The financial sector is currently performing well at customer experience with 58 percent of the list of the UK top 100 made up by banks and mutual, yet some banks are noticeably absent.
Customer experience management across the financial services sector is highly inconsistent. While some banks have been successful in creating an excellent experience, others have struggled to master the areas of best practice that are most important to their customers. What's more, these areas are evolving at an unprecedented rate, as customer expectations, technologies and the regulatory environment continually shift, making it more difficult for brands to stay abreast of demands. And as the safe, reliable rules of retail banking become less relevant, it is increasingly important for financial services organizations to embrace customer transformation, and ensure that the banking leaders of tomorrow are spared a legacy of disenchanted customers and outdated business models.
While the financial sector is currently performing well for customer experience – with 58 percent of the list of the UK top 100 made up by banks and mutuals – the Big 4 are noticeably absent. This is significant, given that these brands are responsible for three quarters of all current accounts. As such, it is evident that the majority of UK customers currently have a sub-optimal experience with their bank.
KPMG Nunwood's Six PillarsTM denote the six universal facets of all excellent customer experiences. Chief among these is the ‘pillar of personalization’ which accounts for a significant 23 percent of the overall brand experience; despite varied styles and approaches to customer service, most banks neglect personalization – or moulding an interaction to the specific needs of individual clients.
Lack of personalization is a strategic weakness that could have serious implications over the next five years. By 2020, a new generation of digitally-enabled millennials – who are more eager to reject the brands that are not absolutely relevant to their needs – will become a more dominant share of the customer base, and a proficiency in the ‘pillar of personalization’ will be the key to reaching them.
Ideally this approach will be overseen by a passionate CEO, who will be able to guide the brand towards a new kind of organizational thinking in terms of how the company views the customer, and the role it plays in their day-to-day lives. Such a CEO will understand that the average millennial will expect everything to be available to them through their mobile and they will not stand for opaque fees or a lack of transparency. They will also demand a one-step solution to problems as opposed to a laborious 10 page navigation.
Interestingly, some of the best financial services brands are already at this stage. One particular bank places a strong emphasis on making life 'easy' for the customer to do precisely what they need to do. This is brought about through the empowerment of lively employees, who care about doing a good job and want to 'get it right' for the customer. They are intensely trained, and are free to handle and resolve any issues that are brought to them. As a result, the company enjoys one of the best customer experience excellence scores in the UK, and a ‘pillar of personalization’ result that puts it 11 percent ahead of the industry average.
Meanwhile, another bank uses its own personalization engine to provide insights and tailored offers to customers, drawing from the pool of data it has accumulated. And further afield, a bank in Turkey has developed a mobile app that sends alerts to customers with details about their favourite brands, using GPS to detect when the person is close to a particular store so that it can optimize the notification's timing.
And while the main aim of customer experience management is to afford a high level of satisfaction to the individual, a brand needn't think that its endeavours are wholly altruistic. Indeed, turning world class experiences into revenues is at the top of many CEOs' growth strategies, as the achievement of a top 100 customer experience ranking is associated with growth rates that are 163 percent higher than the average for FTSE 100 banks. Furthermore, for the average Big 4 bank, a top 100 ranking would equate to £3.7bn in revenues over the next three years, based on data from analyst forecasts.
But of course, transformation is never easy. And yet it is essential if banks want to stay relevant in the lives of their customers. The first step towards achieving this is for financial services organizations to adopt a whole new mindset. After all, as Albert Einstein once said: "You cannot solve systematic problems with the same thinking that created them in the first place." Only by targeting a clear view of customer experience best practice can a financial and social benefit be unlocked, creating a generation of accelerated growth for banks which, in turn, will define a better future for the financial services sector as a whole.
Download the full report: KPMG Nunwood 2016 Banking Sector Briefing – Banking the Customer Experience Dividend.
Mark E. Straub, Global Financial Services Customer Lead
Perspectives offers unique insight and opinion on emerging customer trends and channel developments in the banking sector.