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The key to discovering your customers’ digital needs: Asking

When we recently interviewed ten customers of lending institutions — all business clients from small and middle-market companies — they cut through the noise. They gave direct comments, frankly revealed their experiences, and, yes, sometimes even expressed frustration at their current lender experience. Crucially, we found, they want to talk. 

The question is, do banks want to listen?

Of course, many banks proclaim they want to hear the “voice of the customer” and accordingly sign up for syndicated research or similar services. But those surveys are often tied to the survey company granting awards to many of the participating banks — rendering them about as meaningful as a four-year-old’s softball participation trophy.

Even getting access to these ten customers proved challenging: We had interviewed 15 companies as part of a recent research report on digital lending, and only three of those lenders agreed to connect us to these customers for further insights. 

We heard a number of reasons: “Salespeople do not want it.” “It’s too sensitive.” “We allowed salespeople to decide if they wanted to participate, and they said no.” One lender who couldn’t secure us access to his customers felt just as stymied as we did, saying, “No one ever speaks with the clients except the sales guys, and that’s a bad thing.” 

Indeed, what these customers told us underscores that top management must listen to their authentic views and concerns. In an era when managers are searching for the “secret sauce” to profitability and assessing the role of digital in their institutions, banking leaders need to understand what their customers view as important and what role they want digital to play in their bank relationship. 

Four insights emerged from our interviews and related work. 

1. Customer segments and the customers’ digital needs within those segments differ. 

Though it’s somewhat of a generalization, smaller-ticket borrowers and larger corporations appear to be leading digital transformation. Many small business owners expect an Amazon-like experience with 24/7 access and transaction transparency. But, some lenders told us that even today, some professional services firms want to fax in documents. Therefore, they have built a digital front end while also maintaining traditional, analog origination methods. Larger companies increasingly expect lenders to integrate into existing systems. 

Middle-market companies defy an easy characterization: Many have yet to adopt digital technology because of cost concerns and their view that current processes work well enough. One middle-market company head we interviewed mentioned several times that his main reason for selecting a bank came down to the interest rate and fees. However, another complained about his bank’s slow adoption of technologies such as e-signature, which was mentioned by virtually all of the customers we interviewed. 

Our takeaway? Digital means different things to different customers. Likewise, their interest in and ability to lever the digital experience that banks want to provide also varies. A one-size-fits-all approach to digital banking doesn’t cut it. 

2. The digital experience may already be commoditized. 

One small-ticket borrower we spoke to fully uses his main lender’s digital capabilities from application through payment and portfolio management. Notably, he also commented that he used another bank and that, in his view, the two banks offered the same digital experience. Yes, having a digital offer was critical to the selection of a lender, but, once selected, to him digital lenders looked the same. 

How did he differentiate his lenders? In one word, “Scott.” Scott had been his banker for years and had helped the company brainstorm problem-solving, structure its requests, manage them through the internal approval process and receive answers quickly. 

Though the customer kept his operating accounts with the larger, top-five lender that was less expensive, his bankers there had changed multiple times, bogging down the approval process and requiring him to spend time teaching new bankers about his business. His personal relationship with Scott mattered so much that the customer usually chose to work with Scott’s bank, even though it had somewhat higher rates.

3. Building digitally enhanced relationships may be key. 

We heard a similar view from several interviews. Even when digital is important, relationship managers like Scott make the difference in winning business. So much time and dollars are now invested in the “digital experience” that some of those committed to digital simply don’t want to hear that customers still require human contact and that a great banker remains a differentiator. That’s a mistake.

Perhaps, then, bringing together digital and personal banker attention may be the “secret sauce” that management desires. Digital capabilities can speed up the application process, reduce the time required for underwriting and simplify the closing process. It can free up the desk-bound banker to spend more time with clients and provide the value-added experience many customers want. 

4. Digital requires re-imaging current approaches. 

One company exec we interviewed said that he almost laughed out loud when we asked him about his bank’s digital capabilities. He then went on to describe the number of billing errors he receives on invoices from his bank and described a monthly operational problem that the same bank seemed unable to solve. Several customers mentioned that day-to-day operational problems existed with their banks, and that they were frustrated when they tried to resolve them. Too often, banks may provide solutions a customer doesn’t want or may not trust until a bank resolves its “analog” problems.

In one of our most informative customer interviews, a manufacturing executive said that his bankers never asked him what was important to him or what he needed. Instead, he said, “They tell me what they think I need.” Senior managers should reexamine their current approach to customer outreach. Customers are willing to talk about their issues, and banks should listen to what customers say rather than what bankers want to hear.

Charles Wendel is president of Miami–based FIC Advisors, Inc., a management consulting firm focusing primarily on growth issues related to SME banking and Wealth Management.
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