As McKinsey pointed out this week, banks know that they are in a customer experience battle. Competition from within the sector is overlaid with new threats from lifestyle and social media brands competing for customer attention and share of wallet. More effective use of data is the key to attracting, retaining and profitably serving the best customers. McKinsey goes on to suggest five bold CX moves to get ahead. But understanding what needs to be done is different from knowing the best ways to do it. Economic pressures on both customers and financial service providers mean making the right decisions on customer experience, and ensuring real return on those investments, is critical.
Over the past few years, the sector has made significant strides forward in improving the experience of customers. The process was accelerated for many as the pandemic forced the closure of branches and precipitated a significant shift to digital channels. Although McKinsey predicts a post-pandemic return to physical channels in many sectors, they do not foresee this being the case for banks with over 80 per cent of consumers in Europe and the US using digital banking. This has been reflected in some improvement of Net Promoter Scores (NPS) across the industry, especially from customers using mobile channels. But banking still lags many other sectors with an average NPS index of just 18. Why is this and what more can banks do to better engage with their customers?
Some of the challenges are inherent to the sector. Financial products are often complex, highly regulated and are not always frequent purchases. This can make customer interactions less frequent, more difficult and add friction to processes. In addition, there are still reputation and trust issues that date back to the 2008 crisis and beyond. But other sectors also have complex, infrequently purchased products and have suffered their own reputational crises. Why is it that investments in customer experience have been so slow to move the needle on measures like NPS?
One of the key impediments is data fragmentation. The more data points that can be collected on every individual customer’s interaction through every channel the better. But many banks have invested in a constellation of point solutions that each capture and analyse a different part of the picture. Whether arranged by product, department, brand or region, these data silos restrict the opportunities to see a complete picture of a single customer through all lenses. Many of these ‘marketing’ systems remain divorced from transactional and core operational systems that reveal what customers are actually doing. So, whilst these CX enhancements might smooth the customer journey in specific areas, and lead to some improvements, they will often fall short of real transformation.
The true understanding that is essential for exemplary customer service can only be built on continuous listening. Capturing, analysing and acting upon every data point that can suggest what an individual really wants and needs. Harnessing this data, from across the whole enterprise, and integrating diverse data sets from other sources, in real time, at scale, is the foundation of sustainable improvements in customer experience. What does this look like? Well, one Teradata customer, a major European bank, analyses over 650 million online sessions and generates over 600 million personalisation decisions every day. That capability is what drives outstanding customer experience and improvements in NPS. Building it must be the bedrock of any efforts to sustainably improve customer experience.
But remember, NPS is just a measure and not a goal in itself. It is possible to have excellent NPS scores and still fail. Capturing, integrating, analysing and acting on customer behaviour data at speed and scale is where the value lies. Once enterprise data strategies, and the platforms required to deliver them are in place, banks can rapidly transform.
Deeper understanding of individual customers paves the way for product and service innovations and for entirely new relationships. Instead of pushing a finite slate of products in response to static ‘event triggers,’ banks can build dynamic relationship through which they can become trusted guides and curators of a flexible, ever-changing combination of services precisely tailored to individual needs. With accurate, trusted, real-time data; products, processes and interactions can be totally reimagined rather than simply enhanced. Constant attention to granular data will help spot the changes, opportunities and potential risks among individuals, cohorts or even across entire portfolios. Predictive analytics can leverage the same data sets to spot emerging trends, identify weaknesses, and game-out specific scenarios before they come to pass.
Banks know that data, and data integration, are fundamental to the improved customer experience necessary to compete in today’s digital first market. The gap between knowing where they need to go and getting there needn’t be a chasm. Teradata will be at Money 20/20 in Amsterdam in June, meet us there to hear how we’ve helped banks take the steps from knowing what to do, to how to deliver outstanding customer experiences.