It is no secret that customer experience is the new competitive battleground. In fact, by 2020, it is predicted that customer experience will 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 set in their ways when it comes to implementing the kind operational and systemic change required to meet evolving customer expectations.
Figuring out how to make this shift is an imperative for financial institutions. Millennials and members of Gen Z will only continue to gain wealth and spending power, and they won’t hesitate to walk away from a financial institution they aren’t satisfied with. According one research study, 1 in 3 millennials are open to changing banks within the next 90 days, while in another it was found that 33% believe they won’t need a bank at all moving forward.
So where should banks start? Banking in the future is going to be all about the customer relationship, and the foundation for that is built on a good customer experience at every interaction. Banks can rise to the new challenges presented by the digital age, give customers the seamless experiences they’ve come to expect, and the core principles banks need to keep in mind as they build out their UX.
Keep an Eye on the Marketplace
Customer experiences are being improved in every industry, and the stakes for an exceptional customer experience are higher than ever. Digital technology and innovations around personalization have changed our expectations about how quickly and easily things can be done and what it means to be connected. Try waiting to hail a cab, for example, when you know you can request an Uber with the click of a button. FedEx’s speedy delivery and precise tracking has made shipping via USPS frustrating at best, and you can’t overstate the impact of Amazon’s one click ordering on the shopping experience.
What’s important for banks and credit unions to understand is that in the new on-demand economy, consumers are no longer only comparing banks to other banks to make a judgement on customer experience. They are comparing financial institutions to 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 gotten so good at contextual engagement that they have raised expectations for all industries. So, the first step in building out your organization’s approach to customer experience is to keep an eye on not just traditional competitors within financial services, but the innovators and game-changers in other industries. With too narrow a focus, you risk being behind the curve before you even begin.
Understand Consumer Expectations
What is being done by the best in customer experience that the banking industry can learn from? The way these companies engage with consumers has created a number of “must haves” that financial institutions should keep in mind as they consider how they are communicating with customers.
- Recognition. Immediate understanding who a customer is and, in many cases, what they need.
- Anticipation. Understanding of what the customer will do/need next, and how you can provide a solution in advance.
- Connectivity. Providing new lines of always-on, 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 the 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) The advanced analytics tools that can help you predict future customer behavior. And finally, 3) Exceptional execution, with the ability to act on the data you have and operationalize it on a 1:1 level.
Make Customer Experience a Top Priority
The success of customer experience initiatives requires broad, top-level organizational support. Efforts must cut across many different internal silos, which creates significant challenges. As found in the Digital Banking Report, Improving the Customer Experience in Banking, 97% of financial institutions globally placed the customer experience as a ‘top priority’ (45%) or a ‘top 3 priority’ (62%). Celent 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 the customer experience, actual results continue to vary widely.
Part of the problem may be that there is no consistency to how the CX process is managed. In research done by Celent, 47% of financial institutions said that CX is managed by the head of digital, while 28% stated that it was managed by the head of online or mobile, with only 19% having CX a C-level priority.
Similar finding came from the Digital Banking Report research, which found that most respondents had not yet created a dedicated department with a C-level executive leading the charge. Only 26% indicated C-level leadership, with the retail division having the responsibility of CX at 25% of the organizations. Beyond that, the responsibilities were spread from marketing to operations.
Evaluation of existing CX programs is also extremely disjointed. Celent found that over half of banks and credit unions (53%) say they only evaluate their systems on an ad hoc basis, with 35% of evaluations being driven only when a customer complains.
Banks need to be preemptive, not reactive, to meet the needs of this new era of customers. And the work needs to happen across departments. Consumers no longer think of interactions as offline or offline, with sales or service. It’s one consistent experience … and banks need to adapt this approach internally as well.
Find New Ways to Connect and Communicate
While a lot of the conversation around digital transformation in financial services has focused on mobile banking and banking apps, it’s important to look at how much consumers are actually using these digital tools. Celent found that across the banking universe, only 27% of banking customers have downloaded banking applications. And even among the biggest banks, with the largest user bases, it’s only 38%. That leaves quite a lot of room for improvement.
What banks need, and have had trouble assembling, is a proactive way to connect with their customers and solve for singular experiences. Apps and portals are great for checking account balances or transferring money to an account, but they were built on a ‘come and get it’ model. This structure requires the customers to initiate the interaction and has left many banks in a reactive state, struggling to engage with their customers at timely moments.
The model for the digital customer is less reactive, and more proactive. Rather than putting the responsibility on the consumer, information is delivered proactively … at the right time. And whereas most communication channels are one-for-all, the new customer communication model should be one-to-one.
As an example case study, Citizens Bank decided to explore one such option when they began to see steep drop-offs in their student loan application process. One of the challenges was that the process required a lot of back and forth communication between applicants and the bank. Citizens needed a more effective way of notifying customers of critical next steps in the application process as traditional channels such as email, mail and phone were losing effectiveness. In addition, this specific use case could not be addressed with their app or portal.
In response, Citizens took a different approach by implementing technology that connected every applicant to a 1:1 mobile communication channel beginning at the moment an application was submitted. Like a private Twitter feed for each customer, users received a stream of personalized, actionable messages walking them through the application process. In addition, the new channel was plugged into their CRM platform, so messages were automatically triggered using systems Citizens already had in place.
This enhancement to digital strategy really worked for Citizens, with a 10% increase in completed applications, with customers completing them 40% faster. What’s most impressive, however, is that Citizens got digitally connected to 88% of their student loan applicants, enabling the bank to have a dialogue with those customers on their future banking needs.
A real connection with customers enables businesses to not only communicate effectively now, but also to open a more effective line of communication to proactively deliver content in the future. It takes us back those three elements of effective personalization – 1) good data, 2) good analytics, and 3) good execution.
In order to succeed in this new era of heightened customer expectations, and follow the lead of companies across industries that are reaching new heights in the space, banks and other financial institutions need to embrace the modern model of the ‘connected customer’. Investments must be made in channels that enable 1:1, hyper-relevant and proactive communications between bank and consumer, breaking down internal silos and giving every customer the personalized experience they demand. The focus must be on making it easy for consumers to get exactly what they need, whenever they need it.