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“Do you know me?” “Sure, press 1”

Banks miss with customer (off)centricity

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

You can repeat the mantra “the customer is king” over and over to show you believe it.

Does the “king” believe it?

Reports crossing my screen suggest that banks, despite their professed “customer-centric” efforts, too often fail in customers’ eyes.

Customer-centricity, in the modern sense, hangs on the use of fancy new technology tools, such as analytics, which are supposed to lead to cost-effective personalization of services to many, many individuals.

The theory is sound. Instead of marketing to, or catering to, arbitrary demographic populations in shotgun fashion, the efficient and economical parsing of big data should enable banks to become sharpshooters—turning their attention to populations of one.

In other words, the goal is to use technology to bring the bank one-on-one with individual customers, over and over again.

Thus, the “customer” rules the “center” of a bank’s attention. As each customer becomes a happy customer, the bank in turn becomes a happy bank.

That’s the theory. In practice … not so much.

Off the mark, bankers

Mercator Advisory Group, in a recent report, commented about this:

“Banks, credit unions, and other financial services providers have tried to build success by focusing on narrow niches such as the ultra-wealthy, mass affluent, or even the unbanked and underserved. This niche thinking is costing them increased profitability in the long run because it does not recognize the ways in which they help customers build wealth and thus become more profitable customers. Combining a life-cycle approach with new technology can build a portfolio of customers who each have a profitable personal portfolio.”

In other words, banks miss out by concentrating on selected demographic populations, when they could actually “build” a loyal and dedicated customer base by understanding their lifestyle needs and preferences—and then delivering.

“Financial services is one of the few sectors that actually has the power to build the kind of customers that it wants, but it requires rethinking the approach to the delivery of those services,” says Ben Jackson, director, Prepaid Advisory Service, at Mercator.

Celent adds another, similar, voice to this discussion. Earlier this year it issued a report about the top trends in retail banking for 2015. Not surprisingly, “digital” is the top theme. But Celent put this in an interesting context:

“Digital in banks is about delivering a customized but consistent financial institution brand experience to customers across all channels and points of interaction, underpinned by analytics and automation, and requiring a change in products and services, IT, organization, and people, in order to deliver demonstrable and economic value.”

Adds Dan Latimore, senior vice-president of Celent’s Banking Practice: “We’ve found digital to be increasingly top of mind for our clients over the last couple of quarters; culture will have to catch up to technology.”

Two words stand out here, in relation to technology—“people” and “culture”—that go to the heart of the customer-centricity discussion. The technology that’s supposed to support the concept of customer centricity is here and being used—but on a human level, how is it being received?

Oracle wondered about this. Mark Atherton, group vice-president of the Financial Services Business Unit, describes in a blog what Oracle found when it analyzed the customer tweets of the 25 largest banks between September 2014 and March 2015.

The result: “Overall negative sentiment was at least six times more than positive sentiment. Service quality turned out to be the No. 1 indicator of positive and negative sentiment.”

“Service quality” was further broken down to three areas: digital access/payments: security and fees/charges; and customer service. Of those who exited their bank, 92% cited at least one of these reasons.

“These frustrations reflect the changing expectations of a generation of customers used to a world of instant gratification. More important, the insight reveals a perfect storm whereby the age-old problems of siloed banking are feeling the pressure of pervasive banking expectations from customers,” says Atherton.

That’s what customers think. Banks, though, tend to think they’re doing pretty well, and that’s not necessarily so, says IBM.

IBM commissioned a study by Econsultancy that found that, while 90% of marketers (in businesses in general, not just banks, but the sample was huge) agree that personalizing the customer experience is critical to their success, 80% of consumers (again a huge sample) say that the average brand doesn’t understand them as an individual.

This builds on the idea that the consumer/brand relationship has evolved into a two-way partnership where consumers are willing to share their most personal details with trusted businesses in exchange for experiences that are unique to them.

“The fundamental thinking behind digital marketing has shifted. The goal of providing the right message to the right person at the right time is now just a part of the larger puzzle. The real challenge is providing the right experience for the right person at a time that’s right for them,” says Stefan Tornquist, vice-president of Research for the Americas at Econsultancy. “At the center of it all is the marriage of marketing and technology and a commitment to innovation that’s driven by individual customer needs.”

In other words, the dial on customer-centricity has moved.

“Experience” is the key word here, along with its qualifier, as in: “great experience.”

Oracle’s Atherton, in his blog, distills the concept into three phrases: “Know me, empower me, wow me.”

Know me—Know your customers’ likes and preferences, from their social digital activities. Form a dynamic and complete view of the customer, synthesized from information within and outside the business.

Empower me—Empower your customers so they can transact anytime, anywhere, across any channel. Deliver continuity through the engagement process and empower them with relevant information and tools.

Wow me—Anticipate their needs and provide them simple, easy, and relevant products and services.

All of which tends to incorporate what Mercator, Celent, and IBM are referring to. Technology can provide tools, but it can’t provide great customer service—as perceived by the customer. If the customer is truly to be at the center of a bank’s strategy, the bank needs to add the human/cultural factor that can, in fact, know, empower, and most important, wow.

Sources used for this article include:

Top Trends In Retail Banking 2015

4 Out Of 5 Consumers Declare Brands Don’t Know Them As An Individual, According To IBM And Econsultancy Study

Building Profitable Customers Is The Way Of The Future

Canary in the Coal Mine: What Customer Tweets To the Top U.S. Banks Reveal

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 [email protected]

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