How competitive benchmarking exercises help financial services firms reach their goals
Competitive benchmarking is a comparison exercise that analyzes a firm’s performance against that of its competitors. These exercises are particularly valuable for digital platforms, which evolve quickly and come with higher and higher user expectations. (As the most-used platforms set user expectations, customers learn to expect the same level of digital usability from their bank, insurer or healthcare provider that they get the most frequently used platforms, like those from Google, Meta and Apple.) Competitive benchmarking allows financial services firms to ensure that their digital experiences meet current user expectations and exceed the experiences of their competitors.
By benchmarking against competitors, firms can identify areas of strength compared to the industry and weaker areas that require improvement. This information can inform strategic decisions, such as where to allocate resources, what products to launch and how to improve the digital customer experience.
Competitive benchmarking also allows firms to track and adopt best practices wherever they arise. Best practices can come from across the sector: Startups often offer outside-the-box solutions to long-standing problems, while deep-pocketed traditional players have the resources to refine their digital experiences. CI’s research teams have found time and time again that the best overall digital experiences don’t exclusively come from innovators or from established traditional firms. The best digital experiences come from firms that identify and aggressively adopt best practices wherever they arise.
In other words, it’s a best practice to track and adopt best practices. Regular competitive benchmarking allows firms to identify and adopt best practices across their industry, shoring up weaknesses and enhancing their strengths, to offer a best-in-class digital experience.
Below are four tactics firms can use to competitive benchmark in the financial services industry:
Identify competitors
The first step in competitive benchmarking is to identify competitors. This peer group forms the basis for the comparison. The competitor list can include direct competitors, in terms of size and scope, or industry leaders that provide an example to strive for, or a combination of both groups. Firms can use a list of the companies with the highest revenue in their industry as a starting point, or they can identify similarly sized firms to make a more level playing field.
CI’s competitive benchmarking team uses a mix of big players and smaller firms to create competitor sets. The most recent P&C benchmark, for example, uses both legacy P&C firms like State Farm, GEICO and USAA, as well as insurtech firms such as Root to create a well-rounded comparison group. Including a variety of firms helps create a true picture of the industry and its diversity of offerings. It also helps reveal areas where a particular group does well or poorly—do legacy firms provide better customer support options than insurtechs? Do insurtechs have better mobile apps than legacy firms? (Our P&C benchmark found that insurtechs often lagged behind legacy firms in key areas of digital experience.) A diverse group of competitors helps a competitive benchmarking exercise answer similar questions in any industry, as well as identifying the placement of particular firms in the competitive landscape.
Analyze industry best practices and assign category weights
The benchmarker must identify the best practices that will serve as points of comparison between firms. This can be done with a combination of industry experience, established UX principles, and survey data to identify what customers value. CI’s digital benchmarks rely on those three principals—survey data, established UX principles and 30 years of experience—to identify best practices in an industry for our benchmarks.
For example, in a retirement benchmarking exercise, CI’s survey data showed that users care most about account information and design and navigation on DC plan participant websites. Respondents said that they most often logged in to check their account balance. It follows that a best practice is to make sure that users’ account balances are easy to find on a site or app. Firms can do that by ensuring navigation and design follows industry conventions—so unfamiliar users can find what they want quickly and with minimal confusion—and that the account balance appears on the homepage or home screen—so users don’t have to look too hard for it.
A good benchmarking exercise needs to identify the parts that make up a good digital experience and rank them in order of importance. This allows the exercise to identify areas of strength and areas of weakness.
For CI’s retirement benchmarking, account information and design and navigation were the two most important grading points for the benchmarking exercise, based on survey data, industry experience, and UX principles. Our benchmarkers gave these categories more weight than other categories, like transactions or customer support. Accordingly, the top ranked firms often had the best design, best navigation and best access to account information because that’s what customers care about most. Great customer support options are not useful if users can’t find them—thus design and navigation are more important than customer support, even though customer support is itself important. Firms that fared less well in the benchmarking often needed to improve their design, navigation, and access to account information.
Make a point by point benchmarking comparison
Once the competitive benchmarking exercise has identified the categories and corresponding best practices in a financial services industry, the benchmarkers need to break the categories down further into subcategories for a point-by-point comparison. For example, identifying the brokerage firms with the best digital trading tools, and breaking those tools down into their component parts, is more revealing than simply identifying that trading tools are important on a brokerage website, or that transaction history is important for a credit card website, or that account balance is important on a banking website. A good benchmarking exercise gets into the nitty-gritty. A point-by-point comparison explains why certain firms emerge as leaders and why other firms fall behind.
Using the previous example of account information on a retirement website, a competitive benchmarking exercise would break that account information category down into its components: What account information is displayed? Where is it displayed, the homepage or elsewhere? What information appears on the homepage? Just the account balance or other information, like the overall rate of return, year-to-date rate of return, or something else? Can users customize what information is displayed? These questions break a category down into its component parts, like taking an engine apart to see how it works.
For this point-by-point benchmarking, CI again relies on established UX principles, survey data and our experience evaluating digital experiences. Within each category, our team pinpoints dozens of individual subcategories and then ranks each firm’s offering within each subcategory based on UX principles, industry experience and what users care about. This allows the benchmarking exercise to identify both overall leaders, but also leaders within each category and sub-category. This point-by-point best practice comparison creates a ground-up evaluation, highlighting what certain firms are doing to become leaders—and what lagging firms need to do to catch up overall and in a particular category. Point-by-point comparisons create a roadmap for improvement.
Consistently track competitor experiences
Competitive benchmarking creates a snapshot of a financial services industry. But competitive benchmarking is more valuable as an ongoing exercise. To stay ahead, firms need to consistently track the changes to competitor’s websites and apps. This tracking allows firms to see industry trends as they evolve, identify emerging best practices and keep abreast of the pace of change in the industry.
Consistent industry tracking is becoming more and more important. Digital experiences in financial services evolve faster, and more consistently, than they did even five years ago. In the 2010s, firms would unveil full revamps of their websites and apps at a regular cadence, generally every two to three years. This meant that digital experiences were more static and slower to evolve. A snapshot of an industry remained accurate for a few years.
An industry snapshot today may not be accurate three months from now. Firms update their websites and apps on a rolling basis, adding and updating capabilities, tweaking designs and improving navigation.
This means that benchmarking exercises need regular updating. For example, in CI’s most recent P&C benchmark, the best-performing firms in the desktop edition were separated by just a few points. This means that the 10th or 11th ranked firm in the 2023 report could make some informed, important tweaks and emerge as the overall leader in the 2024 report. The leading firms could fall behind if they don’t observe their evolving competition and continue to benchmark themselves.
Competitive benchmarking is best done on an annual basis to create the most accurate image of an industry. This helps to inform that year’s decisions about where to focus resources, what products to promote and how to improve the overall digital experience. Firms also do well to track competitor’s experiences on an ongoing basis, to ensure they stay ahead of the curve.
Competitive Benchmarking from CI
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