Something needs to change in the banking customer experience. Why? Because it’s caught between a rock and a hard place. On the one side, folks distrust banks now, more than ever. The global recession, and the role of financial institutions in creating it, has made people resent banks, even if they can’t avoid being their customers.
As this Social Attitudes survey shows (below), it isn’t just banks, it’s a whole range of institutions, albeit with banks being by far the least trusted. But this chart also demonstrates another force – that higher expectations from other industries are bleeding into customers’ mindsets, from retail to entertainment to travel. Given this raising of the bar, the behaviour of banks looks even more like a industry who is not on the side of the customer.
Nothing illustrates this more than bank charges. In Don Peppers & Martha Rogers latest book, Extreme Trust, they describe how many banks work on the business model that customers make mistakes, which can then be exploited. The most typical example is a customer whose checking/current account goes overdrawn for a day or two. Even if the customer has more enough funds in another account to cover the overdrawn amount, banks will still charge the customer a fee for the error, and interest on the amount. Peppers & Rogers suggest that a bank that offered the facility to swap money out from a savings account to prevent this error would define a bank as one that acted in customers’ interests.
That banks do not offer this service doesn’t help the image of Big Banking as money-grabbing and self-serving. And untrustworthy. However, these financial institutions may have to start to change, if only because today’s customers have a louder and more influential voice, thanks to social media and other digital channels.
More than that, younger generations have a different customer experience expectation – they want banking done on their timetable, not banks, they expect greater personalisation and a slick efficiency across all channels, not just e-channels but on the (rare) occasions they go into a branch too.
Some ten years ago, I had a colleague who believed that the future of banking was about cool branches, like Umpqua, in west coast US, an open space complete with free coffee, free web browsing and arty murals on the wall. It’s true that UK bank branches have become more open plan since then, but frankly it’s more fun to go to Costa or Starbucks than NatWest to grab a little downtime and check in with the web.
There’s even a question mark over whether bank branch experience should be a priority for investment in order to improve the overall customer experience. First Direct, a direct banking arm of HSBC, has no branches yet achieves an impressive +61% Net Promoter Score (NPS). Compare that to the pitiful -35% of Barclays, despite a branch network of 1600-strong in the UK alone.
Where banks have really failed is in gaining any customer experience value of all the CRM data they capture – namely what, when and who transacted. For all the processing power and data at their disposal, has your online bank statement changed much from the paper version? Switching to e-statements saves the bank heaps of money, but they forgot to offer customer benefit – e.g. how can we make this statement more useful, fun, actionable?
Instead, it’s been left to new consolidator brands like moneydashboard.com (above) to innovate in this area. It brings all your bank accounts together in one place and automatically categorises your transactions to show you how you spend your money. It’s based on the hugely successful Mint.com in the US, and demonstrates what a consumer focus can come up with, once it’s freed from the old-school traditionalism of Big Banking.
At the time of writing, some of the larger players in banking are rolling out wave and pay credit/debit cards to its personal banking customers, promising more convenience and ease, especially for those low-value, on-the-run items like coffees and newspapers.
It’s a step forward, but also reinforces how banking is stuck in ‘transaction-mode’ – still very internal and process-driven in focus.
Ask real customers what their biggest frustrations with dealing with banks are, and I doubt you’ll find the demand “I WANT CONTACTLESS PAYMENT CARDS!” at the top of the list.
Instead, banks still have a big opportunity, finally, to tune into customers by adding some attitudinal insight to their transactional data. It may be a little harder to gather, though, which will mean integrating more unstructured data into their precious transactional databases – something that bank groups may not have the imagination to do.
Yet the payoff for financial services is significant. If they can unlock how consumer attitudes to managing their finances affect behaviour towards banks, they can start to address what trust in a financial service brand looks like.
That could show them the route towards extending their product reach, into mortgages, ISAs and beyond.
Indeed, US-based audit group Marketforce, reports how customer experience has a clear impact on a bank’s bottom line:
- Forrester Research found that customer experience quality could drive more than $240M in increased revenue for one large bank
- J.D. Power reports that banks can increase incremental deposit growth of 3% annually with only a 5% increase in highly committed customers
- According to a study conducted by Lariviere, every 1% increase in bank customer loyalty is associated with a 17% higher likelihood of repurchasing
The Takeout: Consumer trust in banking brands is not going to return overnight. But the hard reality is that we all need banks to work, as we go about our busy lives. From a consumer standpoint, banks can either be part of the problem (bureaucratic, inflexible, uncaring, error-prone) or part of the solution (listening, responsive, thoughtful, accessible). To be in the ‘solution’ group, a bank will need to demonstrate both an understanding of what customers really want, and a willingness and competence to deliver it.
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