Financial services is an industry that is not often perceived to put the customer at the heart of business models. The industry has sometimes been slow to adopt new technologies and customer relationship models and to respond to consumer needs.
However, recent economic and societal developments have changed the playing field irreversibly. The combination of: capital constraints, new regulation, low growth in mature markets, digitisation, and the rise of the connected consumer are hugely disruptive forces in the financial services landscape.
Some of the challenges the industry faces
- New players have entered the market and have been able to swiftly offer a service more tailored to the needs of modern customers as they are not handicapped by legacy systems and operating models.
- Mobile and online channels are transforming the landscape for consumers and becoming a preferred channel of interaction.
- Regulation has changed the landscape for advice and sales, with many organisations still working through the impacts, risks and opportunities raised by changes to investment advice and conduct regulations.
- Consumers' confidence, especially within the "millennials" is low. They are more skeptical and harder to engage with through traditional means, such as direct marketing, telephony and traditional advertising.
No one-size fits all response exists, but step one is to think customer-centric
There is no single catch-all for how institutions should respond to the new environment. In my view, the response should be driven by customer needs and by granular insight about that customer segment. Being 'customer-centric' risks becoming a buzz term, much like CRM became in 1999-2003. But when done properly, a customer-centric approach can drive exciting results and outperformance.
- Operating models need to be customer-centric and collaborative. Instead of product silos think customer segments. Online must have more emphasis, internet channels should feel safe and secure but it should also be more engaging and interactive – allow instant messaging with customer service reps, provide useful content and look and feel as if it was made with the customer not the institution in mind.
- Channel choice is customer-driven. Don't look to migrate transactions to the lowest cost channel, but rather recognise that customers will be multi-channel. Give them the opportunity to resolve their transaction on their terms, make it simple, and intervene proactively when things go wrong.
- Product design needs to evolve. Too often products are designed in isolation from the customer experience, or legacy products can't be evolved to the needs of emerging segments. How long would it take you to push out a simple, execution-only product via social media channels?
- Creating affinity to traditional brands can be hard. Be genuine, engage users on their terms and offer a service tailored to their needs. When a customer feels they have been the recipient of free, useful advice or information they are far more likely to return as a paying customer as well as advocate the company that provided it.
- It won't work if the organisation isn't aligned. Virtually every organisation makes statements about being customer focused but few have really embodied this in how their people and leaders act and are motivated. One of the key practical steps is to consider how the customer is represented and embedded in all parts of the organisation.
The pace of change has taken many by surprise over the past decade; it has seen the erosion of the traditional boundaries and rules of engagement. However, far from fearing this change financial institutions should embrace it as a unique opportunity to listen, react and update their propositions and processes in line with what their customers want.
Peter
Desouza
Peter is a Consultant in Sales and Distribution. He has 3
years' experience of working predominantly within the retail
banking sector on customer transformation projects. He has worked
on defining customer journeys, customer value and segmentation, how
to attract, interact and retain customers in the social era. Peter
has also consulted on a range of start-ups in the social media and
crowd funding space.
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