transformation priorities

Bank digital transformation priorities factors

Source: Global Banking Benchmark Study

Based on our extensive experience in the Australian financial landscape and our global perspective, we have observed that financial institutions are mostly continuing to embrace a rather linear narrative when it comes to the customer journey.

Each has earned its merit in operational efficiency. But it's like listening to a symphony and only hearing the notes, missing the emotions, transition and the underlying story that brings it to life.


The critical role of financial well-being

At the heart of this shift is the concept of financial well-being. Beyond the confines of wealth accumulation or transactional proficiency, financial well-being encapsulates a state where individuals feel secure, in control and optimistic about their financial futures. It's not just about the numbers in one's bank account, but also about the confidence, autonomy and peace of mind those numbers provide.

For financial institutions, this will require a shift in focus. It's not enough to simply offer products with a service wrapped around them, institutions must actively facilitate and nurture their customers' financial well-being. This could mean offering educational resources, providing personalized financial advice or developing tools that foster long-term financial health. According to our Global Banking Benchmark Study, 26 percent of respondents believe that "more customer-centric innovation" would be help them to deliver on digital transformation plans in the next three years.

Changes to help deliver digital transformation plans

Source: Global Banking Benchmark Study

The lifecycle-led imperative

Customers do not follow a straightforward path and their financial journey is often complex and multi-faceted, intertwined with pivotal life moments like starting a business, purchasing a home, funding a child's education or planning for retirement. Governments are also recognizing the importance of life events when providing services to citizens. For instance, the NSW State Government has identified eight life events, ranging from starting a family to end-of-life planning, as key areas that should be focused

Consider Linda, a mid-level professional at an insurance company. As Linda starts her career and her side business grows, her financial needs change. At first, she's focused on building wealth. Later, she thinks about spreading her investments and reducing risks. As retirement nears, she considers how to leave a legacy. Traditional banks might see her steps as separate events, as discrete transactions. But a lifecycle-led approach sees the interconnected narrative of professional growth, family considerations and long-term aspirations.

Embracing lifecycle-led strategies isn't merely an adaptive move, it's an opportunity to refresh and elevate your business model from its foundation. Ultimately, high customer experience scores today are linked to a greater willingness among consumers to interact with a bank in the future. For banks looking to sustain or accelerate growth, this is an important insight.

Relationship between CXGX and future intended usage

Relationship between CXGX and future intended usage

Source: CXGX: The CX Growth Index Financial Services

In addition to customer retention and loyalty, the lifecycle approach delivers other benefits:

1. Operational efficiency

Gaining insights into the customer lifecycle can streamline your internal processes and minimize the need for rework, which can have a negative impact on the customer experience. By understanding where a customer is in their life journey and the state of their financial well-being, financial institutions can pre-emptively allocate resources, optimize service channels and reduce redundancy in client interactions.

2. Product and service experimentation and innovation

Anchoring services around life events and emphasizing financial well-being increases their relevance to existing and prospective customers. Banks should prioritize and experiment with innovative products specifically tailored to various lifecycle stages.

3. Data use and analytics

Lifecycle-led approaches mandate a richer understanding of customer data. Enhanced analytics can provide insights not just into spending habits but also into the broader financial health and well-being of clients.

4. Organizational alignment

The lifecycle approach can catalyze a shift in organizational culture. When teams prioritize the financial well-being of clients, collaboration becomes more organic and goal focused.

5. Regulatory alignment

Regulatory bodies are increasingly emphasizing the importance of customer-centric approaches in the banking sector. Focusing on customer financial well-being through the lifecycle narrative ensures that banks remain aligned and compliant with such regulatory perspectives.

Charting the way forward

Intertwining the lifecycle narrative with the core principle of customer financial well-being is a strategic approach that enhances business objectives and customer loyalty. Financial institutions can cater to their customers more effectively, foster trust, drive business growth and ensure they’re operating with both ethical and commercial considerations in mind.

Tales Sian Lopes
Tales Sian Lopes
Managing Partner, Financial Services, Australia & New Zealand
Matt Hopgood
Matt Hopgood
Global Vice President, Strategy and Consulting

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