The UK’s Financial Conduct Authority and Competition and Markets Authority recently mandated that large banks must publish information on how likely people would be to recommend their bank. Martin Häring, chief marketing officer at Finastra, looks at how banks can respond.
The rankings, based on customers’ online, mobile banking, branch and overdraft experiences, aim to increase competition and drive up standards, making it easier for consumers to compare bank services and judge which is best for their needs. The new requirements come when several large UK banks have experienced IT glitches, including outages in mobile, online banking and payment services. While some of the incidents have been short-lived, the most serious have lasted several days, severely impacting customers.
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With a growing number of customers seeing their bank relationship as merely transactional, there is a risk that banking becomes a commodity service that can be easily switched. Customer experience is the key to turning these perceptions around, allowing banks to forge a real competitive advantage. With consumers and small businesses now easily able to compare the services offered by different current account providers, what steps should banks take to set themselves apart? Three areas banks must focus on are customer-centricity, digital transformation, and collaboration and innovation.
Each plays a fundamental role in contributing to the bank’s ability to personalise and enhance the customer experience long term. A customer-centric approach demands that the customer is placed at the heart of everything. To be truly effective, buy-in is needed across the whole organisation – starting at board level and cascading down so it becomes a part of company culture.
For too long banks have been productdriven, operating from distinct business silos. Banks have to start fostering more meaningful relationships with customers – turning them into advocates and customers for life. This means understanding their needs and desires so customers feel their bank is supporting them in achieving their goals.
A customer-centric approach forces crossfunctional involvement, breaking down silos as it attempts to create a unified and interconnected bank. Only by addressing these issues will it be possible to gain a full picture of each customer and deliver a fully joined-up and more engaging experience.
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By GlobalDataDigital demands
Banks must transform their structures, technology and processes to respond to the digital age. A top priority has to be removing friction from the customer journey; this means overhauling legacy structures to interconnect all functions while modernising and optimising systems and processes to dramatically reduce the risk of failures.
Of course, there are challenges associated with legacy, but customers do not care about that. They expect their bank to be ‘always on’ and to deliver the digital experience they have become accustomed to in their interactions with leading retailers and tech giants.
Open Banking and PSD2 are increasing competition, but also creating opportunities by encouraging larger-scale collaboration between banks and fintechs. The pace of change is forcing banks to recognise that they no longer need to develop everything in-house, but can use new models such as a platform-as-a-service and open API approach that allows them to collaborate, develop and deploy services securely via the cloud.
Success – and the ability to translate changes into an enhanced customer experience – will depend on a change in mindset, moving away from an inward-looking approach towards greater openness in collaborating with partners, and a willingness to experiment and innovate. Innovation in areas such as digital assistants, chatbots, robo-advisors, voice and speech recognition to automate front-end banking will be crucial in cutting response times and raising customer satisfaction.
Studies show that customers feel more loyal to bank brands that know who they are and treat them differently. To deliver this, it is essential for banks to be conversant with Big Data, artificial intelligence and machine learning. Banks must take advantage of the huge amount of available customer data to create tailored, personalised experiences that make customers feel valued. The combination of transaction data, personal data, mobile location and social media data can help banks respond to, and even pre-empt, customer requirements based on actual needs. Of course, to ensure high levels of trust with customers, and ensure full compliance with GDPR, banks need to gain permission from customers to use their data; the reward will be a better and more personalised service.
While younger generations are increasingly comfortable interacting with digital assistants, chatbots and robo-advisors, it remains important to give customers of all ages the opportunity to escalate more complex discussions to a human operator – offering the opportunity to switch to a video call or to book an appointment at the branch.
For face-to-face interaction, banks should invest wisely in branches they keep open – making them a brand hub with automated services that provide a consistent experience to consumers, with staff taking on the role of advisors. This will help improve the overall experience – online and in a the branch.
In an Open Banking world with league tables comparing performance, if you do not serve customers effectively, it will be very easy for them to trial a new service from another provider – or to move on entirely.
With a customer-centric, digital-first and collaborative approach, happy customers become your answer to growth. Their influence in ranking your services is simply too great to ignore!
