This article first appeared in CEO Forum.

Australian financial-services companies are making significant investments in digital channels. The ‘big four’ banks, for example, have announced in recent years technology investments of more than $5 billion between them. By transitioning consumers and small and medium enterprises (SMEs) to digital channels, they seek to improve the customer experience, reduce their cost to serve, and create cross-selling opportunities. To date, however, financial providers have found it even harder than they anticipated to deepen relationships with consumer and SME customers.

Why are banks, insurers, wealth managers, and other financial providers facing such strong headwinds? The problem may be that their strategies are misaligned with what customers really want, a recent Bain & Company survey finds. The survey of more than 1,000 consumers and SME owners points to several critical misalignments between financial providers’ strategies and their customers’ preferences.

By understanding this preference gap, financial institutions can identify improvement opportunities and adjust their approaches to win in an increasingly competitive market.

Gauging the preference gap

Five survey findings highlight the misalignments:

Customers aren't actively seeking to consolidate.

Financial institutions are trying to increase the number of products held by each customer and boost their share of the customer’s spending. Yet, surprisingly, only one in five Australian customers is keen to consolidate products with fewer providers.

This is true despite the fact that, on average, consumers hold five to eight financial product types across three or more providers. Younger consumers hold fewer financial products than older consumers, but they tend to have more providers; 33% have five or more compared with 22% of older consumers. They are also more likely than older consumers to want to consolidate—20% versus 11%.

Notably, half of larger SMEs (more than 20 employees) said they want to consolidate their holdings. Reinforcing this consolidation opportunity, SMEs told us they intend to increase their holdings of most financial products.

Read the full article at CEO Forum