Why banks need to become more customer-centric

By Daragh O'byrne | 24 May 2017

In many industries, the explosion of “choice” and the resulting decline in customer loyalty has prompted companies to dramatically overhaul their approach to customer centricity. Or to put it another way, many companies have pivoted to deliver what their customers want, when and where they want it. In the process, many companies have struggled to overcome limitations imposed by legacy infrastructures and new entrants have sprung up to take advantage of the latest technologies. Consider the changes brought about by online retail, travel booking and indeed ground transportation.

Despite the critical importance of banking to consumers, the financial services sector hasn’t really been leading the charge for customer focus recently. If it had, then perhaps we would not have seen the rise of fintech as a global trend – where companies are leveraging the latest technologies to exploit gaps between customer expectations and existing banking products and services. While it may be true that the initial hype about how fintechs would eliminate traditional banks has subsided, their disruptive and transformative effect has just begun. Consumers’ expectations have risen; they expect their financial services providers to give them the same customer experience as they get from the latest app-based innovation.

While bankers understand that things need to change, they are prevented from fully implementing their customer-centric strategies by a number of factors, including regulatory restrictions, security concerns, ageing and siloed IT infrastructures, the tremendous pressure on costs and in some cases a traditional mindset. But the seeds sown by the fintechs are now reaping positive results - many banks are now embracing bolder customer centric transformation initiatives. Recognizing growing customer impatience, the potential of customer centricity as a competitive edge and the business gains from technology advancements like digital, leaders are reinventing their banks.

So what does becoming truly customer-centric really mean in banking? Is it about being digital and multi-channel or is it about having more branches to serve customers closer to their homes? Is it about making them aware of all that the bank offers, or is it about knowing what they want and helping them make an easier decision, faster? Is it about enticing them with a warm welcome and forgetting about servicing once they buy, or is it about providing an end-to-end consistent digital experience? Customer centricity is all about keeping the customer’s perspective above everything else and then designing processes, products and operating models around it.

Consider the experience of a person looking for a new loan. It begins when they receive offers for new banking products over email, mobile, messages and calls. Faced with the massive time pressures that people report these days, a bank that sends across only relevant and personalized offers over their preferred communication channel clearly stands out. Predictive analytics, combined with omni-channel solutions and the ability to rapidly create highly tailored products, turns this herculean task into something far simpler.

Moving on, as the customer decides to explore a particular offer by visiting the bank app/website, they would expect a user-friendly experience and a simple application process that can be completed there and then without visiting the branch. Next, they would expect instant acknowledgement, transparency in tracking and quick processing – again with modern systems this is not a big deal anymore. However, the sophisticated digital front end has to work seamlessly with the rest of the bank’s systems.

Today’s advanced digital technology platforms are designed keeping such situations and complexity in mind. And let’s not forget that customers spend far longer paying off a loan than they do buying the loan, so the bank needs to sustain the experience throughout the entire loan lifecycle.

Bank of Queensland (BOQ) in Australia is a great example. The Bank, established in 1874, adopts a strategy based around operational excellence and building strong customer relationships. BOQ is a bank with a mission – to prove that ‘it’s possible to love a bank’. Recognizing that customer expectations were changing and that quick credit decisions were highly valued, BOQ radically reinvented their approach to lending, underpinned by digitized, automated and streamlined processes. The results speak for themselves – with end-to-end digital processing, BOQ reduced ‘time to yes’ for loan approvals by 99% and reduced ‘total touch time’ for application processing by 85%. A centralized credit policy reduced rework loops and enhanced credit decisions with an automated credit bureau check in less than 30 seconds. Reduced processing time and ease of access over digital channels resulted in enhanced customer satisfaction with better transparency. Click here to read more about the story of this digital transformation in lending by Bank of Queensland.

Customer centricity doesn’t mean all things to all people, but banks do need to determine what customer centricity means to their strategy and how to align their business objectives and mission to changing customer expectations. Put simply, to turn theory into practice, customer centricity needs to be deeply embedded as part of the institutional philosophy, which can then be woven into every small step of the customer experience journey. Technology will be the backbone supporting these transformation initiatives and ensuring that the actual experience matches the concepts. As customers continue to be faced with ever more options, brand loyalty will continue to be challenged – unless you can prove that it is possible to love a bank. 

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