The allure of new jazzed-up current accounts isn’t enough to mask services that remain far from customer centric, says Natalie McLellan of Egremont Group

With the reputation of the financial services industry still in shreds, the sector is having a hard time trying to pick itself up again. Continued restrictions on borrowingand poor interest on savings leave little for customers to be excited about. Meanwhile life and pensions activity has been tempered by suspicion of policy mis-selling, excessive administrative charges, and poor value for money.

In the meantime, steps by the FCAto make it easier for customers to switch banks have raised the stakes for FS providers. In a bid to win customers from their rivals, a number of UK playershave begun to reinvigorate their current accounts. But only in a few instances are these anything out of the ordinary; as a result customer service remains the single biggest determinant of customer stickiness or propensity to move.So it’s interesting that FS providers are no nearer to improving the front-line experience.

The advice vacuum

Mystery Shopper research conducted recently by Egremont Group among leading retail banks -traditional banks, former building societies and newer challengers – found that the vast majority providedservice levels that were inadequate by standards seen today in other markets. The most acute shortfalls, found across the board, were in staff’s ability to profile individuals and assess their specific needs.

Although the challenger brands were found to provide a higher level of service generally, their depth of product/service knowledge and interest in the customer’s individual circumstances was found to be significantly lacking – 55% rating efforts to be poor or extremely poor.

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The findings suggest that FCA compliance has become a box-ticking exercise, taking away frontline teams’ ability to think for themselves; in the worst cases customer conversations have become a 10-15-minute monologue as the agent covers all bases.

Most banks are working hard to distance themselves from toxic product targets, vowing to ‘put the customer at the centre’ of everything they do, but few if any have discovered how to do this at a practical level. Frontline employees have not been given guidanceon how to open a conversation with customers, so are hiding in the shadows afraid to offer ‘advice’. Somehad to be repeatedly prompted by Egremontmystery shoppersbefore they would even give out product information.

Underestimating digital channels

Another customer phenomenon FS providers have failed to adapt to is consumers’ growing digital literacy, and the extent to which online and mobile channels have become a point of interaction right across the customer lifecycle. From students to much older generations, today’s consumers are increasingly at ease doing their own research online -seeking freely available peer and expert opinion, identifying offers they like, starting and even completing the application process online, andreturning for after-sales account management. If their experience is any way remarkable (for good or for bad), this maybe voiced publicly via social media, influencing the future choices of other would-be customers.

For less digitally switched-on providers,meanwhile, an opportunity has been lost. Their input has not been sought so they have not had a chance tostart a conversation.This isn’t just happening in retail banking, either. As life and pensions providers adopt direct-to-consumer channels, they too must learn how to engage with a broadening spectrum of digitally-literate customers who aren’t afraid to shop online.

It is not enough for one channel to be great, however.If advanced service levels aren’tmirrored across the different touch points, the overall customer experience will suffer. It is important to understand,too, how the rise in digital channel use affects the role of more traditional channels, and how each must now be adapted so that it adds its own unique value and dovetails back seamlessly into the other channels.

Where customer centricity meets compliance

So how can FS providers overcome their regulatory anxiety to the point that they don’t lose sight of customers’ everyday needs?The good news is that ifa bank is genuinely focused on the needs of the customer, it is already halfway there to satisfying FCA requirements.

But there is structural and cultural work to be done too. Silos are still to blame for a lot of disjointed FS activity. Vertically, the organisation might have a great vision and strategy but lack the mechanism to get this through to the frontline. Horizontally, there may be too much logistical separation between functions, channels or the organisation and third parties. And, culturally, leadership and performance management structure may not be conducive to doing things differently. As the adage goes, if you keep doing the same things you shouldn’t be surprised if you keep getting the same results. So all of these components need to be reviewed.

Looking laterally

Any strategy for change must start with the customer. Here, organisations need to go back to basics, segmenting and developing a deeper understandingof customers, and more holistically, so that products can be developed that better meet their requirements. But they can’t afford to take their time over it, as the industry – and customer preferences – are changing all the time.

As they try to become more fluid and adaptive as organisations, FS providers can learn a lot from other sectors – particularly retail – where customer engagement and the ability to innovate quickly and incrementally is much more advanced.

Hot-housing techniques are one of the popular approaches used by retailers. Here, certain operationsare ring-fenced for customer experience improvement initiatives. These projects look at everything holistically across the operation – at the people, the processes and the supporting systems – and with particular emphasis on input from customer-facing personnel themselves. But ideas are gathered and implemented swiftly – using accelerated techniques such as ‘test and learn’ which allow organisations to fast-track good ideas but throw them out if they aren’t working, without too much time or budget having been wasted. Something else retailers do well is reward loyalty, a concept the FS sector has still to fully embrace.

When customer-centricity initiatives gain real traction the difference can be transformational – not just for customers, and for business, but for the morale of staff – who feel re-energised and as though they are doing something worthwhile. As the future role of branches becomes clearer, it may be that they could play a bigger role in their local communities – something large retailers have become good at.

It will be interesting to see how far things have moved onwhen Egremont’s mystery shoppers go back under cover.