Why customer experience is the new differentiator in banking

Banking IndustryIn 2012, the Canadian financial services industry spent an astounding $8.7 billion dollars on information technology.  According to a Deloitte 2014  Industry Outlook, many banks are investing on IT to focus on revenue growth, customer experience, and security.  There is a strong desire by the banking industry to drive performance, mitigate risk and improve operational efficiency.

Customer experience is the new differentiator, requiring the seamless and unified delivery of online, branch, and mobile channels.  By leveraging technology, banks can better understand customer spending habits, preferences and product demand and  grow revenues.

McKinsey research, The three Cs of customer satisfaction: Consistency, consistency, consistency supports the belief that a consistent customer journey across multiple touchpoints is a key predictor for customer satisfaction and loyalty. Key findings include: companies can differentiate their brands by focusing on customer experience; building trust leads to long-term business success; and consistency-driven emotional connection is essential for customer loyalty.

McKinsey recommends three priorities for customer journey excellence:

  1. Take a journey-based approach. Create teams that are responsible for the end-to-end customer journey across functions.
  2. Fix areas where negative experiences are common. A negative experience has three to four times relative impact than a positive one.
  3. Do it now! Customers have less patience today in variability of delivery.

The Technology Investment Imperative

Customer teams at the banks must be able to predict and recommend the next product of interest for their clients based on a number of factors, such as current products, account balances, transaction history, and life events, to name but a few.  These insights are only possible through ongoing technology investment and developing strong expertise in Big Data analytics.

At the same time, customers want to be able to control the when, where and how they interact with their banks. They want personalized service and receive value with every interaction.  In marketing terms, this is the brand promise – an expression and delivery of the brand experience – which requires consistency with a bank’s people, products and services.

Edelman Trust Barometer

The 2014 Edelman Trust Barometer reports on the levels of trust and credibility in many key global industries, including banking. The survey reported that banks have much more work to do, coming in at the bottom of the rankings at 51 percent, while technology and automotive were the most trusted industry sectors, at 79 percent and 70 percent, respectively.

Why such a poor showing for the banking sector over the past few years? The memory of the global financial crises of 2008 and a number of more recent financial stresses, particularly in the EU, have skewed the EdelmeanTrust Barometer results negatively for the banks globally.

Here in Canada, consumer sentiment is much more positive.  The Canadian Bankers Association reports not one Canadian financial institution failed because of the country’s stable and conservative banking system.  The banking association references a December, 2013 Abacus Data public opinion poll, reporting that 79% of Canadians give banks a good performance rating when it comes to stability and security.

The Canadian Business Magazine May, 2014 annual consumer survey on Canada’s favourite brands is even more telling: five of the “Big Six” banks are in the top 25 brand list. We Canadians indeed love our banks!

Technology is the Glue

Branch proximity and convenience likely play an important role for consumers when selecting their financial institution of choice.  However, for long-term relationships, the greatest point of differentiation is through a positive, consistent customer journey, which the research supports.  Technology is the glue that bonds the multiple channels, but it’s the employees that must deliver the services and adhere to the brand promise.

A great example can be found at the TD Canada Trust Bank (full disclosure: I’m a customer). Their well known slogan, “Banking can be this comfortable” has had millions of advertising dollars spent on it. Many of us can picture that big comfy green chair in their ads.

More importantly, the TD corporate culture remains focused on consistent customer service and delivering on their brand promise of comfortable banking.  A great example is TD’s leadership in extended banking hours before other banks followed.

TD has achieved that important emotional connection with its customers, and consumer trust has naturally followed. Indeed, over 11 million Canadian consumers believe so and transact daily via a branch, ATM, home phone, mobile, and online computer. Just imagine the technology infrastructure that is in place, the next time you check on your bank balance.

 

 

 

 

 

 

 

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