07 Feb The Empathy Gap in Financial Service Institutions
People who work in financial services are generally highly financially literate. Managing money, sticking to a budget, and understanding the basics of customer finance seem to come naturally to them. Since they understand the world of finance so well, it is often difficult for them to understand that most of their customers do not. This is what I call the “empathy gap”
What Is The Empathy Gap?
The difference between employees’ and customers’ understanding of a product or service. I have noticed that the empathy gap is most prevalent in the financial service industry, specifically insurance. Employees of financial service companies spend their days talking about complex financial instruments and transactions. Or at least they seem complex to their customers. So, they often forget that what comes naturally to them sounds like a foreign language to their customers.
Why Does The Empathy Gap Matter?
Because not understanding customers’ complex feelings about money often cause financial service companies to miss out on opportunities with their clients. For instance, to many who work in the life insurance industry, getting life insurance just makes sense. But for customers who are not familiar with life insurance and still wary of the financial sector after the 2007-08 recession, the decision can be confusing and downright intimidating. They may not want to face their own mortality or may worry that life insurance is a scam. Your customers may not understand how it works or has worries about loopholes. Whatever the reason, from the customer’s perspective, the decision not to buy life insurance is a rational one. Even if financial experts may think otherwise.
It’s Importance To Understand Your Customer
If your customer is making a decision that seems wrong to you, you shouldn’t try to convince her that she is wrong. You should try to understand why the customer thinks the decision is right and develop an approach that will resonate with her. Developing a deeper sense of empathy for the vast majority of customers who have limited financial literacy is an essential first step in building products and services that stick.
Think about it this way. If something comes naturally to you, you may not recognize that it doesn’t come as naturally to other people. Ice skating is easy to me, but I’ve noticed that it is not as easy for many of my fellow San Antonians who didn’t grow up doing it. This is exactly why empathy can be so challenging–we have to think beyond ourselves and our experiences.