Customer behaviours and expectations are changing at an ever increasing pace. This is driven by technology ubiquity and habits set by internet companies that have largely come to life over the last decade and a half. As a result, the gap between what customers expect from banks and what banks can deliver is wider than ever, states the newest British Banking Association, Seren and EY report The Way We Bank Now.
Seren and EY believe that the quality of customer experience banks offer has become their main source of competitive differentiation in today’s market. Only those that become truly customer-centric will be able to deliver the exceptional experience that is key to winning and retaining customers in the face of competition from both new and traditional players.
Customers in the digital driving seat
Digitally native companies such as Amazon, Alibaba and Zappos, are changing consumer behaviours and expectations faster than financial institutions can respond. Consumers have become accustomed to instant (or near-instant) gratification, outstanding service quality, simple and intuitive processes, 24/7 availability, self-service, transparency of products and pricing, personalisation and tailoring, and a consistent experience across all channels. It comes as no surprise that customers bring these expectations to their dealings with other service providers, including their bank.
To add further complexity to the challenge facing banks, consumers are taking ever increasing control of their personal finances. As they move from researching to eventually buying a product, customers switch from site to site and from channel to channel, questioning service providers, reading online reviews and seeking advice on social networks as they go. Consumers expect to be able to do the same when choosing and buying financial products.
From incremental change to total reinvention
This rapid change in what customers are looking for is shaking up the banking market. The number of complaints banks handle daily has skyrocketed. Customers, who in the past would remain with the same bank for most of their adult lives no matter what, are now much more likely to switch. This could lead to a ‘winner takes all’ effect, with banks that adapt the fastest likely to take significant market share from their competitors. And, with the level of competition now coming from FinTech players, there is no absolute guarantee that it will be traditional banks who will win.
New FinTech entrants, such as Nutmeg or TransferWise, are already focusing on specific areas of the banking value chain, and are naturally agile and customer-centric. We know that delivering customer experiences that meet the expectations of today’s digital consumer will require much more than incremental improvements to yesterday’s processes, which were designed for a banking world based on branch, telephone and mail interactions.
Banks must completely reinvent their customer processes to offer customers the exceptional but simple experience they seek, as well as choice, flexibility and transparency. They must also deliver this change in a way that is rapid and agile. Banks need to start from a blank sheet of paper, with a new model of digital and mobile service delivery, fully integrated with, and complemented by, traditional channels. All this can only be delivered by designing services based on the desired experience outcome; that is, by putting customers first.
The Service Design approach
For the last 20 years, banks have been vigorously soliciting customer feedback and now have a mass of customer (dis)satisfaction data, which is informing new product and service design. Whilst enhancements in service can be identified, there has not been a consistent improvement in the quality of end-to-end services to date, either because of the siloed approach or because of system issues. This is both frustrating for the banks and a source of dissatisfaction for customers, who feel banks are ignoring their feedback.
Therefore, to deliver the reliable and efficient end-to-end experience customers expect, banks need thoroughly well-designed operations and products. Service Design enables service provision to be simple, more efficient to run and intuitive to use. Crucially, it does this by looking at the complete experience from the customer viewpoint to deliver services that are ‘simple, swift and elegant’ – the guiding principles used by Google, Amazon and Apple to design their market-leading services.
At both Seren and EY, we believe that digital is enabling business transformation through technology. It is not enough for banks to innovate and introduce new digital channels and tools to customers. They must do so in the context of transforming the end-to-end customer banking journey. Digital should be an enabler of this transformation, not an end in itself.
Beyond this, banks need to change the way they are organised to become more cross-functional. The culture inside the organisation needs to become more customer-focused and externally-oriented. The banks who do this successfully, who design and innovate well and who integrate their innovations seamlessly into the customer experience will deliver truly engaging banking services. They will be the winners of tomorrow.
This is an excerpt from a joint article by Seren founder Catriona Campbell and EY Head of Digital for Financial Services David Ebstein, published as part of BBA The Way We Bank Now 2015 report.