Home // Blog

Regulation Has a Cost – Part One

This is part one in a series of essays on the cost of regulation in the banking environment. While everyone knows that regulation has a cost, and has for years, it is interesting to consider specific components of that cost. Sometimes, there is more than one, for example, the cost to customers and the price paid in customer satisfaction. As the customer service experience is assessed, analytics can help identify cases in which a change, while still in compliance, can make a major difference in the customer satisfaction level.

Considering that banks are at an all-time low in satisfaction ratings, a major priority should be recognizing, identifying and fixing the issues that affect the customer experience. And with major financial services institutions looking to find the right balance among the seemingly conflicting objectives of revenue generation, improved operational efficiencies and customer satisfaction, it’s as good an opportunity as any to review and fine tune customer retention strategies.

Operational Efficiency and CSAT: Taking it one step at a time

Let’s start by getting a better understanding of the mindset of the customer.

A recent TowerGroup survey identified an apparent disconnect between perceptions of financial services executives and those of their customers. When asked how many customers experienced service issues each year, 44 percent of the executives surveyed said it was between 5 and 15 percent. Unfortunately, the Corporate Executive Board Operations Council’s recent Customer Experience Survey found that 31 percent of customers said they experienced issues, mentioning difficulty in reaching the right person, employees being unable to resolve problems and issue resolution taking too long.

Who are you?
Customer calls are more complex now than they were in the past, often because basic questions can be handled by self service, leaving the more difficult questions for agents.

A recent study of the customer experience in retail banking disclosed a number of interesting insights into industry business drivers and market needs. One aspect of the study revealed that callers on average were spending up to 4.5 minutes before they could even speak to the right person. Verification of the caller, typically the second step in the process, could take more than 1 ½ minutes, and that was before an issue was even discussed. Surely this is an obvious gap in the process that impacts experience – after all, verification was not meant to be such a burden.

Continuing with the process, transfers were closely related to verification and accounted for much of the remainder of the 4.5 minute time frame. Once callers had verified their identification – sometimes more than once — they described their concern to at least two agents before being transferred to the proper department. It’s little wonder they were unhappy with their ability to reach the right person. Once again, this can’t be viewed as the right way to handle customers.

Effect on the bottom line
The industry benchmark is a 7-minute call that costs approximately $3.75 – $4.00 per call ($28 per hour @ 85 percent occupancy, assuming 7 calls an hour). That’s $.57 a minute or $.85 per call for the 1.5 minute extra for the double verification. If this happens 100,000 times per month or even more, that’s a significant cost to factor in.

There’s a better way
The study analyzed the transfer/verification process and noted that verification was not needed in 45 percent of transferred calls. The recommended, streamlined flow reduced talk time to a little more than one minute, down from 4.5 minutes. Suggestions included asking immediately about the reason for the call, waiting until the reason had been explained before deciding whose call it should be and expanding the number of transactions agents could “own” without a transfer.

In this process, verification was performed only when the caller “landed” with the right agent, saving time and repetition, thereby reducing caller frustration. Ultimately, this resulted in reduced time spent/cost per call, while promoting increased customer satisfaction. That’s on top of the savings on calls that no longer received double verification.