Can Banks Fix Our Stubborn CX Shortfall Versus Customer Expectations?
Almost every institution talks about the need to deliver personalized, relevant products, services and experiences. But most also admit they are falling well short of that ideal. According to Capgemini, the reasons why are a tangle of cultural issues, operational lethargy and misaligned technology.
By David Evans, Chief Content Officer at The Financial Brand
The report: The Art of Customer Connection: Creating Memorable Experiences in Retail Banking
Source: Capgemini
Why we picked this report: Many traditional banks and financial institutions still struggle to meet the needs and expectations of today’s customers. We wanted to understand why and what could be done to close the gap.
Executive Summary
Despite recognizing the value of understanding customer needs, many banks struggle to align their strategies with customer expectations. Capgemini reports that 71% of banking executives believe understanding customer motivation is crucial, yet 54% admit to lacking sufficient customer insights. Key challenges include poor communication, substandard customer service, and inconsistent digital experiences.
To succeed, the report argues that banks must leverage advanced technologies like generative AI and adopt a framework focused on personalization, accessibility, and transparency to create meaningful customer connections.
Key Takeaways
- 52% of customers are frustrated by ambiguous communications from their banking institutions.
- 48% report substandard customer service experiences.
- 44% are dissatisfied with FI digital channels.
- Only 60% of leaders regularly engage with front-line employees and customers.
- 78% of loyalty programs fail to provide personalized incentives.
- 87% of lack a centralized customer view and intelligent decisioning capability.
What we liked about this report: It offers a multifaceted, comprehensive diagnosis of the common challenges hobbling effective customer centricity for most banks.
What we didn’t: The report’s comprehensiveness sometime devolves to a laundry list of failings (can we do nothing right?) and the focus on AI as a magic bullet feels reflex and rote.
Understanding Customer Needs and Expectations
The report emphasizes the importance of focusing on two key criteria to deliver impactful personalized experiences:
Emotional and purpose-driven factors Customers, especially younger generations, are increasingly driven by brands that align with their values. For example, 64% of Gen Z customers expect brands to make their values visible at the point of purchase.
Life stage-specific needs Customer preferences vary significantly based on life events. For instance, 30% of those planning for retirement prioritizes personalized financial guidance.
Common Challenges in Aligning Strategy with Customer Needs
The report argues that most banks, despite avowed intentions to deliver personalized products and services, struggle to align their strategies with customer expectations, arguing that the reasons why can be clustered under three headings:
1. Customer engagement and experience, including
Limited customer interaction: On average, bank employees spend only 29% of their time interacting directly with customers. This limited engagement hinders the development of deep customer understanding and relationships. For example, onboarding teams devote just 9% of their time to customer interactions, focusing instead on documentation, compliance, and operational activities.
Inadequate personalization: 78% of financial institutions don’t personalize loyalty programs to individual preferences, with 40% still using tiered rewards structures. This one-size-fits-all approach fails to address the unique needs and preferences of different customer segments, potentially reducing the effectiveness of loyalty initiatives.
Slow AI adoption: 84% of financial institutions are still in early stages of integrating AI and generative AI into their processes. This lag in adoption puts these institutions at a disadvantage in delivering real-time, tailored solutions that modern customers increasingly expect.
Dig deeper:
- A Matter of Consent: How to Safely Mine Customer Data for AI Models
- Why is Bank Loyalty Dying? Listen to the Folks Around My Dinner Table
- A Look Inside an Airline Credit Union’s Innovative Approach to Member Services
2. Market positioning, including
Overreliance on traditional channels: 80% of Banks and credit unions rely too heavily on traditional channels to meet customer needs. In an era where customers expect omnichannel accessibility, this overreliance can lead to missed opportunities and decreased customer satisfaction.
Digital asset management issues: 80% of financial institutions struggle to efficiently organize and distribute their digital marketing assets. This challenge makes it difficult to deliver consistent, seamless experiences across various customer touchpoints, potentially eroding trust and loyalty.
Banks need to invest in developing robust omnichannel strategies and improve their digital asset management capabilities to ensure consistent, high-quality customer experiences across all touchpoints.
3. Data utilization and decision-making, including
Lack of unified customer view: 87% of financial institutions lack both a centralized view of the customer and intelligent decisioning capabilities. Without a comprehensive understanding of each customer, financial institutions struggle to anticipate needs and provide tailored solutions effectively.
Ineffective data-driven strategies: 70% of executives say their financial institutions need to improve data-driven strategy development by embracing appropriate tools and mindsets. This gap hinders the ability to make informed decisions and predict customer needs accurately.
Limited use of behavioral targeting: 85% of financial institutions don’t use advanced behavioral targeting and customer behavior data for precise cross-selling and upselling. This shortcoming limits the effectiveness of marketing efforts and the ability to meet customer needs proactively.
Financial institutions should prioritize developing a unified customer data platform and invest in advanced analytics capabilities. This will enable more effective data-driven decision-making and allow for more precise, personalized marketing and service delivery.
Leveraging Advanced Technologies for Customer Centricity
The report emphasizes the potential of advanced technologies, particularly generative AI, in accelerating the transformation to customer centricity:
Generative AI applications
- Content generation and management: 73% of financial institution executives believe generative AI can help provide more personalized services and offerings. It can automate campaign brief creation, generate tailored content, and enhance personalization efforts.
- Predictive insights: Generative AI’s real-time analysis capabilities can provide predictive insights, enabling FIs to anticipate customer needs and rapidly adjust strategies.
- Contact center enhancement: AI can improve customer engagement through sentiment analysis, predictive capabilities, and enhanced operational efficiencies in routing and scripting.
Modular content strategies
- Personalization at scale: Modular content uses reusable components to deliver personalized content with consistent brand messaging across channels.
- Efficiency and adaptability: Its plug-and-play capabilities enable FIs to quickly assemble hyper-personalized experiences, reducing time-to-market and operational costs.
Market-centric data layers (MCDLs)
- Holistic customer view: MCDLs blend internal and external data sources to provide a comprehensive understanding of customer behavior and preferences.
- Real-time insights: When powered by generative AI, MCDLs can offer real-time analysis of customer interactions and feedback, enabling more responsive and personalized services.
Challenges and risk
- Data privacy concerns: 84% of customers have privacy concerns related to generative AI technology, highlighting the need for transparent data practices.
- Potential for bias and errors: Generative AI models can produce biased or incorrect information, requiring careful monitoring and validation.
- Regulatory uncertainty: The regulatory landscape for AI in financial services is still evolving, necessitating a cautious approach to implementation.
By addressing these challenges and thoughtfully implementing advanced technologies, retail banking executives can transform their institutions to deliver the personalized, seamless experiences that foster customer loyalty and drive sustainable growth in today’s competitive landscape.
Editor’s note: This article was prepared with AI language software and edited for clarity and accuracy by The Financial Brand editorial team.
