50 years ago, if you wanted to withdraw some money, pay in a cheque, or take out a loan then your experience would have been very different to today. Firstly, you would have had to visit your local bank or building society. You would likely then have had to wait patiently in a queue. Finally, depending on the nature of your enquiry, you might then need to speak to a cashier or your bank manager.
The traditional bank manager was an interesting character who began to disappear by the 1990s through the introduction of centralised credit scoring. Before this, they played an important role, not just in the financial wellbeing of their customers, but in their local community. They would have spent a large amount of their time interviewing customers, reviewing and signing correspondence, and establishing new contacts within their local area. They needed to be known as being trustworthy and fair, to have an eye for detail, and able to effectively manage their customer’s expectations. It was a role based on skill, authority, and autonomy that supported risk-based decision making and enabled a personalised service.
Since the 1990s, physical banking and the role of the traditional bank manager have been impacted by a range of political, societal, and technological factors that have fundamentally transformed financial services and how customers interact with them. Factors include the introduction of ATMs in the 1960s, the rise of internet banking, and the emergence of neo banks offering online-only banking at a reduced cost.
But with each new innovation also came an added layer of separation between the customer and the institution which led to a range of unintended consequences:
- Fewer touchpoints = every interaction matters.
- Faster transactions = lower patience.
- Increasing digital skills = higher digital expectations.
- Easier to switch providers = decreasing loyalty.
- Lower barrier to entry = increased competition.
- Crowded marketplace = harder to differentiate.
Customer expectations continued to rise while the physical experience and personalised service slowly eroded and, along with it, customer loyalty.
Before the pandemic, many established financial institutions (FIs) still retained a reasonable presence on the high street. For some FIs, this was a result of failing to realise the full potential of digital transformation, but for many, it was an intentional move to provide an effective and inclusive omnichannel strategy. Handelsbanken, one of Sweden’s leading banks, retained its network of 380 branches to deliver a highly personalised and bespoke customer service. As a result, Handelsbanken has the highest ten-year total return of any of the four major Swedish banks and has ranked number one for customer satisfaction for the last 30 years.
Customer’s needs during the pandemic
When Covid-19 broke out, the combination of social distancing requirements, lack of commercial activity and customer hesitancy meant that many branches were forced to close their doors as a result of inactivity. As the demand for online and phone channels increased dramatically overnight, we saw catastrophic examples of services falling over, call centres running out of capacity, and people waiting in virtual queues for hours. Just as customers were at their most vulnerable, many FIs failed them, and in doing so may have damaged their brand perception beyond repair. Of those that were poorly prepared and struggled to offer continuity, many scrambled to transform their services by moving call centres to the cloud – rapidly deploying self-service mechanisms that previously didn’t exist and bolstering their infrastructure to cope with the spikes in demand.
We have seen two years' worth of digital transformation in two months
A way forward
Today, a year on from Covid-19 being declared a global pandemic, data begins to paint a familiar picture. Just as we saw during the 2007 financial crisis, FIs which have reacted fastest to provide a superior customer experience have financially outperformed their lagging counterparts.
So how do you improve something as complex and intangible as your customer’s perception of their experience with your brand? First, it’s helpful to think of customer experience as the sum total of every interaction a customer has with your business. Whether navigating your website, talking to customer services or receiving the product/service they bought from you – it all plays an important role in the resulting customer perception. In essence, it’s about putting customers first. It may seem obvious, but to truly drive holistic improvement requires a top-to-bottom commitment, particularly across large legacy estates and complex, highly regulated industries such as financial services. By analysing the organisations that performed the best during the pandemic and the 2007 financial crisis, it’s become clear that there are four actions FIs can take to move the needle forward.
1. Prioritise care, safety and trust
The pandemic has had a huge impact on customers’ financial, mental, and physical wellbeing. Reaching out to customers with empathy over sales-driven marketing should be the first priority for FIs.
2. Meet your customers where they feel comfortable
Investing in digital self-service channels, enabling everyone to use them and offering digital assistance where needed will ensure that the majority of customers can solve their own problems from the comfort and safety of their own home. Testing digital services with users with a range of digital skills, confidence and accessibility barriers will not only make services more inclusive but also simpler for everyone.
3. Increase your agility
Covid-19 has highlighted the need for organisations to quickly adapt to changes in customers’ needs and behaviour. Investing in the necessary digital skills and infrastructure to enable rapid digital experimentation and the iterative deployment of scalable solutions is the cornerstone of any resilient organisation.
4. Create a customer-centric culture
While technology is a key component of enabling a better customer experience, the only way of driving meaningful and incremental improvements is by making customer-centricity part of the culture at an organisation. This means democratising data and insights to drive decision making, developing a customer experience strategy and rigorously reviewing progress against a set of key objectives. Organisations are increasingly appointing key personnel, such as a Chief Customer Officer, to be accountable for both customer strategy and all customer initiatives across the business. Where the opportunity to make such a high-profile executive appointment may not exist, simply facilitating regular and direct feedback from customers and opening this up to the wider organisation can be an effective means for building empathy with customers.
The evidence is clear from the precedent set by industry leaders: FIs that revolve their strategy around the needs of their customers and execute their strategy effectively, command a loyal following and exceed the financial performance of laggards. To be successful in the post-pandemic era, organisations must embed empathy and understanding into every customer interaction and embody the trustworthy and personalised services provided to customers by the bank managers of the past.