Transformation leaders at financial institutions are bombarded with constant news on new challenger banks entering the space and the intensifying competition from tech companies such as Apple. In addition, the last decade has brought a proliferation of FinTech solutions that allow banks to compete and transition from being closed to open systems, leveraging ecosystem innovation to offer new products and services and distribute solutions digitally. The plethora of FinTech solutions makes it difficult for financial institutions to understand how to create relevant business cases, select, and then implement the right solution for their business and their customers. While the ability to develop relevant ideas through empathy, experimentation, and FinTech integration will certainly be part of the DNA of those financial institutions who will stay ahead of the game, knowing the customer and anticipating what they will need next is imperative.
Start by understanding who your customers are, what problems they are facing, and what they will want in the next 5-10 years.
So, how do we do this? Start with ‘Why’. If the answer is to meet the needs of your clients (or members of a credit union), then you’ll quickly understand how important it is to incorporate your clients’ needs, wants, and lifestyle considerations into your digital transformation strategy. Instead of immediately implementing a solution, start by understanding who your customers are, what problems they are facing, and what they will want in the next 5-10 years. As Abraham Lincoln once said: “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Below are a few recommendations on what “sharpening the axe” may look like in a new customer-centered initiative.
Search for information that’s already available.
It’s always good to be aware of industry-wide research and to understand market trends. According to the Financial Brand, customer expectations have evolved, and it’s well known that technology is changing the way we shop, communicate, and live. Today, customers expect the same day or immediate transactions, impeccable UX with minimal friction, and just enough information to make a decision.
At the same time, a lot of companies are trying to disrupt the banking industry. Amazon, for example, is shaking it up (American Banker, 2019). Technology giants are providing financial services while some banks are going ahead and reinventing themselves by offering new ways, new products and services, and opening “digital only” branches and subsidiaries. Not many succeed though, and it’s important to understand why. Learning about the market, from the good and the bad, can give tremendous insight into what works and what doesn’t.
A few recommendations on how to get started:
- Find relevant research, articles, forums, publications, and reviews related to the process that you want to improve. Learn not only about the successes but also about the failures.
- Look outside of your own industry. Your customers compare you not only to other FIs, but to other organizations, such as Google, Amazon, Facebook, and Apple.
- Dig deep into the data that you already have.
If we were to take a new customer onboarding experience as an example, what are others already doing right now to make this experience better? What are the main pains and frustrations of the customers with this process? Is there research available? What does onboarding look like in a company like PayPal? How long does it take to open the first account in your organization? What is the conversion rate and at what steps do customers drop off? If you are asking your customers to come into a branch or store to do this, how many of them show up for appointments?
Collect additional data for analysis.
Customer feedback is an invaluable source of insight into what your customers need and feel about your brand and product. Most companies collect feedback from their customers in some way; however, not many are actually organized enough to have a holistic view of all of the feedback collected. Feedback comes through different channels from conversations in a branch, emails, online forms, social media, online reviews, or call centers. To be able to act on this feedback, management has an important role in removing silos and creating a central source of data about complaints and their resolutions.
Feedback collection may be done in two primary ways: passive and active. A good way to start is to organize your passive data collection. To do that, you need to review the process for handling complaints. This is the most obvious source of feedback that may help your organization to improve its performance. Some questions to ask: Is there an easy way for a customer to submit a complaint? Who is supposed to answer it and what is the expected time to respond? Has it been documented and reported to management? If any of these questions are difficult to answer, it would be good to review the design of your company’s complaints procedure, SLAs, escalation paths, and documentation process. With this, you will be able to automate some of the process steps which will later allow for a more in-depth data analysis.
Unfortunately, the passive feedback collection may not reflect the full picture. For example, not everyone will take the time to submit a complaint while likewise, not all complaints reach management. The next step is to then proactively solicit feedback from your customers (active feedback collection). There are many ways of doing this. The most efficient way is to organize a survey.
Some recommendations on how to collect more data:
- Form a “voice of the customer” team responsible for collecting and analyzing feedback.
- Talk to the branch specialists about the common customer challenges and friction points.
- Organize a customer survey for the clients and ask specific questions about the process that you want to improve.
- Conduct “mystery shopping” research either on your own or with employees (this can be a lot of fun!).
Going back to our example of a new customer onboarding experience, consider what more in-depth insight into certain processes can provide. You may want to put out a separate survey for the newly onboarded clients (no later than three months), such as an online survey. Those who didn’t respond can be reached out to by phone. You can also collect data by going to individual branches and talking to employees about the issues they have when onboarding new clients. Observation is also a great way to get new insights. Benchmarking and mystery shopping will give you great insights on how you compare to others.
Analyze and synthesize data and identify problems with a full picture.
Collecting and discussing newfound insights is an important step but is not enough unless the information is properly analyzed to become actionable. After collecting all information, external and internal, it’s time to present the findings to the appropriate stakeholders with the right level of decision-making authority.
Depending on the maturity level of working with data, this step can be as simple as using Excel to make calculations and PowerPoint to create a presentation. It can also be as sophisticated as using advanced statistical models built with BI tools presented as dashboards. The essence of the analysis stays the same, and the goal is to get information from customers so that you may address their problems and concerns and put it in front of the decision-makers in a consumable way.
If customer-centricity is considered a core value of your corporate strategy, then “voice of the customer” should be incorporated into the strategic decision-making process.
This step requires, foremost, a proper organizational culture. If customer-centricity is considered a core value of your corporate strategy, then “voice of the customer” should be incorporated into the strategic decision-making process. It’s important to note that when talking about the customer, it is the Board of Directors who are supposed to represent them. Making decisions based on gut feelings and experience of a few people is quite risky and may not help to achieve the corporate goals. Management should apply data-driven decision making on a daily basis and trust the findings of the research team, at least to the same extent as their own experience and gut.
Recommendations on conducting data analysis and reporting:
- Organize monthly/quarterly/yearly reviews and report on customer satisfaction and issues.
- Be aware that enterprise feedback management does not capture all feedback.
- Take additional time to dive deeper into the issues and problems that are coming from your customers. Map the journey. Find out what causes frustration. Figure out if it’s to do with the process, people, technology, marketing, or perhaps all of the above.
Using the customer onboarding process as an example once again, you may want to put together a special report with insights about your customers’ experience at the very beginning of their interaction with you. Add relevant metrics to the regular report, such as time to onboard, conversion rates, satisfaction rates about the onboarding or new client experience. Track the dynamics and observe any outliers and ask if there are any inconsistencies between the branches, channels, regions, or customer segments. If so, what could have led to these differences? The data will tell the story and help to build hypotheses that can be tested.
Why start with ‘Why’?
If customer-centricity is considered a core value of your corporate strategy, start with learning more about your customers and their preferences. Set a goal to really understand what your customers want and how their expectations are going to change in the next 5-10 years. Before going into the difficult solutions selection process, do your research and analyze customer needs properly to understand and deliver on what they need and value most. Instead of focusing on ‘What’ and ‘How’, focus your efforts on ‘Why’. This will help you to formulate a clear strategy and ultimately allow you to achieve the best business results for your bank or credit union.