In today’s digital economy, banking, like other industries, faces “disruptive” expectations from customers. Both individuals and businesses expect access to and delivery of services virtually on demand. Winning companies are responding by creating innovative approaches to the customer experience. They have learned that recalibrating their processes, bringing them into alignment with customer expectations, has resulted in new sources of revenue and productivity.
How can bankers accomplish this? By offering value in three areas:
Be easy to do business with. With nearly everyone instantly connected by smartphone, our expectations for ease of use have changed. However, let’s face it: many financial institutions are not easy to do business with.
Our industry operates with complex business rules across multiple organizational silos. Some are the result of regulatory requirements, but much of the problem is self-imposed. This has a negative impact on the customer experience because it leads to greater variability and inconsistency across touch points. It also has a negative impact on cost because it requires replicating specialized knowledge and the supporting infrastructure to maintain it.
How do we reverse this trend? By thinking like a customer. We must remember it’s never the consumer’s responsibility to figure out your organization. Does your bank make it easy to be a customer? Is the customer experience designed how you would want it to be?
Make all of your internal assets work together by aligning the way products work and are delivered – the product architecture, fulfillment and service rules – from the customer interaction to the back office support. For example, if you think of credit as one “service utility,” then unsecured loans, secured loans, leases and lines of credit can come together in one operating environment using common business rules. Similar functional steps, such as lien verification, are handled in the same way irrespective of the product type. When your internal processes are consistent, it is easier to simplify business rules and identify risk. There is significant improvement across the board, in new staff training, speed-to-market, expense reduction and productivity.
Be guided by the Voice of the Customer. Real upside exists by prioritizing initiatives based on the Voice of the Customer. What are customers telling you about the way they shop, buy and use your products? Are you allocating resources based on their preferences and the economic value they associate with specific features and functions?
At a time when executives are barraged by demands to invest in new technology, products and processes, how should they prioritize their scarce human and financial resources for the greatest impact? Institutions need to be careful how they invest for customer value; not every new idea is a good one. Throughout our client work, we have noticed a lack of agreement on the drivers of success. Which interactions matter the most to which segment? Where does the greatest opportunity exist? How are we assessing risk? These “fault lines” can translate into misallocation of resources and lack of focus.
The customer experience involves both rational and emotional factors while customer priorities vary by individual needs and economic status. Emotional issues often present a greater challenge than rational ones. For example, if the customer loses a credit card and can’t receive an overnight replacement, it can destroy economic value because of high frustration and hassles, often leading to attrition with high net worth and mass affluent segments. Will fixing this service issue have a greater near-term impact than investment in new payment initiatives? Customer research and segment analytics can provide a plain “line of sight” into those touch points that are critical in driving engagement, advocacy and revenue.
These answers are within management’s grasp. Adopt decision methodologies that align your financial and human resources so that they solve the problems your customers want you to solve, and you’ll be richly rewarded.
Bring consistency to data collection and use it to organize how the customer experience is managed and delivered. We are in the service business, and the customer experience is both a promise and product. In short, the brand sets the stage for the emotional connection between customers and your business.
As channels, devices and data continue to evolve at a rapid pace, it makes sense to re-think how this experience is built, managed and delivered. One place to start is by adopting the next generation of decision support tools that integrate client history, value, and channel preferences to provide a 360-degree view of customer behavior.
A critical enabler is the centralization and standardization of data. Without quality data, tools and routines can fall short of their potential. A lack of standardization in how customer information is being collected can result in failure to recognize opportunities, with the consequence of customer needs going unfulfilled. This puts retention and revenue at risk.
Enterprise data capture should have a unified line of sight, as we often find that product-oriented structures reinforce a limited view of the customer. This limits the upside cross-sell potential and results in a failure to capture natural opportunities, such as the synergy between commercial banking and wealth management.
Assess your current process by auditing customer, account and value data for completeness, accuracy and usability. Without this comprehensive understanding, it becomes more difficult to perform segmentation and modeling with the degree of precision needed to realize incremental profit. A commitment to the normalization and cleansing of data will create a better result – based on our experience, generating a two times return by improving data management routines.
Implement a standard, data-driven approach to decision making so that the highest value opportunities receive the greatest focus.
Mr. Hendrix is an advisor at Austin, Tex.-based Peak Performance Consulting Group, which specializes in community and retail banking strategies. He can be reached at email@example.com.