Earlier this year, I had the pleasure of co-hosting a webinar along with Sean Calvillo from our partner Perficient, and sponsored by American Banker. The subject of the webinar was “Delivering a Superior Customer Experience in Banking“, and, I’d like to share some thoughts and feedback we received about how banks must transform to respond to the customer experience challenge if they are to remain relevant in their customers’ lives.
A Discussion About CX in Banking
To level set, the Q&A started with a discussion about how improving the customer experience in banking is a top priority going forward. Disruption is coming from non-traditional competition and non-financial institutions alike and is raising consumer demands for highly personalized, information-rich interactions as well as real-time decisions provided seamlessly across multiple channels. Today, banks are in real danger of seeing their customer relationships diminished if they cannot adapt to the new digital economy.
How can banks deliver a superior customer experience? Insight from our webinar indicated that in order to deliver a superior customer experience, banks must overcome two major hurdles:
- They need to be able to tap into the wealth of information that today is trapped in information silos scattered across the enterprise.
- They must modernize their information systems, many of which were never designed to adapt at the speed of today’s digital-first economy.
Sean and I fielded some great questions from the audience during this webinar, and I’d like to use this post to share some of them here - along with my responses.
“In banking, what’s the difference between customer experience and customer satisfaction?”
In my opinion, Customer Satisfaction is more easily measured. It tends to be more associated at a product level and is the delta between what the customer expects and what they actually receive. So, things like, “how happy are you with your lending experience?” or “how happy are you with your credit card?”
Customer Experience is the sum total of all your interactions with a bank. For example, “how easy it is to do business with your bank?” or “Do I feel like my bank is providing me with personalized service?” “Are the websites and mobile apps provided by my bank intuitive and easy to navigate?” Customer Experience is about being customer focused vs product focused.
“Why is customer experience so important to banks?”
The reason is that Customer Experience is about driving commitment. That is, “Loyalty”, “Wallet Share”, and “Referrals”. Will your customer stay loyal to the brand in the face of a price-sensitive offers? Are they inclined to purchase more financial products from you and increase your “products per household”? And finally, are your customers willing to recommend your bank to friends and family members? Those are the three pillars of success if you’re going to remain relevant, competitive, and gain market share.
“What is the driving force behind this push for improving the banking CX?”
A lot of it is coming from non-traditional competition like BigTech. Companies like Amazon, Google, Facebook, and Apple have raised the bar for what it means to be customer focused, and those customer expectations are spilling over across all vertical industries including financial services like banking. At some point, your customers are going to ask, “what isn’t it as easy to do business with my bank as it is to do business with Amazon?”
“How does Fintech fit into the picture?”
Right now, Fintech is a kind of double edge sword.
On one hand, banks are certainly benefiting from partnerships with more nimble and agile Fintech firms to quickly develop and deploy new products and services. On the other hand, Fintech startups are nibbling around the edges of traditional banking revenue streams and threatening to disrupt business models.
“What is it about BigTech and Fintech that is raising the bar on customer experience?”
If you had to distill it down to a single word, it would be “speed”. They are fast to deliver information-rich products and services. Fast to provide real-time decisioning. They are on the leading edge of innovation and they delight their customers with a personalized customer experience.
They are able to do this because of their digital agility. And today, customer don’t differentiate their customer experience expectations across industries. They’ve come to expect a high degree of customer experience, regardless of what industry they are dealing with.
“What are some examples of how digital agility is driving speed of delivery and enhancing the customer experience?”
Examples are everywhere.
- “Affirm” is providing consumers with on-the-spot 2-, 6- or 12-month loans at over 1,500 retailers.
- “Better Mortgage” can qualify a mortgage loan in 3-minutes and approve it within 24-hours.
- “GreenSky” provides spot financing for home improvement projects.
- “Upstart” approves 47% of loans without human intervention.
All of these companies are customer focused and deliver near real-time decisions that delight customers and grabs their business before they can shop around for alternatives.
“What are the main challenges that keep incumbent banks from competing on a level playing field when it comes to CX?”
Probably the two biggest inhibitors are the accessibility of content and data, and the legacy systems that rely on that information.
First, as we all know, the volume, types, and the size of data is exploding. Banks have more access to customer data than ever before. But it’s scattered all across the enterprise making it difficult to obtain a 360-degree view of your customer. And legacy systems are slow to adapt to changing customer preferences and expectations. Monolithic legacy systems were never designed to adapt quickly to dynamically changing business models.
Combined, they present a dramatic negative impact on the banking industry’s ability to deliver a positive customer experience.
“What can banks do to adapt to these changes dynamics?”
First, banks need to get control over their content and data. For decades, banks have been sold the promise that they can consolidate all their customer information in a single repository. That is simply not the case.
Often times, banks cannot control the spread of information due to point solutions, mergers and acquisitions, regulatory reasons, or it simply may not be desirable by the business to consolidate their information.
Banks need a smarter way to deal with the problem of information scattered across the enterprise. Then, banks must modernize their legacy systems. These systems have to become more nimble and adaptable to the demands of today’s digital consumer. New products and services must be delivered in days or weeks, not months or years. And today’s legacy products simply cannot keep pace.
“What steps can be taken to overcome these challenges?”
While there is never a single answer or silver bullet to address all shortcomings, there are measures banks can take to remain competitive and relevant to their consumers.
When it comes to content and data, banks must be able to connect to this critical information where it resides. Simply ripping and replacing one repository for the promise of another is no longer a viable alternative. Information will always reside in multiple locations. By accessing information where it is, banks can make better and faster business decisions. Data is the key to real-time decisions. Once banks gain access to their information, they can determine how best to consolidate that information in a manner and time frame that makes the best sense and is the least disruptive to the business.
Then, the modernization of legacy information systems means moving away from monolithic “products” in favor of more nimble, services-based, “platform” approaches to application development, that allows multiple applications to be created off a single infrastructure base and provides a future-proof environment that allows individual components of those applications to be easily swapped out and scaled as technology advances. Plus, a platform approach based on connecting various services through application programming interfaces opens up a wealth of opportunities to leverage what is called the API-Economy. That is, thousands of organizations that expose their capabilities and services so banks don’t have to reinvent the wheel for things like e-signature, maps, and payments. This allows banks to focus on delivering just their specific business requirements and to use commodity services for everything else.
How Can the Customer Experience in Banking Be Improved?
- First, that banks are under pressure to increase the quality of the customer experience they provide.
- Second, that customer expectations for customer experience know no industry boundaries. You are merely an industry among industries. So, your competition is not the next bank, but rather those industries that excel at providing a superior customer experience.
- Third, you have something the non-traditional competition lacks. That is a financial relationship with your customers and massive amounts of transactional data that can be forged into actionable insight to deliver that customer experience.
- Fourth, all your data is worthless, if it is not accessible. You must [connect the information]/blog/information-management-challenges/) that is scattered across your enterprise if you are going to make a difference.
- Fifth, you need to leverage AI and ML to derive those insights. It is not a scalable model to simply throw people at it.
- Sixth, you must modernize your information systems in order to gain the digital agility to quickly respond to changing business models and customer preferences as well as deliver new products and services at a speed that matches you more nimble competition. That fundamentally means moving from a product based application mentality to a platform approach.
- And finally, the customer experience must be personalized at every touchpoint with information-rich contextual data that makes the customer feel you have personalized the interaction specific to them.
Schedule a demo today and let us show you how the power of the Nuxeo platform can help you deliver the superior customer experience you need to be competitive in this digital age.