There has never been a time when the focus on customer experience has been greater. The banking industry needs to reimagine how it operates and measures customer satisfaction in order to meet growing consumer expectations.
It is no secret that customer experience (CX) is the new competitive battlefield. In fact, by 2020, customer experience is predicted to overtake price and product as a key brand differentiator. Unfortunately, this is easier said than done in financial services, as legacy banks and credit unions are highly regulated, complex, and historically entrenched when it comes to implementing the operational and systemic changes needed to meet changing customer expectations.
Figuring out how to make this shift is an imperative for financial institutions. Millennials and Gen Z members will only continue to gain wealth and purchasing power, and they will not hesitate to walk away from a financial institution they are unsatisfied with. According to one research study, 1 in 3 millennials are open to switching banks in the next 90 days, while another found that 33% believe they won't even need a bank moving forward.
So where should banks start? The future of banking will focus on the customer relationship, and the foundation for that rests on a good customer experience at every interaction. Banks can rise to the new challenges presented by the digital age, offering customers the seamless experiences they expect, guided by core principles that banks must keep in mind as they build their UX.
Keep an eye on the market
Customer experiences are improving across all industries, and the stakes for exceptional customer experience are higher than ever. Digital technology and innovations around personalization have shifted our expectations regarding how fast and easy things can be done and what it means to be connected. Try waiting to hail a taxi, for example, when you know you can request an Uber at the click of a button. FedEx's fast delivery and precise tracking have made shipping via USPS frustrating at best, and the impact of Amazon's one-click ordering on the shopping experience cannot be overstated.
What is important for banks and credit unions to understand is that in the new on-demand economy, consumers are no longer just comparing banks to other banks to judge the customer experience. They are comparing financial institutions with the Amazons and Ubers of the world. Those companies make communicating with them as easy as talking to a friend.
In these exceptional examples, you never need to provide your account information or even your location, because they already know who you are and where you are. They have become so adept at contextual engagement that they have raised expectations across all industries. Therefore, the first step in developing your organization's approach to customer experience is to keep an eye not only on traditional financial services competitors, but also on innovators and game-changers in other industries. With too narrow a focus, you risk being behind the curve before you even start.
Understand consumer expectations
What are the best customer experience leaders doing that the banking industry can learn from? The way these companies interact with consumers has created a series of "musts" that financial institutions must keep in mind when considering how they communicate with customers.
Recognition. Immediate understanding of who a customer is and, in many cases, what they need.
Anticipation. Understanding what the customer will do/need next, and how to provide a solution in advance.
Connectivity. Providing new lines of ongoing two-way communication.
Localization. Offering convenience in time and location as desired by the customer.
Prioritization. Creating recognition/rewards for those who support your business most.
Simplicity. Removing steps and friction that can negatively impact the customer journey.
Achieving this level of contextual personalization comes down to three things: 1) Access to data, with the ability to understand customer tastes, preferences, actions, and behaviors. 2) Advanced analytical tools that can help predict future customer behavior. And finally, 3) Exceptional execution, with the ability to act on the data you have and put it into practice on a 1:1 level.
Make customer experience a priority
The success of customer experience (CX) initiatives requires broad, top-level organizational support. Efforts must span many different internal silos, creating significant challenges. As found in the Digital Banking Report, Improving Customer Experience in Banking, 97% of financial institutions ranked customer experience as a "top priority" (45%) or a "top 3 priority" (62%). We found a similar level of commitment from a panel of banking executives and decision-makers. Both studies found that while there was a commitment to improving customer experience, actual results continue to vary widely.
Part of the problem may be a lack of consistency in how the CX process is managed. Research showed that 47% of financial institutions said CX is managed by the head of digital, while 28% claimed it was managed by the head of line of business or mobile, and only 19% made CX a C-level priority.
A similar finding emerged from research on Digital Banking, which found that the majority of respondents had not yet created a dedicated department with a C-level executive leading the charge. Only 26% indicated C-level leadership, while the retail division held responsibility for CX in 25% of organizations. Beyond that, responsibilities ranged from marketing to operations.
The evaluation of existing CX programs is also extremely disjointed. We found that more than half of banks and credit unions (53%) say they only evaluate their systems on an ad hoc basis, and 35% of evaluations take place only when a customer complains.
Banks must be proactive, not reactive, to meet the needs of this new era of customers. And that work must happen across all departments. Consumers no longer view interactions as offline vs. online, or sales vs. service. It is one consistent experience… and banks also need to adapt this approach internally.
Find new ways to connect and communicate
While much of the conversation around the digital transformation of financial services has focused on mobile banking and banking apps, it is important to examine how widely consumers actually adopt these digital tools. We found that across the banking universe, only 27% of banking customers have downloaded banking apps—and even among the largest banks with the largest user bases, only 38%. That leaves significant room for improvement.
What banks need—and have struggled to piece together—is a proactive way to connect with their customers and deliver individualized experiences. Apps and portals are great for checking account balances or transferring money, but they were built on a 'come-and-get-it' model. This structure requires customers to initiate the interaction, leaving many banks in a reactive state, struggling to engage with their customers at opportune moments.
The model for the digital customer is less reactive and more proactive. Instead of putting the burden on the consumer, information is delivered proactively… at the right moment. And while most communication channels are one-to-many, the new customer communication model must be one-to-one.
As a case study example, Citizens Bank in the United States decided to explore such an option when they began seeing steep drop-offs in their student loan application process. One of the challenges was that the process required significant back-and-forth communication between applicants and the bank. Citizens needed a more effective way to notify customers of critical next steps in the application process as traditional channels like email, mail, and phone calls were losing effectiveness. Furthermore, this specific use case could not be addressed through their app or portal.
In response, Citizens took a different approach by implementing technology that connected each applicant to a 1:1 mobile communication channel, starting from the moment the application was submitted. Much like a private Twitter feed for each customer, users received a stream of personalized, actionable messages guiding them through the application process. Furthermore, the new channel connected to their CRM platform, so messages were automatically triggered by the systems Citizens already had in place.
This digital strategy enhancement truly paid off for Citizens, with a 10% increase in completed applications, and customers completed them 40% faster. Most impressive, however, was that Citizens connected digitally with 88% of its student loan applicants, enabling the bank to engage in dialogue with those customers regarding their future banking needs.
A genuine connection with customers allows companies not only to communicate effectively now, but also to open a more effective communication line for proactively delivering content in the future. It brings us back to those three elements of effective personalization: 1) good data, 2) good analytics, and 3) good execution.
To succeed in this new era of heightened customer expectations, and follow the lead of companies across all industries that are reaching new heights in this space, banks and other financial institutions must adopt the modern model of the "connected customer." Investments must be made in channels that enable hyper-intensive, proactive 1:1 communication between the bank and the consumer, breaking down internal silos and delivering to every customer the personalized experience they demand. The goal must be to make it easy for consumers to get exactly what they need, whenever they need it.
ACP