MANAGE THE RELATIONSHIP BETWEEN THE BANK, ITS PEOPLE, AND ITS CUSTOMERS Copy
Customer-centric culture
A customer-centric strategy requires a bank to ensure that its employees understand that they must operate differently from a product or sales-oriented culture. In the latter that may focus on selling as many products as possible to anyone who will buy one, whereas they should now focus on delivering mutual value through customer satisfaction and loyalty.
It’s a change that must be implemented through every level of the organisation from the CEO and the executive management team, through their departments and functions, such as operations, credit and risk, compliance, and channels, to the front-line employees in branches, call centres and maintaining digital channels.
The bank must build and reinforce a customer-centric culture through formal training, through coaching, and in the language used to communicate with employees and customers.
It must think and act differently, from being ‘inward looking’ to an ‘outward looking’ approach in how they interact with their customers. This means that they look to customers for guidance and insight concerning how they operate, rather than think for them, or refuse to shift how they’ve always operated.
A customer-centric bank will build what it offers customers around propositions, not low-cost channels, or individual products (or bundles of them) that generate the most income. Propositions solve customers’ problems and are based upon thorough customer research, modelling, and testing with small groups of selected customers to prove their commercial value and desirability to customers. It can be a massive mistake to bundle existing products and services into a ‘package’ that doesn’t achieve the fundamental aim of solving customers’ problems. A proposition includes products, services, and other features, including how customers get the products and services and how they manage them.
Building a customer-centric culture
The challenges of building a customer-centric culture should not be underestimated. Companies have been trying to adopt customer-centricity for over 20 years.
The most common barrier to customer-centricity in an organisation is the lack of a customer-centric culture. As we stated in the Business Models Module, most companies are product-centric or sales driven, or customer-centricity is only a priority for certain functions like Marketing.
Treating customers fairly, but not equally
Besides any regulatory measures, the bank must have a ‘code of conduct’, derived from customer research into how they want their bank to treat them. This will help to realign the relationship between the bank, its employees, and their customers.
In response to past problems, many regulators mandate retail banks to treat their customers fairly and monitor whether the banks adhere to the rules. This means that the product or service terms and conditions, ‘the small print’, must be fair in how the product or service is delivered. They must be free from technical jargon and written in plain language so that the intended customer can understand them.
However, customers generate different levels of value for the bank and, whilst they must be treated fairly, they do not have to be treated equally. More valuable customers who feel that the bank isn’t recognising the value that they bring might seek better service from competitors. This is where research might uncover needs and problems from this group of customers that leads to a proposition that solves those problems.
Empower employees to make decisions that meet a code of conduct
A customer-centric bank must use its code of conduct to empower its customer-facing employees to show that it values the customer, treats them as an individual, and leaves them in control and that it respects and takes customer feedback and complaints seriously.
This helps resolve queries, problems, and complaints quickly and fairly at the first point of contact, sometimes called ‘first point resolution’. Even though the customer may not get the result they want, it shows to them that the bank takes the matter seriously and doesn’t evade dealing with the issue or pass the problem around. Within guidelines, supported by training and coaching, employees will make on-the-spot refunds or ex-gratia payments as necessary without referral to management.
Customer Care
Unfortunately, sometimes things go wrong. Misunderstanding and mistakes happen. Products and services don’t do what customers expect them to. A customer may complain if the product or service cannot meet their expectations.
A customer-focused bank will want to deliver its products and services with reasonable care and skill. This means acting responsibly towards the customer and keeping accurate records of their finances. It will provide its services when it says it will and within a reasonable time, depending on the service – and at the agreed price.
Many countries have implemented regulations that require banks to publish their complaints processes. Under these regulations, banks must tell customers how to complain, the process that they will follow to resolve the complaint, and how long it should take. The regulations require the bank to explain how the customer may refer their complaint to any regulator or ombudsman for adjudication.
The regulator or ombudsman may require banks to report the number of complaints that they receive by type of complaint, how long (on average) complaints take to be resolved, and the number that are escalated for adjudication by customers. They will regularly publish these statistics by bank. This can help consumers make informed decisions about the service delivered by banks that they are considering.
A customer-centric bank will view customer complaints positively as a source of feedback on their products, service and delivery and take action to make performance improvements.
Sense of Urgency and Cut Down the Delay
Consumers are driving changes to how all businesses respond to them, whether it’s pizza delivery within 30 minutes, same day delivery of groceries, or next day delivery of online purchases.
Much of this is because of the access that Internet-enabled smartphones gives to consumers to get what they want, when they want, and how they want in a way that barely existed five years ago.
The service levels at many banks are typical of product-centric or customer-centric thinking and are often designed to meet the needs of the bank, not the needs of customers.
This change applies to retail banks as it does to any retailer:
- Reply to enquiries immediately, within the same day where possible, and certainly within 48 hours.
- Advise customers of transactions as they happen, for example, as a debit card transaction is authorised, providing the customer with re-assurance that their account is safe and that transactions are taking place as scheduled.
- Provide access to account information and services, such as checking their balances and transactions, making, and receiving payments, managing their debit and credit cards, and reporting fraud.
- Ensure that customers never have to repeat or re-enter information twice (or more) to buy, use, or manage a product or service.
- Open new products or manage existing products or services from the device or channel of the customer’s choice and, at their convenience, not how the bank wants to manage account opening or product maintenance. Allow different channels to continue the customer’s journey and making it a straight-through-process and without loss of information or delay.
A customer-centric bank must understand how, when customers must move channels unnecessarily, it causes friction and frustration and ‘bad demand’ for the bank. ‘Bad demand’ is an unnecessary additional workload caused by not completing an interaction efficiently and the bank must eradicate this through process re-engineering.