The Gap Between Products Banks Offer & What Consumers Really Need

Forrester's annual customer experience ranking carries a critical lesson: Most U.S. banks should be exploring 'co-creation' in designing new products and services. Without it they may produce new ideas that no one wants.

How can a bank or credit union devise new products and services that will attract new customers and retain the ones they already have? Invite them to be an ongoing part of the creative process, and listen to what they say all the way through it.

In the latest round of Forrester’s “U.S. Banking Customer Experience Index” a key factor among those used to rank the participating institutions is “Offers the banking products/services that I need.” This factor shot up from a lower place in past surveys, to become the second most important CX driver among the consumers surveyed. It came in just behind “Resolves problems/issues quickly.”

The above applies to the multichannel bank category in the Forrester study on customer experience, where the top three were Navy Federal Credit union, Regions Bank and TD Bank. The other broad category that the study looks at is direct banks, which produced a different list of factors. (The top three direct banks were USAA, American Express National Bank and Ally Bank.)

“Some of the digital-only banks do a far better job at drawing the connection between customer need and the product devised to meet it,” says Alyson Clarke, Principal Analyst at Forrester, in an interview with The Financial Brand. “They’re not perfect, either, but they’re further along than the multichannel banks.”

Clarke says the ingredient that is missing from multichannel institutions’ recipe for products and services is “co-creation” — making customers part of the process through all iterations of development. Typically these institutions say that this is impossible. Clarke says that’s plain wrong.

Making Co-Creation Work in Your Institution

When “offers the banking products/services I need” ranks so highly, it begs the question of why that stands out right now.

“Talk to banks and they think they’ve got everything that consumers can possibly need,” says Clarke. “But the customer’s perception of whether banks provide what they need is what’s important.”

Clarke says there appears to be a disconnect between what consumers want in the context of their lives and what banks offer. It’s not always a literal matter of products and service. Instead, people can be puzzled or put off by a procedure or process at the institution that isn’t logical. It could be something as simple as an enrollment routine that strikes them as odd.

Such disconnects come about, she continues, when institutions design without consumer input.

“Many banks will say, ‘But we do involve customers in design’,” says Clarke. But when she digs into the matter, it turns out that they are using the same old tools, surveys and focus groups, that they always have. The banks complain that people don’t seem to know what they want when approached in this way. Clarke says much more involvement is required to draw consumers out and they need to be at the table all along the way.

Ideally, says Clarke, customers should be guiding design by helping the institution develop personas and customer journeys and giving input into customer and user experience factors.

“We have not really seen a lot of co-creation in the U.S.,” says Clarke. By contrast, she says the U.K. neobank Monzo leans heavily on the technique.

“Their brand and all of their products and services are completely co-created with customers,” says Clarke.

“Far too often I see banks not even knowing who their key customer personas are. So they don’t know who they are designing products for. They will say they are designing for everyone. But you cannot design for everyone.

— Alyson Clarke, Forrester

Indeed, part of the reason that digital-only banks may have a better handle on product design is because they are not trying to please everyone, says Clarke. In fact, they generally recognize that most customers of direct banks also have a relationship with at least one traditional multichannel provider. This gives the digital institutions a sharper focus in designing what they offer.

Read more: Catch-Up Lessons from a Digital Banking Transformation Straggler

How to Get Co-Creation Going in Your Institution

Where co-creation happens in U.S. institutions it typically has been tried in a pocket here, a corner there. Clarke insists that it has to be adopted broadly.

What No One Wants to Admit:

Part of the reason that institutions flop at product co-creation is because they fear it. They may even recruit customers to help test new products and prototypes, but then they get cold feet.

“‘We can’t do that, it’s too risky’, they’ll say,” Clarke explains. “But I argue that not using co-creation, design thinking and CX techniques to build your products is far riskier. Why? Because the risk is that you will build a white elephant that nobody wants and that nobody will use.”

Adopting such new techniques demands a commitment to use them, not ad hoc application. A key element is understanding the concept of the customer journey.

“Taking out a mortgage is not a customer journey,” says Clarke. “A customer journey begins with, I’m having a baby. I need to move to a bigger house. Or I’m moving to a new city and I need to buy a house. Or I am buying my first house. Those are all customer journeys. The mortgage is only part of them.”

All customer types have to be considered in design, as well. Clarke says that some customers simply seek ease. What they will like is not the same as the “savvy seeker” who enjoys trying out new things. Other segments will have their own preferences Co-creation requires having the range of attitudes at the table at each stage of design. Co-creation is the opposite of “one meeting and done” thinking.

Read more:

Design to What Customers Say, Not What You Think

“You don’t ask them what they want,” says Clarke. “You bring them prototypes. You ask them ‘either/or’ questions. You should be testing ideas and concepts.”

There is a role here for ethnographic research, she says. That is the science of watching users as they go about their affairs, almost like a naturalist watching animals in the wild.

This kind of thinking can help institutions improve the way they sell, too.

“You want to be doing this in a contextually relevant way,” says Clarke. Too often, she says, financial institutions sell something like this: “Here’s our product, here’s our price, here are the features. Do you want to buy it?”

That’s how personalized checks used to be sold, out of a binder.

See all of our latest coverage on customer experience.

Keeping Customers Once You Sell Them on Your Products

A key factor among both groups is “Resolves problems/issues quickly.” It topped the list for multichannel institutions and was the #2 factor for direct banks.

It might seem surprising that with all of the emphasis in the industry on innovation that leading edge digital products aren’t the decisive factor in customer experience. Clarke says it isn’t that they aren’t important, but that they have become a necessity. They don’t win you any extra credit.

But what really becomes important to consumers is how their institution treats them the one or two times a year when something doesn’t work properly.

The human touch remains very important here, and that is very clear from the study data, according to Clarke.

“We see firms focusing on trying to drive customers to self-service through digital touchpoints, to get them out of branches and contact centers,” says Clarke. However, the companies that rank at the top of the lists invest in technologies and processes that help get problems quickly solved.

Empowering the bank’s human agents and setting rules effectively doing the same for automated self-service can help here, says Clarke. “Enabling the front line to make decisions instead of pushing them back to supervisors gets things resolved. And this is the sort of thing that separates the leaders from the rest.”

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