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Despite tech investment, CX lags

Customer experience expectations soar faster than banks can keep up

Bank tech trends can make your head spin. So regularly longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.” Bank tech trends can make your head spin. So regularly longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.”

For a banker, it would be hard not to feel discouraged after reading the headlines of a slew of recent surveys that indicate banks in general fail to meet customer expectations, despite years of customer-centric technology investment.

Here are a few:

• “2017 Customer Satisfaction With Banks Down From 2016” CFI Group

• “Two Thirds of Bank Customers Feel Retail Websites Know Them Better Than Their Bank” Segmint

• “Fintech Seen As The Biggest Disruptor For Financial Institutions, But Effective Strategies Are Lagging” KPMG

• “Survey Finds Consumer Loyalty is Keeping Big Banks Alive, But Fintech Is Key To The Future” Blumberg Capital

These are the ones popping up in the past few weeks that pertain directly to banks. Even one by the American Bankers Association, which seeks to exude a positive spin, has the headline: “ABA Survey: Six in Ten Consumers Trust Banks Most To Safeguard Payments.”

Reading further, the actual number is 59%, which is hardly earth-shaking. To be fair, though, it does outdistance payment providers like Apple, PayPal, or Venmo, which collectively 12% of customers trust most.

Bleak landscape

Other surveys, which cast a broader net to businesses in general but which can resonate with banking leaders, are similarly bleak.

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Again, here are a few:

• “Businesses Struggle to Deliver on Digital, Losing $655,000 per Failed Project” Fujitsu America Inc.

• “New Study Reveals Brands Fail to Use Customer Data to Deliver Personalized Digital Experiences” Sitecore

• “Are Managers Their Own Biggest Barriers To Innovation?” Robert Half

What’s behind trend?

The thing to do, then, starting at the top, is to drill down into what these reports say and discern what insights might be gleaned.

CFI Group runs an annual proprietary “Bank Satisfaction Barometer” based on feedback from 493 bank customers. In 2017, it dropped to 79 as measured on a 100-point scale, down from 82 in 2016.

The company offers two recommendations. First, it says, banks should reboot their branches, retaining staff but infusing them with new technology that make banking smoother, faster, and simpler, while maintaining a personal connection.

Second, banks need to pursue product and service innovation, particularly through mobile devices which customers increasingly use to manage their money.

Segmint issued a comprehensive Consumer Bank Marketing Report with a number of illuminating results. These include:

• 64% of bank customers feel retail stores know more about them than their bank.

• 54% would be open to receiving marketing communications from their bank.

• 16% feel that the communication they do receive from their bank is “annoying.”

•  33% feel such information is “irrelevant” to them.

Segmint, which specializes in providing secure data-driven software, touts the use of “key lifestyle indicators.” An example it gives is illustrative: “A customer’s set of KLIs could indicate that they are a pet owner, have a high deposit balance, are currently renting their home, and recently visited the mortgage page of the bank’s website. This kind of insight empowers banks to send tailored communications to that customer. This could be an advertisement to learn more about a bank’s mortgage product, accompanied by an image of a dog in front of a home. A different customer with different KLIs who is not identified as a pet owner, would be sent a different, more relevant advertisement.”

KPMG surveyed 160 financial institutions in 36 countries and concludes that, “as emerging technologies disrupt traditional financial services value chains, many institutions are lagging in implementing effective strategies.”

Key results: 46% or respondents have a clear fintech strategy in place; 42% have a strategy in development; 10% have no fintech strategy at all. Of those with a strategy, only 47% say it is well aligned with the challenges posed by fintech.

Commenting on the survey, Ian Pollari, global co-leader of fintech at KPMG, says: “There is no silver bullet when it comes to fintech success. The most important success factor is having a fintech strategy that aligns closely to the organization’s objectives, has senior sponsorship, recognizes the need to execute on a number of fronts simultaneously, and above all, has a focus on realizing demonstrable value, including customer, cost, and regulatory outcomes.”

Bank offerings versus fintech offerings

Blumberg Capital, a venture capital firm, worked with Regina Corso Consulting to survey 2,037 U.S. adults about attitudes toward fintech offerings. Some results:

• 57% have a positive view of fintech startups.

• 57% believe the days of going into a physical branch for any reason are coming to an end.

• 56% are often confused by the information provided by financial institutions in billing, financial reporting, and fee structures.

• 63% would like an automated system that ensures they never miss an interest payment and reduces their total interest paid through optimization.

“While the average consumer may hesitate to change from traditional banking to emerging fintech products and services, the potential benefits may become too valuable to ignore,” says David Blumberg, founder and managing partner. “If banks don’t adapt and adopt new technologies they risk losing the next generation of customers.”

Broader problem

Turning to the business-in-general reports:

Fujitsu America Inc. surveyed 1,625 global business leaders. Some results: 70% admit a digital skills shortage, with 80% of these saying this skills gap is the biggest hindrance to cyber security; 84% say their customers expect them to be more digital; 71% are concerned about their ability to adapt to artificial intelligence; 66% believe they will lose customers relative to their competitors as a result of digital transformation.

One in four organizations have experienced a failed digital project in the last two years at an average cost of $655,000, according to Fujitsu America’s research.

“While businesses today recognize the need to adopt and adapt to technology, there remain significant issues that are contributing to substantial rates of failure and high associated costs,” says Duncan Tait, CEO. “To realize their digital vision, it’s crucial that businesses have the right skills, processes, partnerships, and technology in place. With digital disruption rapidly changing the business landscape, businesses can’t afford to fail in their transformation.”

“You may think you know me, but …”

Sitecore, which provides experience management software, worked with Vanson Bourne, a market researcher, to analyze responses from 6,800 customers and 680 marketing and IT decision makers in 14 countries. Some results from the customer respondents: 59% say businesses use out-of-date information about them: 57% get personal customer details wrong; and 54% say businesses make assumptions about them based on single interactions.

As for the organizations’ representatives, 31% point to a lack of skills needed to analyze the data collected; 42% don’t have the capabilities to integrate data collection; and only 12% have the ability to collect online data on an individual level.

“Customers are openly providing insight for brands to understand their wants and needs, but brands are struggling to follow through on their end of the deal,” says Scott Anderson, chief marketing officer. “The level of expectation that today’s consumer has, coupled with the level of dissatisfaction brand marketers have with the tools and resources available to them, suggests brands must take urgent action to improve their ability to collect, connect, analyze, and act on customer data.”

Why innovation flops

Robert Half, the specialized staffing firm, surveyed 2,200 chief financial officers in 20 large metropolitan areas, to find out what hinders innovation. Results: 30% cited too much bureaucracy; 27% cited being bogged down by daily tasks and putting out fires; 16% cited ineffective leadership. Tellingly, in 2012, when asked the same question, 11% said they did not know—this year, only 1% had that answer.

“Organizations strive to be innovative but all too often get in their own way due to self-imposed barriers,” says Paul McDonald, senior executive director for Robert Half. “Organizations need to find a way to let ideas rise to the top quickly and create clear paths to implement them.”

Positive, but also stagnation

Putting all of this together and trying to find something positive to say, perhaps it’s worthwhile citing Forrester’s 2017 Customer Experience Index of 28 U.S. banks—even though that found customer experience quality “stagnant.”

It found that the top emotions that drive loyalty are feeling appreciated, respected, and valued. Of the six drivers that measure brands’ delivery of customer experience quality, customer service is the most important driver. [Also read, “Must retail banks kick service up a notch?”] 

“Understanding your customers’ needs is vital to creating great experiences that drive revenue,” says Cliff Condon, Forrester chief research and product officer.

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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