As consumers move towards greater digitalization of all aspects of daily life and competition enters the marketplace with superior digital offerings, financial institutions continue to fall short on providing optimal end-to-end digital journeys. This impacts banking’s ability to provide a positive customer experience, a traditional bank’s competitive cost and revenue structure and the ability to create new digital solutions.
In a Boston Consulting Group white paper, it was found that roughly 80% of financial institutions do not offer a consistent digitalization of any given process. In other words, while there may be an excellent online or mobile interface for the application of a product or service, subsequent steps in the process are manual or need direct in-person engagement.
“A customer can buy a new mobile phone and set up a data plan within ten minutes or purchase travel insurance from an airport kiosk in less than three. Yet, the purchasing cycle for many banking products (apart from balance checks, withdrawals, and other basic activities) can average days or even weeks,” stated the report.
To improve the consumer experience and realize the revenue, cost, and operations benefits of complete digitization, BCG suggests that the banking industry needs to do four things:
- Adopt consumer-centric design practices
- Redesign process from end-to-end
- Apply digitization, advanced analytics and automation
- Transcend silos
BCG has found that some organizations that have taken the steps above have increased revenues by 25% and productivity by 20% to 40%.
Embracing Digital Customer Journeys
According to BCG, while most institutions believe that their processes put the consumer first, consumers don’t think in terms of ‘processes’. They think in terms of their personal needs and wants.
”The difference between a seamless end-to-end digital journey and one that is not completely digital is the difference between positive satisfaction scores and process abandonment.”
In the quest to satisfy those needs and wants, consumers take a decision-making path called a customer journey that includes all of the steps, processes, systems and channels they encounter along the way. This includes everything from the time they begin their research and evaluation of solutions throughout the purchase and post-purchase experience.
What the consumer wants (regardless of what occurs behind the scenes), is a simple and seamless experience. The importance of providing an experience that is easy, well-designed, fast and personalized is reflected in improved satisfaction, loyalty and referral scores. The inability to provide a positive end-to-end digital process is increasingly reflected in new account opening abandonment.
An optimal customer journey makes every step and touchpoint in the buying cycle streamlined, efficient, consistent and personalized from the consumer perspective. “Financial institutions need to reimagine their core journeys from front to back by addressing key customer pain points, identifying new opportunities to delight customers in differentiated ways, applying – and being inspired by – smart new technologies, and building a scalable and resilient digital IT platform to innovate and facilitate consistent delivery,” states the BCG analysis.
The good news is that financial institutions don’t need to overhaul the entire IT system to achieve these benefits. Instead, it is best to focus on the journeys that matter most, such as the account opening process, account switching, refinancing and financial planning, removing unnecessary steps and digitizing and streamlining the rest.
Adopting Customer-Centric Design Practices
Understanding customer needs and the way they want to do business with your bank or credit union goes well beyond traditional market research. Instead, it is imperative that firms view consumers as they go through the processes of researching, shopping, opening and using products and services. These behavioral insights are invaluable in determining how to digitize and improve engagement.
Beyond understanding the needs and wants of the consumer, this type of research provides a deeper understanding of the frustrations consumers experience in attempting to do business with your organization. It also highlights what delights the consumer. By bringing together internal impacted departments, user experience specialists and designers, the entire customer journey can be reimagined from the customer’s perspective.
Redesign Processes from End-to-End
The BCG research makes it clear that the inspiration for many of the redesigned process can come from outside the financial services industry. With so many technology firms (Google, Apple, Facebook, Amazon, etc.) providing examples of cutting edge engagement tools and processes, there is a wealth of knowledge in the marketplace on how to improve the end-to-end customer journey.
Both front-office and back-office processes much be redesigned to avoid a ‘false veneer’ that may look good to the consumer but increase costs, risks and human resource allocation internally. Operations and servicing areas must also be involved to ensure that the processes perform well over the entire customer journey.
Often, this type of end-to-end process redesign allows financial services institutions to generate new functionality in weeks instead of months, according to BCG. By automating many of the steps, costs can be significantly reduced while the time required by the consumer to complete a process can also be reduced. This has a direct impact on satisfaction.
Apply Digitization, Advanced Analytics and Automation
The ability for cognitive tools to perform advanced analytics on vast amounts of data in real time provides the foundation for the development of highly responsive journeys in real time. This processing of insight improves the quality (and accuracy) of interactions, improving the customer journey over time as additional insights are collected and applied. This advanced learning can then be applied in marketing, sales, service and even risk management.
Over the past several years, the quality of predictive analytics has improved significantly at the same time that the investment required to leverage these tools has dropped to levels where almost all organizations can benefit. It is important to note that ‘intelligent engagement’ is now table stakes in the quest to acquire and serve consumers, with many non-financial organizations setting the consumer experience threshold that customers demand of all firms they engage with daily.
Building seamless customer journeys often requires coordination and cooperation across organizational silos that have been a part of banking throughout history. Set up initially for accounting purposes, these silos become a hinderance to consumer-focused process improvement, agile development and innovation.
Many organizations have found ways to transcend organizational silos though the development of cross-functional development teams, innovation labs, centers of excellence, etc. with overarching management support. The key in this process is to not allow any single area to dominate the process and to put the customer needs in front of departmental desires.
Where to Start
Many components of an enhanced digital customer journey mindset are foreign to most banking organizations. To create a seamless end-to-end digital experience for customers will require a rethinking of front office and back office processes with a renewed focus on the customer (instead of products). According to Boston Consulting Group, banking organizations should take the following steps:
- Evaluate the Value of Change: Before beginning the complete digitization of processes, prioritization of customer journeys should be done by evaluating the potential value of change. This includes reduced costs as well as increased revenue and market share potential.
- Conduct Assessment of Current Capabilities: Organizations should take an assessment of the tools and technologies available in-house that can assist in improving the customer journey. This helps determine where investment is needed or where partnering can occur.
- Visualize Success: More than just a vision, organizations will need top-down support, agreeing on metrics, goals and timelines to achieve the level of transformation required.
It is no longer a matter of whether digitalization of the customer journey in banking is needed. The consumer is already demanding this level of engagement and moving relationships based on an organization’s ability to meet their expectations in an increasingly digital marketplace. The value to the banking organization goes beyond customer satisfaction, to include cost reductions, revenue enhancements and risk management.