10+ Years later: How customer experience has shaped the banking industry
Originally published on Forbes.
In the decade since the financial crisis brought widespread attention to how the banking industry treated its customers, many banks have made customer experience (CX) transformation a strategic priority. The post-recession banking landscape – reshaped by new security and regulatory requirements and populated by a new breed of competitor, financial technology (fintech) firms – has spurred banks to shift away from their traditional location-driven strategies and instead focus on differentiating their brand through the experiences they deliver to customers.
In the current landscape, it’s easier than ever for customers to open accounts with a number of different businesses, rather than rely on a single bank for all their needs. These new industry dynamics – along with the rising popularity of CX generally – are driving banks to invest in developing strong, long-term customer relationships.
So, how effective has this been?
To understand the current state of customer experience more broadly, the Qualtrics XM Institute (XMI) conducted a large-scale consumer benchmark study that asked 10,000 U.S. consumers to rate their interactions with 294 organizations across 20 industries, including banking. We examined the quality of CX within each of the industries, as well as how customer experience affects various aspects of brand loyalty. Within banking, we looked at 5,500 consumers who evaluated their experiences with 15 large banks.
We found that banks are:
- Delivering above-average CX. The banking industry’s strategic emphasis on customer experience is not going unnoticed by customers. Banks received an overall XMI benchmark rating of 70%, tying for third place out of the 20 industries included in our broader CX research. What’s more, since we started studying the CX industry nine years ago, banks have actually improved their benchmark rating more than any other industry, increasing eight points in nine years. Banks earn particularly high scores on the effort component of an experience, which shows that the investment they’ve made in delivering convenient, simple experiences through digital channels, especially mobile apps, is paying off.
- Earning consumers’ trust. We evaluated how likely customers were to recommend, repurchase from, and trust companies within different industries. While banks received fairly average scores for the first two loyalty behaviors, they outperformed the overall industry average when it comes to trust, with more than two-thirds of banking customers saying they trust their bank to take care of their needs.
- Losing business because of poor experiences. Although only 6% of consumers who interacted with a bank over the previous six months say they had a bad experience, of those customers who did have a negative interaction, 42% of them say they either decreased or stopped spending with the bank after that poor experience. Losing the business of nearly half of your disgruntled customers is a steep price to pay, and it doesn’t even reflect the number of customers who chose to open accounts elsewhere rather than expand their business with that bank or those who choose not to do business with the bank in the first place due to negative brand perception.
- Making it difficult for customers to find a convenient branch. When we asked customers which aspect of banking most needed improvement, 15% identified finding a convenient branch location as the most problematic, while 9% selected using online self-service and resolving a customer service issue. The fact that the biggest experience gaps span in-person, digital, and contact center interactions is noteworthy – and a good reminder to banks that they must consider customer experience across all of their channels, not just one.
The banking industry’s transformation from being a CX cautionary tale to one of the highest-scoring industries in our study demonstrates that any company, in any industry, can become customer-centric. Here are the three habits companies should adopt to establish customer experience management as a core organizational discipline:
1) Continuously learn what customers are thinking and feeling. To deliver consistently positive experiences to customers, companies must first capture and analyze an ongoing flow of feedback and behavioral signals from key customer segments at moments of their experience. Understanding how customers are thinking and feeling about their interactions with the company – and marrying that information with operational data like products owned and interaction history – allows organizations to identify existing pain points, uncover opportunities for desirable new offerings, and proactively close experience gaps.
For example, when one large bank combined customer data with operational data from its contact center – like wait times and transfer rates – it uncovered that its Interactive Voice Response (IVR) system was confusing customers, leading them to enter the wrong IVR option, then having to re-explain their problem to a live agent, who then transferred them to another department – all of which wasted a good deal of time, money, and customer goodwill. The bank implemented a natural-language processing solution that allows customers to simply state their problem at the beginning of the call. The solution is able to recognize their intent, assign a label to the support ticket, and then route the customer to the best available agent. Since implementation, the company has seen a 91% classification accuracy rate and a significant decline in call time, transfer rate, and negative customer sentiment.
2) Share insights across the organization. Once a company understands how its customers think, feel, and behave, it needs to get those insights into the hands of people who can take meaningful action.
For example, one bank created a series of in-depth customer journey maps highlighting how key customer segments felt at different moments. So, for instance, based on customer feedback, the CX team mapped out the journey of a budget-conscious customer checking the app to see if she can afford lunch. It followed her emotional journey from interest as she opens the app, to anticipation before she swipes to see her wellness score, and finally, depending on that score, self-admiration, annoyance, or anger. It then shares these maps with stakeholders responsible for creating these experiences, like designers, so they understand in delivering By sharing customers’ changing emotional states as they move through the app, the bank ensures that its designers are deliberately creating positive, engaging experiences.
3) Rapidly adapt to changing needs and expectations. Sharing customer insights is meaningless unless the company acts on them to improve its experiences.
Customers today expect simple, personalized experiences. One regional bank realized that its new customers felt overwhelmed by the multitude of potential products and offerings. It redesigned its onboarding journey and incorporated a “Help Me Decide” tool, which asks customers a number of questions about their individual needs and then generates a set of customized recommendations based on their responses. The personalized nature of these suggestions makes customers feel more competent and confident in their decisions, leading to a 4x increase in the number of new customers who actually complete the application process.
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