Unlocking Siloed CX Data Vital for Banking Providers to Beat Fintechs

As the industry prepares for the decade ahead, most banks and credit unions are in the midst of launching the initial phases of their strategic plans for the year ahead. It would be a good time go through the check list one more time to see if their plans are missing a major source of insight for achieving mission-critical objectives: the customer experience (CX) perspective.

It turns out that very few traditional institutions, particularly in the middle market, look at customer satisfaction insights when they engage in strategic planning. CX initiatives — and the metrics that are captured in their wake — tend to live in tactical institutional silos that are rarely available to the departments and disciplines responsible for meeting growth goals.

Specifically, mid-sized institutions have a major opportunity to leverage Net Promoter Scores (NPS) and voice-of-the-customer (VoC) surveys to make strategic decisions. Both of these metrics can generate quantitative and qualitative data that can — and should — be used to inform strategic decision-making. With regards to VoC data, this can come in two flavors: tracking a bank’s own customer base, and comparing internal VoC insights to the broader market in order to get a benchmark against the industry.

Many, if not most, CX projects grow out of a discrete imperative within specific departments — such as training, branch operations, and even marketing. These projects have tactical objectives, such as making branch employees more efficient or to capturing data for a specific engagement campaign. As a result, they have a highly targeted lifecycle and deliver a singular objective.

What is not happening often enough is a proper analysis of how overall customer engagements across the institution affect the ability to achieve forecasted growth and strategic objectives.

There is an urgency to make this happen, however, as competition from fintechs and the largest banks encroach on mid-size territory. Competitors in both of these segments, especially fintechs, have already learned how to capture and harness customer experience data to develop new products and services. They consider CX insight vitally important as consumer attitudes and expectations about personal financial management evolve.

For mid-sized financial institutions, however, the benefits of harvesting CX insights may come from a different direction. The ability to understand and manage CX data is emerging as the key to protecting — and enhancing — existing relationships and offerings.

Rigid Reporting Structures Don’t Help

The CX equation should be fairly simple. The better you know your customers and understand what they want or need, the better able you are to do more business with them. While this seems self-evident, the fact remains that CX analytics have for the most part been excluded from the strategic planning process in many banks and credit unions.

The reason revolves around the traditional organizational charts of the typical mid-sized institution. Most have retained the conventional — and largely rigid — reporting structures and systems that have made it difficult for data, expertise and experience to move across departmental lines of demarcation. As a result, there has not been a lot of deep collaboration and coordination across the teams that run operations, customer care, marketing, sales, training and branch management.

These silos of people, processes and technologies and have created perilous knowledge gaps, which deprive strategic planners of important customer insights and perspectives.

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How One Institution Improved Data Sharing

One mid-sized bank that successfully broke down these silos was able to use CX insights to guide discussion among operations, marketing and IT leaders to develop a shared context across the enterprise.

This allowed the different departments to better coordinate activities and optimize investments. For example, the CX perspective allowed IT to prioritize specific systems of engagement over general systems of record. For marketing it helped to better define target audiences and execute more responsive contact campaigns. For the operations teams, the common CX picture allowed managers to properly train staff and develop workflows that addressed defined and measured customer pain points based on the specific profile of customers’ life stage. It also prepared the teams for the traffic and questions that would be driven by the bank’s omni-channel outreach initiative.

All this directly contributed to the organic growth objectives that had been set based, in part, on the customer experience insights. Sharing CX data among departments and including it in strategy resulted in:

Deepening the bank’s share of wallet by engaging with 58% of the bank’s customers that received targeted communications and advice based on generational needs and wants.
Improving branch office engagement as 62% of the identified households reported they would “Definitely” reuse the bank for future products.
Elevating customer experience levels by posting a 113 point increase in overall satisfaction with mobile banking capabilities. This was the direct result of having the retail, marketing, digital and compliance teams work together to execute a plan to educate customers on mobile capabilities and navigation.

Financial Advice Is a Big Opportunity

Generally speaking, banks and credit unions have found a positive correlation between customer exposure to institution-provided financial advice and average revenue per client. It elevates trust and provides mutually beneficial opportunities to expose customers to desired services of which they were previously unaware.

However, in the most recent national mid-sized bank customer survey conducted by J.D. Power, when we asked respondents whether they had received advice or guidance from their bank over the last twelve months, only 21% reported having such an experience. The other 79% represents a major opportunity for mid-sized banks to drive organic growth.

What is interesting is that when we talk to operations teams at banks, we often hear concerns expressed about over-communicating with customers. We always respond by asking: Based on what evidence?

By acting on assumptions rather than on actual CX data, financial institutions may be depriving themselves of an attractive opportunity to engage more effectively with customers, and of a means to fend off an expanding array competitors. Developing deeper relationships with existing customers has yielded stronger long-term outcomes than strategies based on reaching out to new customers with new offerings.

CX Integration Directly Enables Organic Growth

The good news is that financial institutions have seen a very similar situation — and fixed it — before. There was a time when security, risk and compliance (SRC) management activities were considered afterthoughts by teams engaged in long-term business planning. Compliance, in particular, was often seen as a set of boxes to tick off — a formality rather than a way defending the reputation and integrity of the institution. Today, it is impossible to imagine a credible strategic plan that does not have SRC commentary and considerations integrated throughout all operations.

The industry has an opportunity to repeat this experience with CX. Only instead of harvesting the benefits of defensive activities — reducing exposure and avoiding penalties — CX metrics can better inform strategic planners to improve top- and bottom-line growth by capturing the correlations between strategic objectives, operational activities and customer experience.

Our research indicates that there is plenty of headroom for much more activity. A move from the current rate of 21% to having 25% or even 30% of clients receive financial coaching from their financial service provider would have an immense impact on organic growth.

We have also found that many of the most important strategic objectives set by mid-sized banks are likely to have a CX measure or metric, such as NPS of VoC, that can be used with other KPIs to more appropriately set goals and more accurately track progress.