As discussed in Business Models Level I, banks are suffering from a loss of trust that erodes customers’ loyalty and opens them up to considering competitors’ offers.
It concluded that customer-centricity was a strong defence against loss of customers’ trust, loyalty, besides being a convincing reason for prospects to buy products and services.
Optimising customer satisfaction leads to improved trust and loyalty.
A bank can optimise satisfaction by understanding why and how customers buy, use, and manage their products and services and removing as much ‘friction’ as possible from the interaction. This starts with the bank understanding the jobs that customers need to do and the problems that they solve in doing so.
Banks do this by optimising their regular interactions to remove friction from their customer’s point of view and making sure that any interaction where the customer switches channel to complete a job, it happens seamlessly, adapting to the new journey option.
Most banks, whatever their ‘centricity’, undertake customer journey mapping to design their new product sales, on-boarding and servicing processes to avoid bottlenecks and problems. However, product-centric, and channel-centric banks’ ‘inside out’ approach can cause them to focus on the process from the bank point of view and not from solving the customer’s problem or the job the customer is trying to do.
Customer-centric banks take a more collaborative and wider ‘outside in’ approach that focuses on the problem that they are solving and the job to be done. To do this, banks must undertake customer journey mapping that understands what the customer needs to do. This approach strengthens the customer’s experience, trust, and loyalty.
The Internet and ecommerce have created a new sense of urgency and responsiveness that is affecting how banks respond to their customers for services, such as obtaining product pricing quotes, responding to enquiries, or complaints.
Because customers increasingly want quick responses to their interactions, customer-centric banks automate through a combination of robust self-service solutions, with human oversight and interaction.
One solution for banks is to use Next Best Actions (NBAs) that are a range of responses that a bank predicts for an individual customer. This can be a new product, moving a product sale along to the next stage, or service actions that enhance the customer’s experience. It can deploy them through Omnichannel banking.
“Omnichannel banking seamlessly integrates the bank’s multiple channels to deliver an uninterrupted customer experience, whether the customer or prospect is buying, using, or managing the bank’s products and services. Its focus is not only to conduct transactions accurately and efficiently but to interact with customers to gain valuable insights that build the relationship, improve trust and loyalty.”
@ Smarter Way Mentors Limited 2021
Omnichannel banking is central to being customer-centric in today’s competitive environment and is the next step in the evolution from a single channel to multiple interconnected channels.
Originally, banks and customers interacted through one channel, the customer’s branch. Note that it wasn’t just any branch in the bank’s domestic network, it was the branch that opened and maintained their current account. Customers could perform simple transactions at other branches in the network, like cashing a cheque or paying in a credit.
You could say that branches were ‘product-centric’ and because all revenue generating activity took place there, they were the profit centre. There were no other channels such as telephone banking or contact centres (when the customer called the bank, they spoke to an employee in the branch), internet banking hadn’t been invented. ATMs with basic functionality did nothing but dispense cash. This was mono-channel banking as everything happened through the customer’s branch and the customer journey to buy products and service them was simple.
As they developed new channels, such as telephone banking, Internet banking and mobile banking using an app, the bank moved towards being multichannel. Specialist salesforces and relationship managers were also introduced. This is the stage that most banks find themselves in. Revenue generating activity took place in multiple channels, resulting in multiple profit centres, where revenue is split between originating and contributing channels.
Multichannel Banking are channels that are not well integrated in their approach to interacting with customers. From a customer interaction point of view, Omnichannel Banking is highly integrated.
In a truly omnichannel banking experience, customers can switch from one channel to another without fear of the bank losing track of their journey, and them having to start again (which was sometimes a multichannel outcome).
Providing the link between the channels that a customer might use when they buy or use a product is the thing that omnichannel strategy must achieve. It does this by thinking of customer journeys and how its channels should work from the customer’s point of view – an ‘outside in’ customer-centric approach.
Demand for omnichannel banking is being caused by customers taking it for granted that they can access their bank account from any device, anywhere, anytime. They are blurring the traditionally defined channels of banks, but the result is often a disappointing and fragmented customer experience.
Under pressure to not be left out of the current wave of digital proliferation, many banks have rushed to build and implement apps for many devices and channels. The result is a multichannel approach that has the unintended consequence of more channel silos and a severely fragmented customer experience.
Many of the process and technology components to be customer-centric and operate in the way described in the Module are often already in place and require configuration to focus on the customer. This is no simple thing, but it can be achieved through a step-by-step approach.
By far the hardest challenge is to change the bank’s culture from a deeply entrenched product-centric, sales-focused organisation to a customer-centric, value-focused one.
In Customer Management Level II, we will examine how to use the techniques that we’ve outlined in this Module and discuss the measures and metrics to deploy resources effectively.