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Change events threaten consumer loyalty

Delivering best-in-class customer service is the key, especially when long-standing connections are being disrupted by M&A-related events.

Aug 11, 2022 / Consumer Banking

In a fast-changing world, financial institutions must adapt to stay competitive. Anything that challenges the status quo among consumers, whether in their professional or personal lives — a  job change, a relocation or even a disruption in their daily routine – can create stress and affect behavior.

For financial institutions, change is an essential business opportunity and a slippery slope. A recent Vericast survey of 444 financial services professionals revealed that nearly 20% of financial institutions consider merger and acquisition events a key driver of inorganic growth. In another survey, 63% of banks surveyed with assets of $10 billion or more plan to actively acquire within the next five years.

And with deals ramping up faster and closing sooner, the stakes for getting M&A events right are even higher—according to Vericast’s survey, 75% of consumers are very or somewhat likely to leave after an M&A event.

But there is serious confusion regarding M&A activity, with serious consequences. Recent surveys have revealed a significant—and widely unrecognized—perception gap when it comes to customer engagement during M&A events. Nearly 75% of senior banking executives believe their organization outperforms others when it comes to customer engagement, for example, but fewer than one-third of customers say their experience is positive.

Similar indicators can be seen when it comes to digital banking conversions. Financial institutions understand the need for digital transformation to improve productivity and workflow and offer customers meaningful self-service options. Eighty-two percent of CEOs and operations professionals say they’ve significantly accelerated the upgrading of online and mobile banking capabilities in the past year.

But too often, institutions underestimate the amount of planning, preparation and operational resources needed to manage digital conversions successfully, resulting in strained internal resources and wait times that fail to meet customer expectations.

Many institutions are unprepared for the tidal wave of calls. Inbound call volumes can spike 300% during a digital banking conversion, with nearly one-third of all online customers trying to reach their financial institution for help navigating a conversion. Nearly 74% of respondents to a recent consumer survey said they would switch providers after a poor contact center experience.

Closing the gap

Change is a given. Outcomes are not. Delivering best-in-class customer service is the key to long-term success, especially when loyalty is most challenged.

Vericast’s survey confirms that financial institutions are committed to change management. The survey demonstrated that investment in new tech (67%) and in online and mobile banking (82%) is high. So is investment in recruiting and hiring (76%) for those with staffing challenges.

But banks are putting fewer resources toward cost-effective, quality customer experience solutions proven to improve customer satisfaction and retention, such as virtual banking assistance (13%) and contact center outsourcing (8%).

Here are four ways to reduce attrition, grow revenue, build brand equity and improve satisfaction during change events:

Personalize your communications: 72% of consumers only engage with personalized messaging.

Provide white-glove service to mission-critical customers: Proactive communications delivered at the right time, with the right offer, can increase revenue 30% or more.

Offer a consistent brand experience: Customers have 30% more trust in banks that deliver consistent customer journeys than in those that don’t.

Deliver excellent and accessible customer service, both on- and offline: 81% of consumers prefer live interaction when looking for answers to urgent and complex issues.

Complex change activities, like M&A events and digital banking conversions, are great opportunities to create loyalty, acquire and retain customers, and grow relationships. Customers’ experiences during times of uncertainty have a deep impact on how they feel about their financial institution. Banks must prioritize and value those experiences.

Terri Panhans is the vice president of contact center solutions for Vericast.

Learn how financial services organizations can prepare for and capitalize on M&A growth opportunities in the BAI Executive Report, “Bank M&A is here to stay.”