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The Future of Retail Banking 2012 – Chairman’s Opening Remarks

Optimizing the Customer Experience

The Financial Services market has been challenged with four drivers, or market forces, that impact the way institutions can address and react to the Customer Experience.

These business drivers include:

  1. Rethinking the business model
  2. Rebuilding confidence in the bank brand
  3. Regulatory compliance
  4. Cost reduction

Responses to these drivers include developing best practices that are customer centric, such as:

  • Improving consistency for the customer
  • A more targeted approach to making product offers
  • Building of non-traditional customer relationships which are appropriately empathetic and engaging within the customers segment
  • Creating service environments that please customers

Now is the Time to Consider Redesign
Ten years ago in the United Kingdom, the bank model was simple – keep hiring until metrics are met and provide all types of support in-country.  If a town needed a branch, it was built – the money to provide unlimited support was available with little restriction.  Today, it has all changed. By our estimates, there are 30% fewer contact agents supporting Financial Services Institutions than there were in 2008; transactions are now handled via self service channels and wait times have lengthened.  When today’s customer interacts with a bank, they need answers to more complex questions.  Many times, they are not speaking to their local agent, but rather to someone across the world.

Banks are at a Crossroads
Building up confidence in a bank brand is challenging enough in the best of times. In the past few years, banks all over the globe have experienced an increased number of damaging blows to their reputation.    Quoting from Which.com1, “Scandals such as libor-rate rigging, the endemic mis-selling of Payment Protection Insurance, and the prospect of increased charges for current accounts have left customers reeling.”

Customers are coming to expect something different and expect service on their own terms.  Metro Bank, for example,  is putting dog bowls in some of its retail branches (or “stores” as they prefer to be called”). Tesco is aligned with its already popular and convenient retail presence.  In both instances, these banks moved closer to their customers, listened to what they said and responded accordingly.  Fortunately, consumers are just beginning to re-establish a level of trust with banks and are no longer feeling compelled to stuff cash under their mattresses.

Compliance CAN Converge with Customer Experience
Compliance is a required distraction for institutions.   From Ovum, a Sept  2012 publication2, “The key issue for most banks is that meeting the regulatory demands is, in reality, the immediate top priority.”  From my perspective this rings true.  Data is often found to be at the heart of both customer experience and regulatory problems.  A focus on pain points that solve both would address the relevancy, accuracy and consistency at the heart of both challenges.

Don’t Make Cost the Excuse
Cost reduction can be built in a customer centric way as well with process outputs that concurrently focus on the best way to balance agent productivity with the needs of the bank – while still putting the customer first. Online banking and mobile banking provide great examples of how banks have reacted to the current needs of the consumers – many of whom want banking anytime, anyplace, with minimal call center, branch or agent interaction.

In a poll taken of the 100 financial services attendees, every single cited that they were affected by at least one of the conditions described.  According to the poll, only 19% of bank executives think that more than 25% of customers experience service problems each year.  Certainly issue resolution could be considered an issue in and of itself. Going forward, let us define the customer experience in terms of account interactions, ongoing account management and problem resolution. We can then relate these functions to service issues.  Account interactions and account management aren’t issues, by definition, but have the potential to become issues.

In fact, 31% of FS customers report experiencing a problem each year. This indicates to me that there is a fundamental misunderstanding between banks and customers either on the magnitude of the customer service problem or in how we define issues.  Do customers define things as issues that we don’t?  If so, we need to know what they consider to be an issue and treat it as such.  If that’s not the case and we do indeed define issues in the same way, then FS executives are severely underestimating the problem.

Either way, the customer’s perception of service is a seminal issue that we need to understand and attempt to improve throughout the enterprise.  Let’s take this one step further.  Below is the result of a UK bank customer poll3 that outlines the issues customers see as the worst problems:

  • Difficulty in reaching the right person
  • Lack of first-call problem resolution
  • Takes too long to resolve an issue

Banks are focusing their efforts in diverse ways to better address the customer service issues caused by the market drivers noted.  Some examples of solutions include BBVA’s focus on online banking which is lead by Luis Uguina.  BBVA’s initiatives include getting customer input in testing new channel designs and products and proactively using social media to develop relevant products and services.  In another example, Steve Whitty, Head of Customer Experience, at Royal Bank of Scotland is working to streamline the cross-channel offering, creating a consistent experience by optimizing the cost/customer trade-off, creating a single view across channels and identifying killer attributes which drive the customer experience.

It has become painfully obvious that from the customer perspective, bank executives are quite out-of-touch with their customers.  It is so easy to let distractions lead from the path to success.  Moving forward, in the very least, banks should strive to continue to put themselves in the shoes of their customers.  Remember, keep questioning: What would it take to make you a satisfied, loyal customer?

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Sources

1 Which.co.uk, “Best and Worst Financial Brands”, October, 2012

2 Ovum, “Can UK Banks Deliver on their Customer Experience Promises?”, September 3, 2012

3 Corporate Executive Board Operations Council, TowerGroup “Financial Services Customer Experience Survey”, 2011