Joanna Hall, consulting partner CSC
financial services, EMEA, argues that banks are out of step with
the modern-day needs of their customers. If banks fail to engage
with their clients in a personalised way, she concludes that will
miss out on a golden opportunity to win long-term, loyal
customers.

 

Bar chart showing the wealth operations at Barclays, RBS, HSBC and Lloyds 2004-2009UK personal wealth is
estimated to be around £9trn ($14.6trn) and approximately fourm
people in the UK have investable assets of between £100,000 and
£10m.

The
Retail Distribution Review
(RDR) – the Financial Services
Authority initiative launched in 2006 – has forced the financial
services industry to drive efficiencies into advice
delivery.

One
notable such example is the decision in early 2011 by Barclays to
stop offering branch-based investment advice. Analysts have
predicted that other banks will follow Barclays’ lead and so it is
inevitable that face- to-face financial advice will become the
preserve of the wealthy.

However, this overlooks the huge segment of the
population that will soon have little or no support to manage their
wealth. This group includes the majority of banks’ customers and
needs help to manage their assets and liabilities throughout their
lifetime.

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Providing this market with a personal financial
management service that leverages multiple communication channels
represents a significant opportunity for the UK banking sector to
engage and create a ‘sticky’ long-term relationship with their
customers. To date, though, little has been done to capitalise on
this opportunity.

Should
newer entrants to financial services manage to dislodge existing
customer inertia, they will, without a doubt, be a major threat to
the banking community.

Tesco’s
plans to grow revenues by 150% to £1bn and its well established
customer loyalty programme, via its loyalty card, could give the
banks a ‘run for their money’. Both Tesco and Virgin Money are
brands that customers trust, unlike the banks, which have lost
consumers’ trust.

In
parallel, advisers’ post-RDR, will be forced to concentrate on the
more wealthy individuals; as a consequence, they will ‘redline’
customers considered by the bank to be uneconomical to
service.

As
sections of the banks opt out of competing head-on with advisers,
it makes sense for them to rethink how to target their wider
customer base, more economically.

The
likes of Tesco and Virgin Money have the know-how to service high
volumes of customers efficiently and
cost-effectively.

It is
particularly pertinent for banks to act now to gain first-mover
advantage, by experimenting with new ways of engaging and
supporting their target customers.

To
compete, banks need to ensure they understand customers’ needs,
create a single view of the customer and communicate with them, via
the channel of their choice. All channels – mobile, internet or
instant messenger – must achieve consistent service levels and
offer a good customer experience.

Although non-financial services’ organisations
might have the upper hand when it comes to customer focus, the
banks nevertheless already have a database comprisingms of account
customers who are seeking a haven for their hard-earned
cash.

They
now have to carry the burden of managing their finances pre- and
post-retirement in an era where life expectancy and retirement ages
are continuing to rise, in contrast with a reduction in state
pensions.

Technology is the key to achieve this transition,
enabling greater levels of automation, so that banks can engage
with large volumes of their customers, in a personalised way, about
their services.

Self-service tools can help customers manage their
finances, whether debts or assets, and evaluate their
options.

To help
customers with more complex financial products, banks can
supplement automated tools with a call centre or face- to-face
advice.

Ongoing
communication, triggered by, say, the nearing of the end of the tax
year, via a variety and mixture of channels, ranging from online,
over the phone, to face to face, allows banks to create stickiness
with their customers.

Banks
will need comprehensive systems that capture, store and recall
customer data to enable a single view of the customer’s financial
situation.

Greater
standardisation of processes will reduce error rates and time spent
on manual activities, such as re-keying information and re-checking
information. This will help to improve back office
productivity.

Banks
will need to ensure their customer strategy is aligned to business
processes, particularly multi-channel
distribution.

Rather
than simply offer more channels to communicate, banks need to make
sure processes around these channels are consistently applied.
Customer preferences too, regarding channels, need to be
understood.

This
will aid up-sales and cross-sales opportunities for banks and
again, make customers believe that they are dealing with an
organisation that has their interests at heart.

Banks
too should take a leaf out of the book of organisations, such as
Amazon, who have been quick to realise the benefits of
personalising sales, which increases the customer’s perception of
value.

This,
as well as social networking tools, has a growing role to play,
particularly to help banks manage and enhance their
reputations.

In all, banks are in a position to
capitalise on the needs of modern day consumers and generate
significant revenues. This is particularly the case for those who
step up to the mark and take full advantage of this
opportunity.