By now every banker knows the importance of customer centricity. Making things easy, quick, efficient, and timely for customers can beat or at least be just as effective as traditional strategies such as lowering loan rates, raising interest on deposits, and—for certain—giving away toasters for new accounts., although price, as noted below, can still be a key part of the overall experience.
What’s interesting, though, are indications that even those institutions that put considerable investments in time and money into achieving customer centricity, experience disappointing results.
An Accenture study presents the latest example of this premise. Admittedly, the study looks at businesses in general, not specifically financial institutions, but it limits its scope to business-to-business entities, of which banks certainly qualify. It finds that while 43% of B2B supplier executives say they intend to increase spending on improving customer experience programs by 6% or more over the next fiscal year, 55% of those polled admit that their customer experience programs have achieved little, flat, or negative return in terms of retaining customers.
Robert Wollan, global managing director of Accenture’s Sales and Customer Services practice summarizes the situation this way: “Business customers are acting more like consumers. They know more about the services on offer, expect more customized solutions, and are more price sensitive. Companies say they recognize this but the majority are not designing and executing the necessary changes effectively. This creates a drain on profitability and missed opportunities. Getting B2B customer experience right increasingly determines market success, but too many companies are playing not to lose rather than playing to win.”
Focusing more closely on financial institutions—as well as the part technology can play—Stuart Houston, global solution director for financial services analytics at Oracle, writes in a blog about observations gained at a conference in London, entitled, “Customer Analytics and Insights in Retail Financial Services.
“What became apparent in the various discussions was the need to think about the analytics challenge holistically: What data do I need? Is the importance of the analytics role sufficiently understood and endorsed at the highest levels? And are the people, process, and technology organized to provide the best outcomes for customer and institution?”
Expanding on the technology theme, Houston writes “successful technology enablement at an enterprise level is crucial.” He lists four requirements in this regard:
- A comprehensive data modal designed to accommodate all data sources within the bank, including customer, risk, performance, channel, and marketing.
- A unified analytical approach that provides the flexibility for custom solutions for individual subject areas without compromising data consistency enabled through data conformity.
- Prebuilt and industry-specific reports, dashboards, and analytic models that address critical strategic analytic needs across customers, performance, product, and channels.
- The ability to operationalize customer insight processes—to make them distinguishable and measurable—while automated to ensure rapid delivery of information when and where it is needed.
To be sure, simply acquiring fancy technological tools, even in an enlightened manner, won’t go all the way toward boosting customer experiences. After all, the customer has to be an integral part of the relationship. That’s pretty much the point of a recent Gartner report which emphasizes “customer engagement.” It breaks customer engagement into four attributes: Active, emotional, rational, and ethical.
Active customer engagement—“An actively engaged customer is more willing to participate with the organization through multiple different channels, ranging from online self-service tools or a mobile application to community participation or user group involvement.”
Emotional customer engagement—“Customers who are emotionally engaged are more likely to complain less, compliment more, buy more, and contribute more than those who do not.”
Rational customer engagement—“Rational customer engagement is the involvement of a customer in accumulating lessons on a product or service and conducting additional fact-finding and research. The customer will decide what level of further relationship investment is warranted.”
Ethical customer engagement—“Ethical engagement explores the deepest values and meanings by which people live…The organization has a published framework that discusses how it views its responsibilities to employees, partners, customers, suppliers, the community, and the world.”
So it’s clear that effective customer-centricity is both a science and an art. One must navigate the vagaries of human whims, needs, and desires, while doing so in a way that’s automated as much as possible in order to keep costs under control.
Which makes a recent announcement by IBM intriguing. It is partnering with the Genesys customer experience platform, with the goal of providing fast, data-driven, online assistance to customers.
Remember IBM’s Watson, the computer that famously won on Jeopardy! a couple of years ago? Well, Watson apparently has moved on. Here’s what IBM has to say:
“How will Genesys and the Watson Group combine their innovation to transform the agent-to-customer experience? Imagine yourself as a bank customer, home from work and doing late-night research on mortgage loans after your children are in bed. You may see a feature or rate that you like, but you have detailed questions that require expert advice. You can call, email, or tweet the brand, but it’s after hours so you won’t have access to a customer service agent until the next day. Now envision the following experience: At any time of night, you can access a web chat advisor that has access to the bank’s data-driven content around mortgages, and through a natural language interface, understands your questions and history interacting with the bank. Not only will the application educate you on all things mortgage shopping, but it will also provide a formal offer than can be presented by a mortgage expert at a convenient time scheduled by you.”
This specific solution is brand new and it’s too early to say if it will catch on. However, if it doesn’t, then some other vendor or vendors will come along with other approaches. The point here is that it’s not enough just to spend money on customer experience technology—a bank has to engrain customer-centricity throughout its enterprise by intimately understanding its customer base and selecting the exact right tools that fit its strategy the best.
Sources used for this article include:
- Wave of M&A Predicted to Hit US Community Banks
- Why Wells Fargo Is Looking to Exit the Asset Management Business
- Bank Customer Satisfaction Rising, ABA Reports
- Bank On It: How to Serve Underbanked Communities
- PPP: SBA Issues Guidance on Changes in Ownership and Full Forgiveness Eased for Smaller Loans